The looming threat of cyber hacking continues to cast a shadow over small businesses across not only Canada, but the entire world. Yet, according to a study we conducted, many small business owners don’t consider cyberattacks or data breaches to be a significant threat.
In fact, the three-year study of 800 Canadian businesses across various industries — conducted in partnership with Leger— found that businesses have become less concerned about cyberattacks over time. That’s due in part to a common misconception that cyber criminals are only interested in large corporations.
This blog looks at the effects of cyber hacking on small businesses and ways to protect your business from this type of risk.
Cyber hacks are targeting small businesses
Nearly half of small businesses (45 per cent) experienced a random cyberattack in the previous year, according to a 2022 survey from the Canadian Federation of Independent Business (CFIB). And 27 per cent of small businesses experienced a targeted attack.
Smaller companies are often easier for cyber criminals to target, as they usually don’t have the same high-tech defense measures in place as larger businesses do, such as network firewalls, two-factor authentication, and fraud protection tools. Smaller businesses may even be targeted as a way for hackers to gain access to larger vendors or customers.
These incidents can have major financial impacts, resulting in lost revenue and productivity, as well as unexpected costs related to breach response and recovery. There could also be costs associated with notifying customers that their data has been lost or compromised.
What cyber risks your business may face
Cyber breaches typically involve the theft of data, which then can be sold on the dark web, held for ransom, or even used for identity theft. These attacks are becoming increasingly sophisticated, thanks to the use of generative artificial intelligence. Some examples of cyber risks your business should be aware of include:
Phishing: A form of social engineering in which cyber criminals send fraudulent emails or text messages designed to manipulate employees into downloading malware or sharing sensitive data. This can lead to data loss, identity theft, and ransomware attacks.
Whaling: Another form of social engineering in which an employee receives a fraudulent email from a cyber criminal posing as their manager, or any other person of authority, requesting sensitive data (such as login details to the company’s customer relationship management system).
Ransomware: If a cyber criminal breaches the network, they can then encrypt data so employees can no longer access it — unless a ‘ransom’ is paid, usually in the form of bitcoin. However, even when the ransom is paid, there’s no guarantee the cyber criminals will decrypt all of the data (and they may still sell some of it on the dark web).
Denial-of-Service (DoS) attack: This occurs when a cyber criminal floods the network with so much traffic, the network can’t respond or it crashes, meaning employees and customers can’t access services such as email, online accounts, or websites.
Not all data breaches are related to a random or targeted cyberattacks. For example, if an employee is rushing to a meeting and accidentally leaves their briefcase in a taxi — with paperwork containing confidential customer information — that could lead to a data breach.
What is cyber insurance and how does it work?
When it comes to cyber insurance, some small business owners don’t think they need it, or think it’s too expensive for them to invest in. But even the smallest of businesses are at risk of loss.
Oftentimes, that loss is much more expensive than insurance coverage. In fact, cybercrime and fraud (including phishing and extortion) cost Canadians more than $500 million in 2022, according to the RCMP.
Cyber risk insurance is designed to help protect small businesses from certain losses related to cyberattacks and data breaches, such as incident response expenses, data recovery expenses, and public relations services.
For example, if your business is hacked and personally identifiable customer information is stolen, cyber risk insurance can help with the costs of legal claims, network repairs, and public relations so you can get back to business as quickly as possible.
Protect yourself with the right insurance
You simply never know what could happen in the digital world, so ensuring your business is protected and covered in the event of a loss is imperative. Beyond the financial ramifications, security and data breaches can severely impact your reputation with your clients and customers.
To learn more about protecting yourself and your business, visit our cyber risk insurance page today.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.