Victims of traditional crimes such as burglary or mugging often receive sympathy and support. However, when a business falls victim to a cyber-attack, the response is far less forgiving. Instead of sympathy, business owners are often labeled as "stupid" or "irresponsible."
The Harsh Reality of Cyber-Attacks
If your business experiences a cyber-attack and client or patient data is compromised, you may face serious fines, lawsuits, and a damaged reputation. Even if you trusted an outsourced IT support company to protect you, ignorance is not a valid defense. This nightmare scenario can land squarely on your shoulders, and you will be required by Texas laws to inform your clients and patients that their data was exposed.
Your competition will exploit this vulnerability, clients will leave, and employee morale will plummet. Banks are not required to replace funds stolen due to cybercrime, and insurance policies often exclude such losses unless specifically designed to cover cyber-attacks. The importance of these threats cannot be underestimated, and you cannot assume your IT company is doing everything necessary to protect you.
Yes, It Can Happen to You
Many business owners underestimate the risk of cyber-attacks, believing they are too small to be targeted. However, statistics show that 70% of cyber-attacks are aimed at small businesses. The National Cyber Security Alliance reports that one in five small businesses have been victims of cybercrime in the last year. These numbers only include reported incidents, meaning the actual number is likely much higher.
Cybercriminals count on small businesses believing they are not at risk. This false sense of security makes them easy prey. If your IT company hasn't discussed the protections outlined in this report or implemented a cyber "disaster recovery" plan, you are at risk.
This Is Too Serious a Matter to Entrust to Others Without Your Involvement
Cybersecurity is no longer an issue that can simply be delegated to the IT department. A single mistake from an employee clicking on the wrong email or downloading an application can open the door to hackers or ransomware. Take the story of Michael Daugherty, former CEO of LabMD. His company was required to comply with federal data privacy rules but fell victim to a cyber-attack due to a careless employee action.
The consequences were severe: employees blamed Daugherty and left, sales declined, and insurance providers refused to renew policies. The emotional and financial strain eventually led to the closure of his business. This story illustrates that no company is too small to be targeted and suffer significant damage from a cyber-attack.
The Real and Immediate Threats
Cyber-attacks can have devastating consequences, including reputational damage, government fines, legal fees, and lawsuits. Breach notification statutes require businesses to inform clients and patients if their data has been compromised. In industries such as healthcare and financial services, there are additional notification requirements under HIPAA, SEC, and FINRA.
The costs of a cyber-attack go beyond legal fees and fines. Business interruption, downtime, loss of sales, and emergency IT restoration costs can add up quickly. According to the Ponemon Institute, the average cost of a data breach is $225 per compromised record. Small businesses can suffer losses exceeding $100,000 per ransomware incident, along with over 25 hours of downtime.
It's Not Just Cybercriminals Who Are the Problem
Disgruntled employees and vendors can also pose significant threats. Employees can steal company data and use it for personal gain or to damage the company. According to Osterman Research, 69% of businesses experience data loss due to employee turnover, and 87% of employees who leave take data with them.
Vendor theft is another concern. Payroll, HR, and accounting firms have access to confidential information and can commit fraud. Part-time employees working from home can easily siphon funds or sell data. Employee theft of funds, inventory, trade secrets, and client lists is more common than businesses care to admit.
How Can Your Company Be Damaged by Cybercrime?
Cyber-attacks can cause various types of damage, including:
- Reputational Damage: Covering up a data breach can result in severe legal consequences and loss of client trust. Clients will demand answers and may not accept excuses for inadequate security measures.
- Government Fines and Legal Fees: Breach notification laws are strict, and non-compliance can result in hefty fines and legal fees. HIPAA, SEC, and FINRA have additional requirements for healthcare and financial services businesses.
- Financial Costs: A single breach can lead to significant expenses, including business interruption, emergency IT restoration, and legal fees. The average cost of a data breach is $225 per compromised record.
- Bank Fraud: Banks are not responsible for replacing funds stolen due to cybercrime. CEO Verne Harnish lost $400,000 when hackers intercepted emails and instructed his assistant to wire funds.
- Using Your Company to Infect Clients: Hackers may use your server or website to spread viruses and compromise other PCs. This can lead to additional reputational damage and legal consequences.
Are You Sure You're Safe?
It's possible that your current IT company is not adequately protecting you. Have they recently discussed new cybersecurity threats and protocols? Are they proactive in monitoring and updating your network? Many IT companies lack the expertise to deal with advanced cybersecurity threats, leaving your business vulnerable.
Don't underestimate the importance of cybersecurity for your business. Cyber-attacks can have devastating consequences, and you cannot afford to be complacent. Schedule your free Cybersecurity Risk Assessment with Justice IT Consulting today to ensure your business is protected.
