This article will drill down into the particular costs that can result from a cyber attack for SMBs specifically, including both and indirect damages. Following up from SWK’s earlier post on recovering from an incident, it is clear that the aftermath of a breach can become quite expensive, but preventative measures can limit the impact tremendously. Multiple reports reveal that prepared businesses saved between 30% to 80% in recovery expenses – numbers that can make the difference for a small business, especially considering how many came close to or had to completely shut down after being breached.
Here are a few examples of the costs that come with a cyber attack against SMBs, and how your business can control them:
Direct Costs of a Cyber Attack
There are several methods that hackers can try to take your money, but there are even more ways that a breach can cause lasting monetary damage. Here are some of the direct costs that can result from an attack:
- Theft & Ransom
While the layers of security protocols in most banks can – for the most part – prevent someone from just walking in and taking your money, there are plenty of techniques for committing identify theft and wire fraud, with the average loss per victim being $100,000 in 2020. Many cybercriminals have switched over to ransomware to effectively cut out the middleman and put the pressure directly on the victim, with the average payment ranging from about $200,000 to $2 million dependent on industry – and often, gangs will commit to double extortion or just steal and copy the data anyway.
- Remediation & Notification
Post-breach activities altogether represent the greatest average cost of a cyber attack, and many which are required by law depending on the state or industry your business is in. This includes notifying stakeholders, which can include consumer reporting agencies, and offering identity theft and other recuperation services to your customers.
- Data Recovery
Data loss and recovery costs will come from multiple sources and thus can vary wildly, averaging from $150 to over $300 per record, rising higher in industries such as healthcare. Everything from restoration to remediation will bring a base expense that can grow exponentially the more damage is done – for ransomware alone, this averages at about $2 million, and victims typically do not get all of their data back.
- Compliance
Regulatory compliance – or more specifically, noncompliance – can generate additional costs beyond the notification and recovery expenses. Instances of nonconformance can generate heavy fines that reach millions of dollars for industries like financial services.
- Cyber Insurance Rates
Cyber insurance premiums rose between 50% to 100% in 2021 as providers kept pace with the growing rate of cyber attacks, and rates will more than likely climb for victims of a breach.
Indirect & Potential Costs of a Cyber Attack
While direct cost averages are already devastating, indirect costs of cyber attacks actually represent a big chunk of the damages that most businesses face after being breached. Here are some examples of the potential losses that can arise:
- Business Lost to Downtime
Every hour your business is down while responding to a cyber incident represents significant loss of productivity, adding to the growing deficit brought on by other breach expenses. Estimates are that small businesses will lose around $28,000 while shut down on average.
- Reputational Damage
The fallout from being hacked and losing control of the data you have collected will extend to your customers and partners, who now have to bear the consequences of their own information being exposed without any direct input on their part. This can lead to losing even more business, with SMBs facing average costs of $8000 from reputational damage alone.
- Loss of Intellectual Property
Valuable intellectual property data that is compromised during a breach can generate considerable potential long-term losses as hackers can disseminate the IP to competitors around the world. Resulting litigation only adds to the ultimate cost as legal fees mount up over time.
- Future Cybersecurity Investment
A somewhat ironic after-effect of many breaches is that those companies quickly opted to begin investing in better cybersecurity, quite often because it was mandated by state and industry regulations. While an improvement, when coupled with the expenses of the initial cyber attack it makes for a very expensive lesson learned when the alternative was much cheaper.
The Cost of Defending Against Cyber Attacks
Averages vary, but the total direct cost of a cyber attack among SMBs is reported to be around $25,000; companies with less than 10 employees fell between a median of $8000 to $308,000 while those with less than 50 saw a range of $12,000 to $285,000. However, as much 67% of small business victims were breached multiple times, so these numbers could go up as much as double or higher within a single year.
Cybersecurity investments have long been considered expensive, with annual costs for a full set up going above $50,000 on-premise and $30,000 for cloud security, but generate significant savings over time when compared to the potential losses above.
Doing Nothing is More Expensive in Cybersecurity
With the probability of an SMB being hacked growing every year, it is ever statistically likely that your business will be faced with an attempted intrusion. If you have no network security in place, your team will need to ask yourselves the hard question – how much of any (or all) of the costs listed above will your company be able to absorb in the event of a cyber attack? If the answer is anywhere close to “none,” then you need to consider investing in a cybersecurity strategy ASAP.
Limit the Costs of a Cyber Attack with Double Blockchain
While many comprehensive security solutions can seem prohibitively expensive, the cost of doing nothing is much greater – but SWK Technologies can help you secure your data up to 99.999999% without breaking your budget. Our double blockchain double archiving solution preserves a 100% immutable copy of your critical files that can be retrieved on-demand, streamlining both protection and recovery.
Contact SWK here to learn more about our cybersecurity solutions and how we will cybersecure your data at a fraction of the price of traditional cybersecurity.
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