Data breach causes 10 percent of small businesses to shutter

Data breaches hitting massive entities like Equifax, Facebook and Target grab headlines, but the impact on small businesses is just as severe with attacks causing bankruptcy or even forcing a firm to shutter its doors.

A report issued by the National Cyber Security Alliance, based on a Zogby Analytics survey of 1,008 small businesses with up to 500 employees, found that after suffering a data breach 10 percent went out of business, 25 percent had to file for bankruptcy and 37 percent experienced a financial loss.

Overall, 28 percent of respondents reported experiencing a data breach in the last year. Of these victims, 44 percent were from larger firms of 251-500 people, while 11 percent were companies with 10 or fewer workers.

The fact that companies live in a dangerous cyber environment is not lost on these business leaders, with 88 percent believing cybercriminals are eyeing them as potential targets and 46 percent convinced that they are a likely target. This equated to 62 percent of the respondents saying cybersecurity is a high priority. But the level of concern dropped dramatically for very small businesses, with only 39 percent making cybersecurity a high priority.

Another fact unearthed by the survey was that 46 percent of surveyed businesses feel very prepared to respond quickly and appropriately to limit impact of a data breach or other cybersecurity incident. The majority, 58 percent, of businesses have a response plan that can be immediately put into action, while 36 percent would be able to fully operate without computers.

Larger businesses (251 to 500 employees) tend to have an in-house cybersecurity team, and so it’s no surprise that 58 percent have a response plan in place, while only 37 percent of smaller organizations have a plan.