Did you know that over 40% of all small businesses were affected by data breaches and business losses in the previous calendar year? Usually, the common assumption is that hackers target big and publicly traded companies. However, the attacks on small and medium businesses are rising significantly.

The arrival of technological advancements has made cyberattacks an imposing threat to modern businesses. These advancements, in a way, affect the structure as the threats evolve along with technology. Companies with outdated cybersecurity setups are prone to cyberattacks at any given time. The cyberattack impact on business can be very damaging for small & medium businesses, as their entire operations can be disrupted.

Financial Loss

Financial loss is one of the biggest risks that cyberattacks pose. According to statistics, the cost of cybercrime covering all businesses is estimated at $8 trillion as of last year. This number is expected to triple within the next 4 years. Business risks from cyberattacks are no longer considered as a technical threat. Gradually, these online threats have evolved into significant financial risks.

The rise of extortion and ransomware is happening at an alarming rate. Those are being used as prevalent tactics by hackers to commit cybercrimes. The impact of such attacks, wherein the victim’s data gets encrypted and the hacker demands a ransom to decrypt will have a two-faced impact on a business. One would be the data loss where the victim might lose highly sensitive data because the ransom was not paid. The second would be the disruption of business operations. Even if the ransom was paid, the interim halt in operations would still be seen as a significant loss to the business. These losses can be classified into two types, via. direct and indirect costs.

Direct Costs

• Incident Response Costs: The expenses incurred during the investigation related to the breach, damage limitations and system restoration fall under this.
• Legal Charges: During the time of legal proceedings like lawsuits and investigations, legal costs can rise. 

Indirect Costs

• Lost Revenue: A momentous halt to a company’s operations including system downtime and supply chain disruption can lead to hefty losses.
• Regulatory Fines: The data protection regulations regarding non-compliance will result in huge fines as well.

Reputational Damage

The domino effect of this interconnected world makes reputation a key asset for any company’s flourishment. One single cyberattack is enough to shred the reputation of a company. In times of data breaches, customers might lose their trust in that company’s ability to protect their information. When your company is faced with a cyberattack, the investors will think twice before putting their money into the organisation’s growth.

When your company suffers a cyberattack, public relations can become a nightmare with negative media coverage, thereby damaging the company’s image. With upset customers and concerned citizens, social media can be a cruel place for companies to be after an online breach. Cyberattacks on small businesses can be very cruel as there’s a chance for the company to go bankrupt. 

Additionally, the companies who are a victim of such cyberattacks will be subjected to more scruity by the regulatory bodies. Non-compliances on an organisational level will draw a huge penalty. These type of reputational damages can be long-lasting and it may take years to get recovered from those. Companies that want to mitigate this would want to conduct a regular security check over their systems.

Operational Disruption

A company’s operation can be heavily affected by a cyberattack. From production to customer service, the business risks are much higher when a company falls prey to an online scam. Disrupting a company’s critical system can include network outages, system failures and data loss. This action might result in employee downtime which will reflect as project delays due to lack of necessary resources. 

On the other hand, when supply chains are compromised, it might result supply delays or even putting the entire production on halt. Also, when communication channels are disrupted, it might result in phone and email outages which are part of customer services. A compromised online site might stop the customer from accessing the products and services as well. Regular backups and improved network security is essential to prevent such scenarios. 

Legal and Regulatory Consequences

The online regulatory bodies will come hard at companies that have been a victim of cybercrime. The non-compliances that come with data security regulations will result in heavy fines and legal actions. The data protection regulations have strict data protection requirements on all types of companies. These regulations might vary depending on the geographical location.

As liabilities, companies might face legal actions from the affected individuals or customers if their systems are hacked to launch malware attacks. Some laws will require the companies to report data breaches which will draw an increased oversight on their company structure. 

Conclusion

Cyberattacks are a growing concern for businesses of all sizes. Companies need to stay up-to-date on the latest data protection standards and conduct regular risk assessments to eliminate cyber threats. When the basics of cybersecurity is understood, then businesses can take measures to proactively protect themselves. It is imperative for companies to invest in robust cybersecurity measures to protect themselves from malicious attacks. It is advisable to partner with experts, build a strong culture of security and regularly review and update your systems to stay ahead of the evolving threats.