Data breaches cost SMEs more than money
The cost of data protection hacking hits SMEs hard, even when there is no obvious financial loss.
Moore Blatch, the law firm specialising in data protection and cyber security, has released a research report that shows 76% of companies are concerned about cyber-security, and 17% have recently experienced a cyber attack.
The report found a data breach could be far worse financially for SMEs, due to the often more personal relationship that they have with their customers and the less utility-based products and services they provide, compared to larger businesses.
While hackers are most interested in financial information, this isn’t the only way a SME could be impacted by a data breach, Moore Blatch says.
In fact, emotional distress caused by a breach is becoming more of a consideration when it comes to legislation, even when no financial loss has been suffered.
For instance, whilst a gas company may hold the same financial details as an SME, the loss of the product details, e.g. that you are a gas user, is unlikely to cause distress.
An insurance broker, on the other hand, might lose details of your classic car or fine art collection with the same principle applying across many business types, Moore Blatch says.
Financial loss because of reputational damage, and loss of trust are also likely to hit SMEs harder as, for many, this is one of their key trading propositions, the lawyers say.
Paul Whitaker, Moore Blatch partner and head of dispute resolution, says, “The most commonly discussed financial cost relating to a cyber-attack and loss of data is the potential fine from the Information Office Commissioner.
“But, while this should not be ignored, the real financial issues for many SMEs lie elsewhere, as the loss of the client’s relationship and details about products and services lost could cause far greater emotional stress.
“Therefore, if an SME is hacked or loses client data, the claim for emotional distress could be far higher.”