All About Security Risk
Cyberattacks are expected to reveal 33 billion records by 2023, as per Juniper research. These records are expected to be the confidential data of individuals and businesses. The same research disclosed that 50% of those cyber attacks are most likely to affect US citizens. Such shocking findings raise an unease among the business circles and regulatory authorities. Hence the reason why global KYC and AML compliance regimes are becoming more and more rigid regarding the screening of the affiliates of all types of businesses.
The businesses of all sizes and types are under the strict scrutiny of global watchdogs. The businesses from every corner of the world are investing in outsourced and in-house identity proofing and AML screening tools to keep the fraudsters at bay. Also, the Security Risk of penalties in case of noncompliance is high so the businesses need to watch for themselves.
When it comes to fraud, the fraudster does not discriminate among the businesses of different sizes and niche, it targets the business that has a loophole for them to exploit. Small businesses are not always the weak spots, fraudsters have given a tough time to huge names like Target and Equifax. The reason why small businesses have higher risk is due to their business model and sometimes their practices and organizational protocols that are not as well defined as the big organizations have.
Why Small Businesses are at a Security Risk?
Among the many reasons that increase the risk of a small business below are the most common:
Weak Cyber Security Risk and Lack of Employee Training
Attackers do not discriminate between small and big organizations. All types of businesses are under their radar. Often the small businesses do not exercise vigilant security protocols in their system. They believe that their business is small so the risk is also small.
The use of cloud storage is a common practice. But the businesses need to pay heed to the cybercrimes evolving in cloud spaces. The businesses use these spaces because they give them an easy and free storage space, but such spaces are often very easy for cybercriminals to penetrate. The small businesses commonly leave their confidential data on such cloud spaces without exercising any extra security protocols. This leads to data breaches which further leads to penalties and loss of company value and customer value.
Small businesses often overlook the need for employee training regarding cybercrime and how to prevent it. Such training reduces the chances of loss due to cyberattacks.
Security Risk due to Weak Cybersecurity
The business might lose its business identity in case of confidential data theft. Using that identity the fraudsters can charge illegal chargebacks from clients or build relations with other businesses spoiling the credibility of the victim organization.
How to Mitigate the Risk of Cybercrime
These tools come in all price models and often customizable according to your requirements.
Businesses should encrypt their data. It will secure their data from cybercriminals. Also when using outsourced collaboration software do not share confidential data through those platforms, as they are often risky.
Investing in some sort of cybersecurity tools always becomes a useful investment of the companies and helps them to convert their investment into revenue at some time. Because if your investment in cybersecurity eliminates even a single cybercrime attempt it has proven itself to be worth it.
2. Weak third-party Security Protocols
Often the small businesses and startups are very enthusiastic to gain a lot in a small period of time. Aiming high is not bad but bad management of the milestones and goals brings in added risk for the organization.
Bill Gates referred to this problem in these words: “Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
Hence the risk arises when the businesses take quick decisions in onboarding employees, customers and merchants/vendors.
As a result, small businesses end up building B2B relations with fake businesses that do not last long.
What Risk Fake Third-Parties brings in?
Fake customers pose financial loss risk to the businesses. Credit card fraud is a common fraud with businesses of all sizes. Fake vendors use small businesses to carry out their criminal intentions, like money laundering and terrorist funding. Once a business is found in connection with a money launderer or fake organization the regulatory authorities do not hesitate to impose fines or reduce the credit rating of those businesses.
Way to Reduce third party Risks?
Run complete identity proofing on third parties affiliated with your company. Also, do not initiate B2B relations with companies that are new and only have an online presence. Proper documentation is also important, it reduces the risk of fraud.
Weak Security Protocols inside the Company
In small businesses, it is a common practice that confidential information is accessible to all employees. The employees are often the source of fraud, and open data access to all employees is risky. According to a global PWC survey, 49% of organizations have been the victim of fraud and economic crime, and 52% of those crimes were facilitated by the employees.
Small businesses often oversee the need for in-house security protocols. Complete identity proofing of employees should be done before onboarding them. Also, employees should not be given access to confidential information. Another loophole in in-house security protocols is letting the employees bring their own devices to the workplace.
Read Also 4 Ways Certified QuickBooks Proadvisor Help Your Small Business
Risks that comes with weak security protocols inside the company
In case a company does not exercise due diligence on its employees it will reduce the risk of onboarding criminals. Often the companies ask the people about their criminal records but it is not enough because faking an identity is not difficult these days.
Also giving open data access to all employees brings in the risk of fraud and data breaches, which might prove to be the killing blow for the business.
How to mitigate the risk coming from employees?
The best practice is to exercise due diligence on the employees and to manage the data in a way to give confidential data access to only a few people and not to everyone.
To wrap up, the small businesses often have huge growth potential but they should not overlook the need for security protocols. Investing in security and compliance tools often seems a little bit unnecessary but they are the foundation pillars of every business. If small businesses want to rise as empires in the future. They need to make their foundations strong enough to overcome any potential risks in the future.
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