Small and Medium-Sized Businesses Not Investing in Cyber Security
The rise of global cyber attacks in recent years might have led many to believe that small and medium-sized businesses (SMBs) are investing in cyber security. But the reality is that majority of SMBs aren’t investing in cyber security.
In the study “Canadian Business Speaks Up: An Analysis of the Adoption of Internet-based Technology”, the Canadian Chamber of Commerce found that cyber security threats are underestimated by 64% of Canadian businesses, indicating they’ve no intention of investing in cyber security measures at this time. Eighty-one percent of the respondents of the Canadian Chamber of Commerce study classify themselves as small businesses and 7% classify themselves as medium. The study was conducted between December 2016 and January 2017.
In another paper “Cyber Security in Canada: Practical Solutions to a Growing Problem”, the Canadian Chamber of Commerce said that a “data breach costing $6 million would break many small businesses”.
In the UK, meanwhile, despite the recent global cyber attacks, insurance company Zurich revealed that close to half (49%) of SMEs in this part of the world only intend to spend less than £1,000 on cyber security in the next 12 months, while 22% of SMEs don’t know how much they will spend.
“While recent cyber-attacks have highlighted the importance of cyber security for some of the world’s biggest companies, it’s important to remember that small and medium sized businesses need to protect themselves too,” said Paul Tombs, head of SME Proposition at Zurich. “The results suggest that SMEs are not yet heeding the warnings provided by large attacks on global businesses."
Extent of Cyber Attacks on Small and Medium-Sized Businesses
Symantec’s 2016 global internet security threat report (PDF) showed that cyber criminals are more and more turning their attention to hacking small businesses. The Symantec report showed that spear-phishing attackers gradually targeted small businesses – defined by Symantec as enterprises composed of 1 to 250 employees – from 18% in 2011 to 31% in 2012; 30% in 2013; 34% in 2014 and 43% in 2015.
In the UK, results from the latest Zurich SME Risk Index showed that 875,000 or nearly 16% of SMEs have fallen victim to a cyber attack, costing 21% of the victims over £10,000.
In Canada, 23% of Canadian small business owners were certain they were the victim of a cyber attack in 2016, while another 32% suspected that they might have been breached according to an Ipsos survey (PDF).
Canada’s Digital Privacy Act
"There are a significant number of breaches that never get reported because there's no obligation to report them," Imran Ahmad, a partner at the law firm Miller Thomson – a firm that specializes in cyber security, told CBC News.
This practice of sweeping cyber attacks under the rug will start to change with the upcoming implementation of the Digital Privacy Act (PDF), a Canadian law that was passed in June 2015. The Digital Privacy Act requires organizations “to notify certain individuals and organizations of certain breaches of security safeguards that create a real risk of significant harm and to report them to the Privacy Commissioner”. Failure to report a data breach under this law could result in a fine of up to $100,000.
Matthew Braga of CBC News, in the article "Here's why reports of data breaches will skyrocket this year" wrote, "The hope is that more transparency will lead to better protections and fewer breaches in the long term.”
6 Reasons Why Cyber Criminals Attack Small and Medium-Sized Businesses
Here are 6 reasons why cyber criminals are attracted to small businesses:
1. Less Capable to Handle Cyber Attacks
SMBs are less equipped to manage a cyber attack due to lack of resources.
2. Less Likely to Guard Important Data
SMBs are less likely to protect their important data – intellectual property, personally identifiable information and credit card credentials.
3. Susceptible to Attack Due to Partnership with Large Businesses
The partnership between large businesses and SMBs provides hackers back-channel access to their true target: large businesses.
4. Less Likely to Have Key Security Defenses
According to Cisco, in its 2017 midyear cyber security report, as a result in lesser budget and expertise, SMBs have less key security defenses in place. For instance, only 34% of SMBs reported using email security compared with 45% of large businesses and only 40% use data loss prevention defenses compared with 52% of large businesses.
5. Less Likely to Have Written, Formal Cyber Security Strategies
Large businesses are more likely to have written, formal strategies in place compared to SMBs (66% versus 59%), Cisco reported.
6. Less Likely to Require Vendors to Have ISO Certifications
Large organizations, CISCO noted, are more likely than SMBs to require their vendors to have ISO 27018 certifications (36% versus 30%). ISO 27018 refers to the “commonly accepted control objectives, controls and guidelines for implementing measures to protect Personally Identifiable Information (PII) in accordance with the privacy principles in ISO/IEC 29100 for the public cloud computing environment.”
Ripple Effect of Cyber Attacks on SMBs to Canada’s Economy
In the 2016 Canadian Chamber of Commerce's "Top 10 Barriers to Competitiveness for 2016", the business organization ranked Canada’s vulnerability to cyber crime as the country’s number 2 barrier to global competitiveness. The country’s chamber of commerce said that digital security breaches and cyber theft hinder Canada’s global competitiveness.
Without taking into consideration the value of the data itself, the Canadian Chamber of Commerce said that the country’s internet economy accounted for 3.6% of its $1.83 trillion GDP.
Protecting small businesses, in particular, from cyber attacks is as important as protecting large enterprises, considering that the economy of Canada mostly comprised of small businesses. According to the Canadian Chamber of Commerce, out of the 1.2 million businesses in Canada, 98% have fewer than 100 employees, 55% have fewer than 4 and 75% have fewer than 10 employees. These over a million small enterprises in the country employ 60-80% of all jobs created in Canada and companies with fewer than 100 employees contribute about 51% to Canada’s GDP.
We invite you to connect with us to speak with one of our cyber security experts, and protect your small or medium business today.