Can SMBs Handle the Real Cost of a Cyber Attack?
Aussie SMBs are moving toward cloud computing because of the many benefits it provides. Reduced IT costs, scalability of operations and storage as well as increased collaboration are just a few examples. However, with advances in IT come new risks. To keep up with the changes in the IT landscape, attackers are becoming more sophisticated, and the threat environment continues to evolve. Small and medium-sized businesses that have adopted novel IT processes without updating their cybersecurity measures may find themselves victims ill-prepared to prevent a cyber attack.
Calculating the Cost of a Cyber Attack
For many business owners in Australia, cybersecurity is low on their list of priorities. Even after dealing with a cyber attack, only a small percentage of companies in the Asia-Pacific region consider strengthening or updating their cybersecurity approach.
A study by Frost & Sullivan and commissioned by Microsoft makes a case for heightened focus and increased spending on cybersecurity. Entitled ‘Understanding the Cybersecurity Threat Landscape in the Asia Pacific: Securing the Modern Enterprise in a Digital World’, it involved a survey of 1,300 business and IT decision-makers in the region.
According to the study, the average cost of a cybersecurity incident is about AUD 40,000 for a mid-sized organisation and a staggering AUD 18.2 million for a large organisation. To arrive at this amount, the researchers created an economic loss model based on information they gathered from survey respondents.
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This model factored in both direct and indirect losses. Direct losses include fines, loss of productivity, customer disruption, and remediation costs. Meanwhile, examples of indirect losses are damaged brand reputation, customer churn, and drops in the price of shares.
“Although the direct losses from cybersecurity breaches are mostly visible, they are but just the tip of the iceberg. There are many other hidden losses that we have to consider from both the indirect and induced perspectives, and the economic loss for organisations suffering from cybersecurity attacks can be often underestimated.”
– Benoy CS, Director and Business Unit Head of Frost & Sullivan
What You Can Do to Protect Your Business
For many SMBs, the said cost of a cyber attack is too high an amount to absorb. The costs of cyber attack mitigation as well as immediate and direct losses can force a small or medium-sized organisation to cease operations.
To protect against the financial impact of a cyber attack, the researchers made several recommendations. These include investing in strengthening cybersecurity as well as assessing, reviewing and continuously complying with both industry regulations and internal best practices. Apart from having a strategic and comprehensive security architecture in place, businesses should also perform an IT audit regularly to identify and address gaps before they become entry points for threat actors.
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The Final Word
For many SMBs, cybersecurity is an afterthought and not a priority. This is a mindset that needs to be changed, especially since threats are becoming increasingly frequent, sophisticated, and larger in scale. When you consider the true costs of a cyber attack, having IT experts come in to assess your current strategy and suggest improvements is a smart investment that is well worth the expense.