Despite common misconceptions, ensuring information security for Small and Medium-sized Enterprises (SMEs) can be a complex and challenging process. Traditional information security management practices have largely been developed with larger enterprises in mind, overlooking the unique needs of SMEs. As a result, generic security measures created for larger corporations are often ineffective when applied to SMEs, which require tailored approaches.
Unfortunately, the distinct characteristics of SMEs have resulted in their exclusion from information security management practices. Many erroneously believe that security breaches in SMEs are insignificant and not worth addressing. However, regulatory obligations apply equally to both SMEs and larger corporations, and information security failures in SMEs can have serious consequences.
In reality, SMEs make a significant contribution to the economy. As of November 25, 2022, there are 12,201,448 registered SMEs in India according to data from the Ministry of Micro, Small & Medium Enterprises. This highlights the critical role SMEs play in driving economic growth, both in developed and emerging markets.
The Perils of Not Having a Data Protection Plan
Reports suggest that ransomware attacks in 2021 targeted 82% of companies with fewer than 1000 employees. SMEs, especially those in business-to-business (B2B) industries, are at a high risk of cyberattacks as hackers often target companies with valuable information. With SMEs acting as a gateway to larger corporations, strong cybersecurity measures are crucial. Given the severity of consequences following a data breach or cyberattack, SMEs must remain vigilant and prioritize cybersecurity to stay ahead of emerging threats.
Failing to implement a data protection plan can expose your organization to several risks. Here are some of the primary risks involved with not having a data protection plan in place:
1) Credibility issues- Neglecting to safeguard your data can damage your organization's credibility with clients and customers. Even if a data breach does not directly impact a customer, they may lose faith in the organization's ability to protect their sensitive information in the future. This loss of trust can result in a substantial number of customers abandoning the organization and seeking alternatives to meet their needs.
2) Financial implications- Insufficient data protection measures can result in significant financial losses for organizations. The average cost of a data breach in 2022 was $4.35 million, which is a 2.6% increase from the 2021 amount of $4.24 million. With the rapid shift towards remote work during the pandemic, the cost of data breaches has risen even further. After analyzing post-breach incidents, it was discovered that incidents involving remote work as a factor cost on average over $1 million more than those without this element. Given the potentially devastating impact of these financial losses on an organization, it is crucial to prioritize data protection measures.
3) Legal implications- Inadequate data protection can expose companies to the risk of legal action. According to data protection laws, companies must demonstrate that they have taken appropriate measures to protect the personal data of their customers and employees. When a company's data is compromised, individuals can sue the organization for damages. For example, Equifax's 2017 data breach ended up costing the company as much as $700 million in compensation to U.S. customers.
4) Operational downtime- Organizations often overlook the operational downtime resulting from a data breach. When a data breach occurs, responsible organizations must first take steps to contain it, followed by an investigation into its cause. The investigation must also assess the compromised systems and impacted data. During the containment and investigation phases, the organization may have to shut down its operations completely or operate in a limited capacity until the investigation is concluded.
Usher in the changes
Data privacy is a critical concern that impacts various sectors of your business, including management, legal, marketing, and others. However, the IT department plays a crucial role in your data privacy efforts. Here are essential steps that your IT personnel (or IT specialist or yourself) should take to protect your customers' data:
1) Keep your technology assets updated:Ensure that all software, firmware, and hardware components are up-to-date with the latest security patches and updates.
2) Install anti-virus software:Install anti-virus and anti-malware software on all devices and systems to protect against malicious attacks.
3) Secure your physical devices and records:Keep physical devices like servers, laptops, and mobile devices secured in locked rooms or cabinets. Ensure that sensitive documents and records are kept in secure locations.
4) Implement multi-factor authentication:Require multi-factor authentication (MFA) for all users accessing sensitive data. This adds an extra layer of protection by requiring an additional form of verification beyond just a password.
5) Minimize administrator privileges:Limit the number of employees with administrator privileges to reduce the risk of accidental or intentional data breaches.
6) Enable email encryption:Use email encryption to secure sensitive information sent via email. This ensures that only the intended recipient can access the information.
7) Screen potential employees and contractors:Conduct thorough background checks on potential employees and contractors to ensure that they have no history of cybercrime or data breaches.
8) Set up automatic data backups and encryption:Implement automatic data backups and encryption to protect against data loss and theft. This ensures that data is always backed up and can be quickly restored in the event of a breach.
The Human Element
Small businesses have increasingly faced security threats in recent years, and at Rainmaker, we understand the criticality of safeguarding data and maintaining strong security practices to establish lasting relationships with customers, employees, and partners. To achieve this, it's crucial to train your staff as they are the most vulnerable and can cause data security lapses. Regular training sessions and reminders on data hygiene can equip employees with the necessary skills to detect security threats, understand their responsibilities in minimizing the impact of an incident, and follow the correct procedures in compliance with current regulations.
At Rainmaker, we provide customized Data Protection and Privacy (DPP) workshops that cater to the specific needs of your company. By taking the right steps towards better data protection, you can position your brand and bottom line for future success. Don't hesitate, contact us now!
Author: Sagnik Mukherjee, Legal Associate, Rainmaker Directions and Contributions: Akanksha Arora, AVP-Legal, Rainmaker
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