Insureon Blog

The OTHER Way Data Breaches Hurt Small Businesses

22. July 2014 08:13

woman at computer looking frustrated

Last week, we looked at the ways in which small businesses can be the targets of data breaches in our post “Cyber Insurance: Why It Matters, Where You’re Exposed.” In general, small-business owners might not understand how data breaches work, and so they don’t take the security steps to avoid them.

But small businesses can be affected by cyber crime even when they aren’t the primary targets of the breach. Technology trends and analysis site CIO.com points out a subtler way that big-name data breaches (such as Target’s last year) affect small businesses: by disrupting their automated payments.

How Big-Box Data Breaches Put Stress on the Little Guy

Imagine you are a small-business owner who relies on monthly customer subscriptions – a magazine or a yoga studio, for example. To make it easy on your customers, you allow them to sign up for automated payments. Once a month, a fee is automatically deducted from their accounts and placed into yours.

But here comes the Target data breach, which according to CIO.com, affected 84 percent of financial institutions. Bank after bank deactivates their clients’ debit and credit cards as a precaution. Next month, several of your customers’ automatic payments can’t be processed because their cards have been disabled and they forgot to update their information with your yoga studio.

Now you’re out a good portion of your monthly revenue, and you’ll have to put in extra hours to contact your customers and ask them to fulfill their payments.

How Can Small Businesses Avoid the Costs of Data Breaches?

As CIO.com reports, it’s “easy” to think that hackers will never target your business. But with the growing number of big-name breaches, it won’t be so easy to escape their wrath.

So what do you do? Try these tips:

For more information on cyber security, check out our other blog posts on data breaches.

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Tags:

Cyber Risk Insurance | Data Breach | Risk Management | Small Business Risk Management | Tips for All Small Businesses

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