2018-03-14 08:21:33 Running a Business English Understand how a data breach can hurt your small business, learn how to put preventative measures in place to prevent hacking, and develop... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/it-workers-discuss-small-business-data-breach.jpg https://quickbooks.intuit.com/ca/resources/business/small-business-data-breach-harm/ How Does a Data Breach Hurt Your Small Business?

How Does a Data Breach Hurt Your Small Business?

3 min read

A data breach can be disastrous to a small business — but you can take steps to minimize damage and help prevent future attacks by having a plan ready to go. Understanding the ways a breach can hurt your company is critical to your success and even to your survival. Keep your company’s sensitive personal information safe by putting protocols and technology in place to avoid data breaches.

The Risks of a Data Breach

Your small business may not have access to the high-end cybersecurity that large companies employ, and that puts you at particular risk. Primary vulnerabilities fall into two main categories: failure to recognize the likelihood of attack and exposure to various threats.

You may be unaware of how many threats exist online and how technologically savvy hackers are. Did you know that hackers often target small businesses instead of larger ones? While the payoff might not be as high, it’s generally easier for hackers to get in and out before being noticed. Employees, too, often fail to understand the real likelihood of hacking threats. In some cases, workers just assume management has handled the issue of potential threats and don’t bother to take special care when accessing sensitive data. To keep your company safe, you should make your employees aware of the significance and likelihood of a data breach. Exposure to hacking threats and lack of awareness about potential threats are part of a vicious cycle, with one often fueling the other.

The Cost of a Data Breach

Even a single hacking attack can threaten the financial solvency of your business. The cost of a data breach is most significant to small businesses because the cash flow and profit margins you’re working with are typically much smaller than those of big businesses.

Data breaches pose both potential short-term and long-term consequences. In the short term, you face loss of data, financial loss, loss of customers due to security concerns, legal fees, and possible regulatory fines. In the long term, you face the prospect of major damage to your company’s reputation, failure to regain customers and clients, potential lawsuits, and even the possibility of your company going out of business entirely. The sad reality is that a significant number of small business failures are traceable to data breaches by hackers.

Putting Preventative Measures in Place

Because of these risk factors, your small business should establish and follow a protocol that helps prevent data breaches entirely. Make sure all your data is encrypted, regardless of where it’s stored. According to Experian’s research, 60% of all data breaches occurred in companies with unencrypted data.

Managing employee computer use is a critical factor in keeping sensitive information safe. Make sure your employees understand the safety protocols they need to follow. Don’t give employees access to sensitive information unless it’s necessary. Ensure every person accessing such information has an individual, private account and password, and make sure the password is strong. Consider blocking USB or optical drives when accessing data to help prevent purposeful employee theft.

What to Do if a Breach Occurs

If your company experiences a data breach, early identification and shutting it down immediately are key. Pull financial information to a safe server, and allow only trusted staff to access it. Put new cybersecurity measures in place as quickly as possible, and contact clients and customers so they can put safeguards in place on their end.

Data breaches can be risky business, but you can learn and avoid mistakes. Reducing your exposure to the risk of a data breach and efficiently managing fallout if one occurs are the best ways to set your small business up for success.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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