The high cost of not investing in security: a threat to small and medium-sized businesses

Every year, numerous reports highlight the increasing complexity of the security landscape. IBM’s “2023 Cost of Data Breach Report” highlights that “the average cost of a data breach reached a record high of nearly €4.5 million in 2023.” This increase reflects an alarming trend and underscores the urgency to improve investments in security.

More than 51% of organizations plan to increase their security investments in response to the growing global insecurity, according to the same report. However, these data often focus on large enterprises, leaving SMEs feeling exempt. But what is the real cost of not investing in security for SMEs? Let’s look at the main impact points:

1. Security breaches and data loss

Security breaches can expose confidential information to malicious actors, who can use it for various fraudulent purposes, from selling data to industrial espionage. Attacks like ransomware and data exfiltration are examples of how a breach can devastate a company.

In case of data breach, these crucial steps must be followed:

Investigate the extent of the breach.

Notify the competent authority and affected customers within a maximum of 72 hours.

2. Legal costs

European legislation, especially GDPR, is very strict regarding data protection, with severe penalties that can break an SME. After a data breach, the company must immediately inform the authorities and affected users, which can result in financial sanctions and loss of customer trust, increasing operational and legal costs.

3. Reputational loss

An information leak can be devastating to a company’s reputation, especially if the breach becomes public without prior notice from the company. This can lead customers to perceive the company as insecure, migrating to more reliable competitors. It is vital to have a prepared communication strategy and let marketing professionals handle the disclosure, while the technical team focuses on mitigating the damage.

4. Revenue loss

Operational disruption due to an attack can halt billing and new customer acquisition. Additionally, the loss of trust from existing customers can result in a significant decrease in revenue, jeopardizing the company’s survival.

5. Recovery costs

Recovering from a security breach is not simple and depends on the level of preparedness before the incident. If the company does not have adequate backups, recovery can be slow and costly. Lack of preparation can turn a manageable breach into a total disaster.

In conclusion

Not investing in security has a real and significant cost for SMEs. The impacts include security breaches and data loss, legal costs, reputational loss, revenue loss, and high recovery costs. To mitigate these risks, it is crucial for SMEs to implement a proactive security approach, with a strategy of continuous improvement that increases their resilience against future threats.

Initiating improvements in information security, even gradually, can generate exponential benefits in terms of protection and business continuity.

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