What Are the Costs of Cyberattacks on Small Businesses?

Photo by FLY:D on Unsplash.

Small businesses are especially prone to insufficient cybersecurity measures, due primarily to a lack of funds to dedicate to improving network and data security. Some may also feel that a business of their size would not be a target of a hacker, who would likely want to target larger, more profitable companies. However, small businesses are more likely to be targeted than most people realize, and data loss can have a high cost. While the true cost of a cyberattack can be difficult to measure, a recent study from Kaspersky Lab provided a breakdown of some estimates. Here’s what you need to know about what a cyberattack could cost your company.

The Cost of Recovering from an Attack

When your business is attacked by hackers, recovery is often much more complex than you might assume. Just as you would require professional services to restore your office after a natural disaster, you will need professional help recovering from the security disaster as well. These services may including hiring IT security consultants, risk-management consultants, attorneys, physical security consultants, auditors, accountants, management consultants, and public relations consultants.

This veritable army of experts can help to rebuild or restore your business network, manage the damage to your company’s public image, analyze the amount of data lost or stolen in the attack, and other important factors. All of this will likely cost your company upwards of $10,000 to simply try to get back to a semblance of normalcy after a cyberattack.

If you’re attacked using ransomware, you may also have to pay the added cost of a ransom to the attacker, simply to get back the data that was stolen or corrupted.

The Cost of Lost Opportunities

While this is a less direct cost than those listed above, it’s no less impactful to your business. The study from Kaspersky Lab estimates that cyberattacks cost businesses $5,000 in lost business opportunities, as well as $23,000 in downtime. The cost of lost opportunities can be significantly higher, however, if the attack occurs in the process of pursuing a major business transaction.

For example, during the mergers and acquisitions (M&A) process, both parties involved must provide numerous documents with a great deal of sensitive financial information. A cyberattack at any point in the M&A process would expose your company to major data loss, from financial data and industry secrets to contract details and more. This type of exposure can cause the deal to collapse, potentially costing you hundreds of thousands of dollars or more. This is why it is essential for companies to provide their data with extra protections at any time that data is being shared, including during the M&A process.

In addition to everyday cybersecurity measures, businesses should utilize a virtual data room (VDR), which layers additional encryption and data protection to ensure that the information shared in M&A is protected. VDRs such as the CapLinked virtual data room meet security standards from regulatory bodies like FINRA, HIPAA, and more, ensuring that your M&A has the highest level of data protection possible.

The study also estimates that a security breach costs a small business about $8,635 in reputational damage, which can lead to lost future business opportunities.

The Final Cost to Small Businesses

All in all, the Kaspersky Lab study estimates that a cyberattack can cost a small business about $55,000. For many small-business owners, this cost is devastating enough that they can never recover; some companies close their doors forever in the wake of a devastating data loss. Proper data security now, especially during times of extensive data transfer and sharing, can protect your business from these losses and from the potential closure of your company.

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