Small Business - Major Breach: The Cost of Cyber Disaster and How to Survive One

Written by George Bakalov, Executive Cybersecurity Advisor| Virtual Chief Information Security Officer (vCISO) ThrivUP, Feb 17 2025

The "Cost of a Data Breach Report 2024" by IBM and Ponemon Institute has some eye-watering numbers that might just make you laugh - or cry. Most likely cry if it happened to your business. But I'll give it a try with some tongue-in-cheek dark humor, so let's see how this goes.

How did we get here? Not sure, but the global average cost of a data breach is in the millions! For us, the quaint, charming small businesses, this isn't just "ouch" territory; it's more like "holy moly, we're doomed" territory. Even a fraction of that could have you selling your all-leather executive chair to fund the damages.

Enter the Bad Guys: Phishing and Compromised Credentials

Here's how they get ya: phishing and those sneaky compromised credentials. These aren't just any attack vectors; they are literally ‘the’ main vectors used by the bad guys, silently infiltrating your system while you're busy trying to remember if you turned off the office coffee maker. The average cost from these breaches? Around $4.81 million. That’s enough to buy a small island, but instead, it’s just a ticket to Business Misery Land.

When Your Business Goes on a Sick Leave

About 70% of organizations got their groove thrown off by these breaches - think major disruption. For small businesses, this isn’t just a hiccup; it's like your whole business decided to take a spa day without you.

Recovery? More Like a Marathon

Only 12% of companies bounce back from these digital heartbreaks, and most take over 100 days to recover. Imagine your business limping along for nearly four months. By then, your customers might forget you even exist, or worse, they've moved on to your less breach-prone competitor.

Let’s break this down however unpleasant the topic. Why exactly is it that a major data breach can put someone out of business? I’ll lay the puzzle pieces on the table and will let you connect them however your imagination allows you.

Hiring an Incident Response Team: When a data breach occurs, unless a business has its own internal IR capabilities (which is rare for small businesses due to cost), they must engage external specialists. These teams are composed of cybersecurity experts, digital forensics analysts, legal advisors, and sometimes public relations professionals to manage the crisis comprehensively.

IR teams are highly specialized. Their members are often former law enforcement, military cyber units, or have extensive private sector experience in cybersecurity. This level of expertise commands high salaries or consultancy fees. Imagine for an entire team of 5 such experts working through the mess of your breach for 5, 15 or more days? The bills go up faster than Elon Musk’s flying skyscrapers practicing for Mars!

The Great Security Staff Shortage

Here’s a fun fact: there's been a 26.2% increase in security staffing shortages, which means higher costs for breaches. Small businesses, bless our hearts, typically don't have a Gandalf of cybersecurity on staff. And, let’s face it, some of you are still using that amateur part-time wizard who's also your accountant. No internal team means you are probably not well prepared for a breach which is the single worst contributor to the high cost of recovery.

Fines and Regulations - The Cherry on Top

If you are in the regulated industry, you already know that with every new regulation, comes a potential for fines. Compliance isn't just a headache; it's like trying to solve a Rubik's Cube while blindfolded. And if you slip up? Ka-ching! More money down the drain.

So What’s a Small Biz to Do?

• Basic Cybersecurity: Think robust passwords, two-factor authentication, and updates. It's not rocket science; it’s hygiene for your digital life.

• Training: Teach your team about phishing. Turn it into a game if you have to - "Phishing Bingo" anyone?

• Managed Services: If you can't afford your own cyber knight, hire one. Managed security services can be your budget-friendly armor.

• Insurance: Yes, there’s insurance for data breaches. It’s like having an umbrella when it starts raining cats and dogs (or hackers). Make sure it’s not less, or more than what you need.

• Incident Response Plan: Have one. Even if it's scribbled on a napkin, it's better than nothing when the digital storm hits. Test it once a year. Thank me later!

While the numbers might make us want to dive under our desks, remember, every cloud has a silver lining - or at least, a chance to learn from the comedy of errors that is a data breach. Keep your spirits high, your passwords complex, and maybe, just maybe, your business will be the one laughing in the end. Cheers to surviving the cyber jungle!

Here’s the link to the actual (and very much humorless) "Cost of a Data Breach Report 2024" by IBM and Ponemon Institute: https://www.ibm.com/downloads/documents/us-en/107a02e94948f4ec

George is a Certified virtual Chief Information Security Officer (vCISO) with over 20 years of experience in small business, technology and information security. Connect with George via info@thrivupconsulting.com to disucss about your challenges in this space.