Cybersecurity is crucial for small businesses

Man at a computer — Backing up your systems will make you less vulnerable to ransomware attacks

(Image credit: © iStockphotos)

Small and medium-sized businesses (SMEs) are under-protected from cybersecurity risk, while the pandemic has increased their vulnerability to attacks. The European Union Agency for Cybersecurity (ENISA) says a third of SMEs have experienced a cyber incident over the past five years. Half believe that a serious incident could completely sink their company.

Despite this level of risk, most SMEs have only basic protections in place. The majority of smaller firms have taken steps such as installing firewalls and anti-virus software, but only a minority routinely train staff on cybersecurity issues or use more sophisticated protection tools.

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The big challenge, says ENISA, is that managers are not sufficiently focused on the potentially existential threat that cyberattacks pose. As a result, their efforts to counter the threat often fall short of what is required. They don’t invest enough money in cybersecurity, they fail to recruit the right type of cybersecurity expertise, and they favour seemingly quick fixes such as anti-virus software, rather than building a culture of cybersecurity awareness.

Shocking statistics

Such complacency leaves smaller firms exposed. Research published by Vodafone in early 2021 found that 41% of UK SMEs had suffered cyberattacks over the previous 12-month period, with 20% experiencing multiple attacks. It warned that as many as 1.3 million UK SMEs could collapse completely after falling victim to a cyber-attack.

ENISA’s most important recommendation is that SMEs should focus on how to build stronger cultures of cybersecurity, with management working harder to build employees’ awareness. The agency suggests practical steps such as regular cybersecurity audits, training for staff, the development of cybersecurity policies, and work on incident response plans.

More technical steps will also help. Too few SMEs are taking steps to secure their devices, such as installing all software patches and upgrades, encrypting data and focusing on how to manage mobile devices. Network security also needs to be reviewed, particularly as more staff work remotely. Third parties such as suppliers may also be introducing new vulnerabilities.

However, the starting point for many smaller businesses will be to recognise that they represent an attractive target. SMEs are less likely to have robust defences in place than their larger counterparts.

Even simple steps can prove hugely valuable. For example, SMEs that routinely back up their systems and data will be much less vulnerable to ransomware attacks. Firms that introduce multi-factor authentication on remote devices decrease their chances of attackers getting in this way.

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David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.