Why are SMEs so frequently targeted by cybercriminals?

Setting up a business is a monumental task that often requires years of planning, investment, and hard work. Many small to medium-sized enterprises (SMEs) spend a significant amount of time writing a business plan, seeking investment, building their brand, establishing a customer base and creating a digital presence. However, all this effort can be wiped out in seconds by a cyber-attack. Let’s take a closer look at why SMEs are so frequently targeted by cybercriminals.

How SMEs often underestimate the dangers of hackers

The alarming rise in cybercrime has made it one of the most lucrative criminal industries globally, with a projected value of $10.5 trillion annually by 2025. This surge in cybercrime has seen an increasing number of SMEs fall victim, often with devastating consequences.

Sadly, SMEs are seen as soft targets by cybercriminals due to their typically weaker security measures. Despite the alarming statistics, many SMEs still underestimate the potential damage that a cyber-attack can inflict, leaving them vulnerable to data breaches, ransomware attacks and other malicious activities.

What is an SME?

A Small to Medium-sized Enterprise (SME) is defined as a business that maintains a certain level of revenue, assets or number of employees. Typically, an SME employs fewer than 250 people and generates annual revenue below €50 million or has a balance sheet total of less than €43 million.

The criteria may vary slightly from country to country, but the essential characteristic is that SMEs operate on a smaller scale compared to large corporations. SMEs often form the backbone of the economy, making up over 90% of businesses worldwide. Despite their size, these enterprises are often less equipped to handle sophisticated cyber threats, making them prime targets for cybercriminals.

Why are SMEs such a target for hackers?

Cyber-attacks are on the rise globally and SMEs are increasingly finding themselves in the crosshairs. This is largely due to a combination of factors, including the perception that SMEs have weaker security measures and the potential for a lucrative payoff with minimal effort. Below are some of the main reasons why SMEs are so frequently targeted:

Reasons SMEs are frequently low-hanging fruit:

Lack of Cyber Security: Many SMEs do not have dedicated IT or security teams, making them easier targets for hackers who look for vulnerabilities in the system.
Lower Security Budgets: Unlike large corporations, SMEs often operate on tight budgets and may not invest heavily in cybersecurity tools and services, leaving their systems more exposed to attacks.
Bring Your Own Device (BYOD) Issues: Many SMEs allow employees to use their personal devices for work purposes – so-called BYOD. Without proper security measures, these devices can be entry points for cybercriminals.
Poor Website Security: SMEs may not have the resources to maintain strong website security, making them more susceptible to attacks such as malware injections, SQL injections and DDoS attacks.
Lax Approach to Security: SMEs may have a less formal approach to cybersecurity, thinking they are too small to be a target. This mindset can lead to outdated software, weak passwords and a lack of proper security protocols. Also, because of their lower budgets, SMEs may often be tempted to free or low-cost open-source software – apps that perhaps aren’t maintained as well as they should be.
Human Error: Employees at SMEs may not receive regular cybersecurity training, making them more likely to fall victim to phishing scams, social engineering attacks and other forms of manipulation by cybercriminals.
Outdated Software: Many SMEs run on outdated software that may have known vulnerabilities. Hackers can easily exploit these weaknesses to gain access to the system.
Targeting Supply Chains: Cybercriminals often see SMEs as stepping stones to attack larger companies. By infiltrating an SME that is part of a larger supply chain, hackers can potentially gain access to more valuable data.
Limited IT Resources: SMEs often have limited IT support, meaning they may not have the manpower to monitor for suspicious activity or respond quickly to potential threats – for example, DDoS attacks.
Lack of Data Encryption: Many SMEs do not implement data encryption, making sensitive information more vulnerable to theft during a cyber-attack.

Cybercrime – The real cost to SMEs

The impact of cybercrime on SMEs can be devastating, with financial losses, damage to reputation and even the risk of closure. In many cases, SMEs are less equipped to handle the aftermath of an attack, making recovery difficult, if not impossible.

Costs to SMEs from cyberattacks:

Financial Losses: The direct financial cost of a cyber-attack can be significant, including ransoms paid, lost revenue and the cost of repairing the damage.
Reputational Damage: A data breach can severely damage an SME’s reputation, causing customers to lose trust and potentially leading to a loss of business.
Legal Consequences: SMEs may face legal action from customers or regulatory bodies if they fail to protect sensitive data, resulting in fines and legal fees.
Operational Downtime: A cyber-attack can disrupt business operations, leading to lost productivity and revenue. For many SMEs, even a few days of downtime can be catastrophic.
Customer Loss: When customers’ data is compromised, they are likely to take their business elsewhere, leading to a loss of both current and potential future clients.
Increased Insurance Premiums: After an attack, SMEs may find that their cybersecurity insurance premiums increase, adding to their financial burden.
Data Loss: Without proper backups, SMEs can lose critical data that may never be recovered, impacting business operations and customer relationships.
Bankruptcy and Closure: Statistics show that 60% of SMEs go out of business within six months of a cyber-attack due to the financial and reputational toll it takes on the company.
Brand Damage: The long-term impact on a company’s brand can be severe, as customers may associate the business with a lack of security and professionalism.
Resource Diversion: SMEs often have to divert resources away from growth projects to handle the aftermath of a cyber-attack, hindering their ability to expand and innovate.

Steps to mitigate the risks of a cyberattack

Even with limited budgets, there are several effective measures SMEs can implement to protect themselves against cyber threats. By taking a proactive approach to cybersecurity, SMEs can reduce the likelihood of falling victim to an attack.

Budget-friendly security measures for SMEs:

Regular Backups: Schedule regular backups of all critical data to an external hard drive or, better yet, a cloud service (or services). This ensures you can quickly restore your site in case of an attack.
Firewalls: Install firewalls to provide a barrier between your network and potential attackers, blocking unauthorised access to your systems.
Antivirus Software: Use reputable antivirus software to detect and remove malicious software before it can do any harm.
Two-Factor Authentication (2FA): Implement 2FA to add an extra layer of security, making it harder for hackers to gain access even if they have a password.
Employee Training: Regularly educate employees about cybersecurity best practices, including recognising phishing emails and using strong passwords.
Regular Software Updates: Keep all software, including operating systems and applications, up to date to patch known vulnerabilities.
Password Management: Use strong, unique passwords for all accounts and consider using a password manager to securely store and manage them.
Website Security Plugins: For CMS platforms like WordPress, install security plugins that offer features such as malware scanning and firewall protection.
Cloud Security Solutions: Use cloud services with built-in security features such as encryption and access control to protect your data.
Secure Wi-Fi Networks: Ensure that your office Wi-Fi network is secure and consider using a Virtual Private Network (VPN) for additional protection.

Final thoughts

Cybersecurity should be an integral part of every SME’s business strategy, regardless of budget constraints. The risks associated with cyber-attacks are too significant to ignore and the cost of implementing preventive measures is far less than the potential damage from a successful attack.

By investing in robust cybersecurity practices, training employees and regularly backing up data, SMEs can significantly reduce their risk of falling victim to cybercrime. Acting before an attack happens is crucial – waiting until it’s too late could mean the downfall of your business.