What small business owners need to know about cyber risk

You sit down at your computer to send an invoice and suddenly your screen freezes. Files vanish. And then a message flashes: “Your system is locked.” Within minutes, your business is at a standstill. You’ve been a victim of a cyberattack. 

Unfortunately, this sort of scenario is becoming more common: A cyberattack happens somewhere in the world every 39 seconds, totaling more than 2,200 attacks per day. 

Cybercrime isn’t just an IT issue. And it’s not just a “big company” problem. As business operations across all industries become more digital, connected and automated, cybercrime is emerging as one of the fastest-growing risks facing small businesses today. 

Check out my recent trend talk on what trends are shaping the current cyber risk landscape or read on to learn more about cybercrime trends, what small businesses need to look out for and how you can strengthen your defenses before an attack hits. 

Jump ahead to learn:

• Why cyber risk is rising: 4 major trends
• Why small businesses are especially vulnerable
• How to strengthen your cyber defenses: 5 practical steps for small businesses
• Why Cyber Liability insurance matters
• How ERGO NEXT helps small businesses in a changing cyber landscape

Why cyber risk is rising: 4 major trends

1. More digital = greater risk 

Nearly every business today relies on some sort of cloud software, automation tool, mobile app, AI-based service or connected device. Digitalization improves efficiency, but it also creates more entry points for attackers. 

2. 5G connectivity accelerates productivity and risk

5G technology allows unprecedented connection between devices and systems. Logistics, warehousing, field service operations and remote teams all benefit from faster speeds and broader connectivity. But that same connectivity increases your attack surface. Criminals look to exploit any weak link in a network. 

3. Your supply chain could expose you 

41% of businesses experienced an attack through a third-party partner in a single year, according to the World Economic Forum. Cybercriminals are increasingly targeting smaller suppliers to reach larger companies downstream. 

Small businesses often act as the “digital doorway” for criminal entry because they work with bigger enterprises, they hold valuable access credentials and they often lack formal cybersecurity resources. 

4. AI is making cybercrime faster, smarter and harder to detect

Criminals are getting more successful at using AI to automate attacks and impersonate real people. In one case from 2024, an employee at an enterprise company transferred $26 million to fraudsters after joining a video call filled with AI-generated “colleagues,” including a fake CFO. 

As much as this sounds like science fiction, it’s all too real. And we’re still in the early stages of convincing AI-powered social engineering and deepfake fraud. 

Why small businesses are especially vulnerable

Small businesses often believe they’re “too small to be noticed.” Unfortunately, the opposite is true: Attackers go where the “door” is unlocked — and they’re well aware of the common entry points in many small businesses. 

The most vulnerable businesses: 

• Don’t have dedicated IT departments
• Aren’t familiar with basic cybersecurity best practices
• Use outdated software
• Rely on unsecured networks or devices
• Don’t provide employee cybersecurity training
• Delay investing in security tools due to budget constraints

How to strengthen your cyber defenses: 5 practical steps for small businesses

Small businesses don’t need enterprise-level budgets to meaningfully reduce risk. 

Here are a few actions that can have a real impact: 

1. Train your employees 

Employees are your biggest defense — but also your biggest risk. Many cyberattacks start with human error, like someone clicking a malicious link and sharing sensitive information. 

Employee awareness training can reduce the likelihood that an attack will be successful. Train your employees on how to recognize phishing attacks, the importance of using strong passwords and how to add an extra layer of security to their actions, like verifying unusual requests and verbally confirming money transfers.

2. Use cybersecurity tools designed for small businesses

Take advantage of the many affordable tools that can help protect against cybercrime, like multi-factor authentication (MFA), endpoint protection software, password managers, encrypted backups and secure cloud storage. Many attacks succeed simply because basic protections were never activated.

3. Update your systems regularly

Running outdated software is another way small businesses leave themselves vulnerable. Attackers are constantly scanning for businesses that haven’t installed patches. Help keep your business safe by installing updates for all your tech tools and systems, from browsers and point-of-sale tools to operating and payment systems. 

4. Evaluate your vendors and supply chain

Because your security is only as strong as the weakest link in your network, make sure your partners are using strong protections as well. 

Every partner should confirm they use MFA and be able to explain how they protect your shared data and what will happen if their systems are compromised. 

5. Have a response plan — before you need one

A prepared business recovers much faster — and with fewer losses. Have a plan in place if you’re attacked. 

Your plan should include: 

• Who to call
• How to disconnect affected systems
• How to access clean backups
• How to notify customers, if needed
• What your insurance covers

Why Cyber Liability insurance matters 

Taking practical steps to ward off attackers is a smart move for small businesses. But so is investing in cyber insurance. 

Without cyber insurance, the cost of a single cybercrime incident can devastate a small business with losses that could include: 

• Lost revenue from downtime
• Costs to recover stolen or encrypted data
• Customer notification expenses
• Ransom payments
• Legal fees
• Reputational harm
• Business interruption for days or even weeks

With cyber liability coverage, small businesses can have protection from the financial impact of a broad range of cyber risks including data breaches, ransomware, outages and failures of their own systems and other covered digital threats. 

How ERGO NEXT helps small businesses in a changing cyber landscape

With cyber risk evolving so rapidly, small businesses should look into cyber liability insurance, which can be purchased as an add-on for general liability or professional liability.

ERGO NEXT is dedicated to providing small businesses with the tailored business insurance they need to help protect against a broad range of cyber and other risks.

We’ll ask a few questions about your business and give you a quote. You can select your coverage options and buy your policy in about 10 minutes. Share your certificate of insurance at no extra cost, and you can access your policy 24/7 via web or mobile app.

If you have questions, our licensed, U.S.-based insurance professionals are available to help.

Start a free instant quote today.