Given their high volume of financial transactions and relatively low data protection capabilities, small- and medium-sized businesses are becoming increasingly attractive targets for cyber criminals.
According to a recent Javelin Strategies report, SMBs and their owners face higher levels of fraud than larger companies. This is due in large part to the fact that SMB owners are more likely to conduct a wider range of monetary transactions that include both business and personal accounts.
The study found that SMB owner fraud resulted in a total loss of $8 billion last year. While banks are generally able to absorb a high level of that loss, SMB owners can also pay dearly for such incidents.
The emergence of online business has only compounded the problem, the market research firm stated. Because SMBs face "unique online security challenges," they are more likely to be vulnerable to fraudsters and other cyber criminals. As Javelin pointed out, many SMBs lack the necessary resources and staff to protect their online operations adequately.
"[SMB owners] face significant financial losses as well as other issues as a result of fraud,” said Javelin senior analyst of risk, fraud and security Philip Blank. “[They] have higher legal costs and longer timeframes for resolution of fraud than consumers."
According to a study published earlier this year by the National Retail Federation, more than 60 percent of surveyed SMBs are not aware of the costs that could result from a data breach. While data breaches can be detrimental to a company of any size, they are often devastating to SMBs. Because SMBs often lack the financial padding of their larger counterparts, many are forced out of business as a result of a breach.
There are several institutions in place, such as the Payment Card Industry Security Standards Council, to help organizations improve their data security practices. But ultimately, it is the company's responsibility to ensure it is protected through data security policies, technology and best-practices.