Ask Jack: What Is The Real Risk For Small- And Medium-Sized Businesses After A Cyber Attack?

By Jack McCalmon, The McCalmon Group, Inc.

I own a small retail business. I know I am a target…who isn't? But what is the real risk if I am hacked?

 

The real risk is closure of your business.

According to the National Cyber Security Alliance, as reported by Inc., 60 percent of small- and medium-sized business close within six months after a data breach. https://www.inc.com/joe-galvin/60-percent-of-small-businesses-fold-within-6-months-of-a-cyber-attack-heres-how-to-protect-yourself.html

Not only is the damage greater to small businesses, according to Forbes, small businesses are three-times more likely to be targeted for an attack. Businesses with fewer than 100 employees receive 350 percent more social engineering attempts than larger businesses. https://www.forbes.com/sites/edwardsegal/2022/03/30/cyber-criminals/?sh=484a698a52ae

One reason small- and medium-sized businesses close after an attack is that they are less prepared for a breach than larger enterprises and take fewer prevention steps. https://www.inc.com/joe-galvin/60-percent-of-small-businesses-fold-within-6-months-of-a-cyber-attack-heres-how-to-protect-yourself.html

Why a small business would have to close varies, but primarily the reason involves not having the financial and cybersecurity resources to weather the fallout from an attack - from litigation to loss of business reputation.

The final takeaway is never consider yourself too small for a cyberattack. Continually focus on prevention, but be prepared if a breach occurs.

Talk with your agent or broker about blunting the financial harm with insurance and step up your prevention and post-breach strategies, including training your employees; increasing your cybersecurity defenses; and developing a post-breach strategy, including developing a relationships that can quickly assist and counsel your organization in case of a breach.

 

Jack McCalmon, Leslie Zieren, and Emily Brodzinski are attorneys with more than 50 years combined experience assisting employers in lowering their risk, including answering questions, like the one above, through the McCalmon Group's Best Practices Help Line. The Best Practice Help Line is a service of The McCalmon Group, Inc. Your organization may have access to The Best Practice Help Line or a similar service from another provider at no cost to you or at a discount. For questions about The Best Practice Help Line or what similar services are available to you via this Platform, call 888.712.7667.

If you have a question that you would like Jack McCalmon, Leslie Zieren, or Emily Brodzinski to consider for this column, please submit it to ask@mccalmon.com. Please note that The McCalmon Group cannot guarantee that your question will be answered. Answers are based on generally accepted risk management best practices. They are not, and should not be considered, legal advice. If you need an answer immediately or desire legal advice, please call your local legal counsel.

 

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