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The Increasing Threat of Cyber-Attacks on Small Businesses

As another day draws to a close, news outlets are filled with stories of yet another large-scale cyber-attack targeting high-profile corporations. Such reports have become almost routine, reflecting a concerning norm in our digital age. However, beneath the surface of these infamous breaches lies a troubling reality: small businesses are at an even greater risk of falling victim to cyber-attacks than their larger counterparts. Despite the intimidating headlines that often focus on massive data breaches faced by multinational corporations, the data reveals that small and midsize businesses (SMBs) are far more frequently targeted.

Current statistics highlight the gravity of the situation, indicating that over 90 percent of all data breaches have impacted SMBs. Moreover, 2023 saw 46 percent of ransomware attacks resulting in staggering losses ranging from $1 million to $10 million. For small businesses, these numbers are not just statistics; they represent devastating blows that can jeopardize their existence.

Interestingly, many SMBs adopt an optimistic, often naive attitude toward cyber threats, believing that their size exempts them from being targeted. This “it’ll never happen to me” mindset is not just outdated; it’s dangerously misleading. In reality, the evidence suggests that small businesses are often seen as easier targets due to their comparatively lower security postures.

Underreported Threats: The Reality for Small Businesses

The lack of media coverage surrounding cyber-attacks on smaller firms can lead to a false sense of security. In 2021, for instance, approximately 61 percent of SMBs were victims of a cyber-attack. Alarmingly, research from the UK revealed that 60 percent of small businesses fail to recover and shut down within six months following a successful attack.

In response to this rising tide of cyber threats aimed specifically at SMBs, governmental bodies across the USA, UK, EU, Canada, Australia, and other regions are putting stricter cyber-crime protection laws into place. These new standards compel SMBs to emphasize governance, risk management, and compliance (GRC) as essential components of their operations.

The Importance of GRC for Small and Midsize Businesses

Large enterprises have employed robust GRC (Governance, Risk Management, Compliance) structures for decades to maintain security and safeguard operations. GRC frameworks are not merely a compendium of best practices; they provide actionable steps toward mitigating the risks of cyber-crime, minimizing the chances for breaches, and establishing protocols for recovery after incidents.

Historically, the adoption of GRC protocols among smaller organizations has been sparse—but this is changing. All businesses, regardless of size, now realize the essential need to secure their supply chains and protect sensitive data. Whether it’s a tiny five-person business serving a highly regulated industry, a local port authority maintaining critical infrastructure, or a school with limited IT resources, the similar cybersecurity requirements facing big organizations are now trickling down to smaller entities as well.

The Shift in Cybersecurity Compliance: A Call to Action for SMBs

When major companies such as Boeing experience high-profile cyber incidents, it dominates the news cycle. Yet the harsh truth is that cybercriminals are shifting their focus towards smaller vendors that are integral parts of larger supply chains. Today, it is that small firm supplying parts to Boeing that may find itself in peril.

To combat this rising threat, companies like Boeing and over 200,000 other businesses engaged with the US Department of Defense (DoD) are adhering to the Cybersecurity Maturity Model Certification (CMMC). The CMMC requirements have recently been expanded and refined to enable SMBs and subcontractors working with the DoD to better comply with these enhanced standards.

This example illustrates just how crucial GRC adoption can be for smaller organizations. By embracing GRC, businesses equip themselves to achieve and maintain compliance with various frameworks such as NIST, CIS, ISO, SOC 2, and others. Implementing these frameworks allows organizations to develop effective backup and recovery strategies, bolster information security controls, and enhance incident response procedures. Ultimately, these best practices strengthen overall security posture, significantly reducing risk and liability.

Challenges Faced by SMBs in Tackling Compliance and Governance

The demand for cybersecurity professionals is skyrocketing, particularly for organizations in the mid-market; however, the landscape presents a paradox. The demand for talent is high while resources are limited, making it difficult to fill available positions. Recent findings from CyberSeek estimate that there are around 500,000 unfilled cybersecurity job openings, with these positions taking 21 percent longer to be filled than their IT counterparts.

This resource crunch leads businesses to collaborate with their existing IT support systems, whether these are internal teams or contracted managed service providers (MSPs). They are increasingly looking to these partners to help them integrate GRC effectively into their operations.

At ScalePad, we’ve witnessed this urgent shift firsthand. The MSP sector has stepped up, rising to the occasion by implementing security protocols for industries in need, as well as securing their own client bases through GRC measures. The ScalePad 2024 MSP Trends Report highlights that MSPs are investing significantly in compliance services to better protect their clients and capture new business opportunities. In fact, cybersecurity remains a top concern for MSPs, ranking as the second most important service they plan to offer in 2023 and beyond.

Government Support and Resources for Small Businesses

Governments are becoming increasingly aware of the pressing need for resources to strengthen cybersecurity among small enterprises. In an encouraging development, the White House’s 2024 Report on the Cybersecurity Posture of the United States indicates that ransomware groups are now specifically targeting vulnerable institutions like schools and hospitals. To address these risks, valuable resources and funding avenues are being utilized to aid small organizations in improving their cybersecurity readiness.

A particularly notable initiative is a recent program from the Federal Communications Commission (FCC), which has introduced a three-year pilot scheme earmarking $200 million for cybersecurity services and equipment specifically designed for schools and libraries.

Embracing GRC: The Path Forward for SMBs

The landscape of managed service providers has undergone rapid evolution, but we believe we are merely at the inception of an era where cybersecurity is prioritized for SMBs. An influx of regulatory requirements from governing bodies and industries is imminent, and those companies that proactively meet these benchmarks will do so through compliance as a service and robust GRC tools.

This progressive shift is just beginning. Over the next decade, we can expect to see dramatic advancements in how businesses approach cybersecurity. ScalePad is committed to supporting IT professionals on this journey by providing them with our dedicated security and compliance platform, ControlMap, which is designed to simplify compliance-related processes.

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As organizations, from colossal corporations to nimble startups, work to navigate the complex landscape of security regulations and frameworks, taking a proactive stance on cybersecurity has become a crucial priority for all. To explore these vital changes further, you can download The Future of GRC Infographic here.

By Dan Fox, Cybersecurity Lead, ScalePad and Evan Pappas, Content Writer, ScalePad