The Cost of Cybersecurity Breaches for SMBs and Midmarket Firms is huge

A global research study of 6,240 SMBs and midmarket firms found that IT security is a top priority for these organizations. 85% of SMBs and 100% of midmarket firms ranked IT security as a top priority, and 61% of these firms are increasing their IT security spending by more than 8%, a higher percentage than overall IT spending. The study also revealed that 56% of SMBs and 88% of upper midmarket firms experienced at least one cyberattack in the past year. As a result, preventing cyberattacks is a priority for 64% of firms.

According to the Techaisle survey, cybersecurity breaches can be costly for SMBs (1-999 employees), with an average loss of US$1.2 million in data, productivity, compliance and regulatory expenses, and staffing costs. Upper-midmarket firms (1000-4999 employees) suffer even more significant losses, with an average cost of US$28.6 million per breach.

In the Techaisle survey, SMBs and midmarket firms were asked about the potential impact of a security or data breach on their organization. The results showed that the consequences would be severe and far-reaching. The most significant impact, cited by 54% of firms surveyed, would be damage to customer privacy and trust. Other consequences included harm to corporate reputation and profitability (49%), challenges in complying with regulations (44%), and personal reputation damage for both business and IT professionals within the company (31%).

Businesses depend on technology, but hackers are constantly finding new ways to exploit vulnerabilities in IT security, and the frequency, severity, and sophistication of cyberattacks have reached unprecedented levels. Hackers are highly skilled and have access to vast resources. SMBs and midmarket businesses are particularly at risk, as they often lack the resources to invest in robust cybersecurity measures. This makes them attractive targets for hackers, who can easily exploit their vulnerabilities to steal sensitive data, disrupt operations, or even take the business offline.

To protect themselves from cyberattacks, businesses must take a holistic approach to cybersecurity. This includes implementing a layered security architecture, training employees on cybersecurity best practices, and regularly monitoring their systems for vulnerabilities.

Given the severe consequences of a single security breach, SMBs and midmarket firms must view IT security as a fundamental business priority rather than just another technological concern. As such, strengthening cyber resilience has become a critical priority. However, it’s important to note that the IT security level is determined not just by the budget but also by the consistency of the approach. With the attack surface expanding and threats increasing in number and variety, these firms must take a proactive approach to IT security. This includes protecting against internal threats from “rogue” users or those who may inadvertently cause a data breach due to a lack of knowledge or carelessness.

SMBs understand the significance of cyber resilience, which refers to their ability to anticipate, withstand, recover from, and adapt to attacks and compromises on their cyber resources. This understanding acknowledges that no organization is entirely immune to breaches, making implementing effective processes and technologies for detection, response, and recovery essential.

Implementing a Zero Trust policy is crucial for SMBs and midmarket firms. With the rapid increase in digitalization and connectivity worldwide, trends such as cloud computing, the Internet of Things (IoT), and bring your own devices (BYOD) have emerged, expanding networks and exchanging information within and beyond network boundaries. Traditional security approaches, which use firewalls and VPNs to separate internal and external networks, assume trustworthiness within internal networks but expose vulnerabilities to hackers and malicious insiders.

As a result, Zero Trust has gained momentum as a network security paradigm. It goes beyond technology, focusing on a comprehensive approach that integrates core principles and adopts a “never trust, always verify” mindset. At its core, Zero Trust assumes that no participant in a network should be automatically trusted and requires thorough inspection and verification of every access attempt. Access is granted to the entire service or specific functions or data only after user authorization.

According to a survey by Techaisle, 69% of midmarket firms are aware of Zero Trust, with 64% considering its adoption very important. As a result, 35% have started planning their investments in Zero Trust Architecture. In the SMB segment, 30% are aware of Zero Trust, with 21% of those familiar considering its adoption very important and 14% investigating a Zero Trust Architecture.

SMBs and midmarket firms need help implementing security cost-effectively due to limited IT budgets and security staff. These firms also need help identifying the right security technology, defining and implementing security policies, prioritizing investments, and determining their overall IT security strategy. 

As a result, 72% of SMBs and midmarket firms are increasingly outsourcing to managed security services partners. The lack of understanding of a threat associated with a widely-used cloud platform on the one hand (and likely, additional confusion concerning security issues related to other technologies), and the lack of IT staff resources available to address security concerns on the other produces a clear conclusion: SMBs need suppliers to step up to the delivery of secure IT environments and prevent cyber-attacks.
In many cases, these suppliers will be the mainstream channel partners who supply the SMB’s technology and act as the IT management presence within the SMB’s business. In other cases, including in many midmarket environments, the source of security products and services will be specialized managed security providers who focus tightly on operating SOCs and protecting client environments. In some scenarios, firms will ‘land’ by entering a client account from one of these positions and then ‘expand’ to serve a broader range of IT supply needs – crowding out competitors who can’t address the risk and compliance issues central to the CEO’s mandate.