Why Data Security is Crucial for Your Business: A Comprehensive Guide

Being a business owner comes with many responsibilities. You have to manage employees and keep them happy and ensure that clients are satisfied with your services and products, all while keeping the operation profitable.

Another significant challenge that emerged in recent years with the rapid digitalization of business processes is the need for robust data security. Most sensitive business data is now stored digitally, making it vulnerable to all sorts of threats, from hacking and phishing to ransomware attacks and insider threats.

In this article, we’ll provide business owners and entrepreneurs with actionable steps for securing their digital data to ensure the security and integrity of their businesses.

The importance of data security for small-to-medium businesses (SMBs)

A lot of small business owners are under the impression that cybersecurity is only a concern for large enterprises. After all, these organizations have vast amounts of sensitive data and financial resources, making them a more attractive target for cybercriminals. But even though most of the cyberattacks that get mainstream media coverage involve global organizations, small and medium-sized businesses (SMBs) actually face a disproportionate risk of cyberattacks.

Many SMBs lack the comprehensive security infrastructure of larger corporations, making them easier targets for cybercriminals. Furthermore, a successful attack can be particularly devastating for smaller businesses, potentially leading to severe financial hardships or even forcing them to shut down.

If we look at statistics, about 73% of SMBs experienced a cyberattack, data breach, or both over the past year, marking the highest levels in recent years.

From 2020 to 2022, there was a 150% rise in the number of cyber attacks targeting small and SMBs, with the daily global attack count reaching 31,000. The numbers talk for themselves – any new business needs to maintain a good cybersecurity posture as soon as it’s launched.

Potential consequences of a data breach

Knowing the likelihood of a cyber incident underscores the necessity for strong cybersecurity measures. But, as most business owners think in terms of risk-benefit analysis, let’s look at the implications and consequences a cyber attack could have on your business:

Financial costs. The most immediate and noticeable effect of a cyber attack is financial. In 2023, the average cost of a data breach in the United States was 9.48 million. While the number may not be as high for a small business, even a comparatively small amount can be devastating for a small business operating on a tight budget.
Reputational damage. If a cyber breach exposes sensitive customer information, the consequences extend beyond financial losses. Though not impossible, it isn’t always that easy to remove negative information form the internet. Customers will lose trust in your business, which may spread through word of mouth and even quicker on social media. As the saying goes, it’s much easier to build trust than to rebuild it, so doing everything you can to prevent a cyber incident should be a top priority.
Operational disruption. A cyber attack can cripple your business operations. Whether it’s a ransomware attack that locks out critical data or a more subtle intrusion that corrupts data integrity, the result can be the same: significant downtime. The time and effort required to restore systems to normal operation can lead to lost productivity, unmet customer commitments, and delayed business processes.

Additionally, there has been a recent increase in regulations regarding customer data protection. The EU pioneered these regulations with its General Data Protection Regulation (GDPR). This framework emphasizes transparency, security, and accountability for organizations handling the data of EU citizens. Many U.S. states have adopted similar regulations, such as the California Consumer Privacy Act (CCPA) and the Virginia Consumer Data Protection Act (VCDPA).

Cybersecurity measures to protect your SMB

Considering the significant consequences of cybersecurity incidents, SMBs must deploy proactive measures to secure their systems and data. Here are some cybersecurity measures that will get your business started on the right foot:

Data encryption. Data encryption is the digital form of cryptography. In simple terms, encryption scrambles data to make it unreadable to unauthorized users. Data should be encrypted both in transit and at rest, to ensure it remains secure from interception or access. Encrypting your entire data can be time-consuming and costly, so most businesses only encrypt their more sensitive data like customer details, passwords, financial records, etc.
Strict access controls. Another way to prevent unauthorized access to systems and data is by implementing strict access controls. A necessary concept to grasp regarding access control is the principle of least privilege. This is a security approach where users are given the minimum necessary level of access to perform their job duties. Access control is typically enforced with authentication methods like passwords and tokens and via account management processes that assign user rights.
Threat detection. One of the key elements of a cyber resilient business is its ability to quickly identify and react to a potential threat. Timing is everything in cybersecuirty, so some threat detection capability is necessary to swiftly mitigate risks and prevent them from escalating. Threat detection includes monitoring systems and networks for unusual traffic. This is typically done with intrusion detection and prevention systems (IDS/IPS) or a security information and event management system (SIEM).

Digital tools to protect your business (VPN and password manager)

While digitalization has opened the door for a variety of cyber risks, it also provides businesses with a wealth of tools and technologies designed to enhance security.

Two that immediately come to mind are a VPN (Virtual Private Network) and a password manager.

VPNs have become very popular in recent years, with everyone from individuals to large corporations using them to enhance security and privacy. Two of the main benefits a VPN provides businesses are:

Enhanced security as your internet connection is encrypted, protecting your data from hackers, especially when using public Wi-Fi networks.
By masking your IP address, VPNs ensure your online actions are virtually untraceable. Most large organizations use a VPN with dedicated IP to ensure that remote access to their networks is secure and controlled.

On the other hand, a password manager is a tool that helps users create, manage, and store passwords. So, instead of needing to remember numerous complex passwords, users can keep them all in one encrypted and protected location.

Based on a report from 2022, there were 24 billion username and password combinations available for sale on the dark web. That’s four accounts for every internet user on the planet. A huge reason why this number is so high is that people use weak passwords that are easy to guess or crack with a hacking tool.

If you let your employees choose their own passwords, they likely won’t use robust passwords at all or remember a single complex password and reuse it across multiple platforms. A password manager fixes this issue by making it easy for users to handle multiple unique and complex passwords.

Best practices for a comprehensive data security strategy

Now that you’re familiar with some of the main cybersecurity concepts, let’s go through some steps you can take to incorporate a comprehensive data security strategy for your business.

1. Identify and classify data

Most modern businesses, regardless of size, store several terabytes of data. Ideally, none of it would end up in the hands of malicious actors or exposed to the public. However, for practicality’s sake, it’s necessary to prioritize the the protection of certain types of data over others. So, the first step in developing an effective data security strategy is to perform data classification.

This involves identifying all data your business stores and collects, and classifying it according to its sensitivity and potential impact of its disclosure. High-risk data like personal identifiable information (PII), financial details, and trade secrets, should be classified at a higher level of sensitivity, which dictates stronger security controls.

2. Develop and enforce security policies

Speaking about data security in meetings is one thing, but putting it into paper and making it a requirement is what will solidify its importance in the minds of employees. Security policies must be clear, achievable, and accessible to everyone in the organization. Popular security policies include guidelines for handling sensitive data, using company devices, accessing the network, and responding to security incidents.

3. Educate and train employees

One of the best ways to make sure security policies are followed is to make your employees understand why they matter in the first place. This is done through regular education and training, also known as security awareness training (SAT).

Human error is one of the main causes of security incidents. Learning about the latest threats and how to prevent them will empower the workforce to act as the first line of defense for your business.

Regular training sessions can help reinforce the importance of data security and provide practical tips on how employees can apply security policies in their daily work. Security awareness training is relatively inexpensive, especially considering the long-term value it provides.

4. Regularly update and patch systems

Aside from human error, another method hackers use to breach organizations is to exploit outdated software and systems. Regular updates and patches are critical because they often include fixes for these security vulnerabilities.

Failing to apply updates can leave your company exposed to cyber-attacks that could otherwise have been prevented. Establish a routine for checking and applying software updates and patches. You could also use automated patch management tools to streamline the process.

Final thoughts

With most business functions becoming digitalized, businesses are under a constant threat of cyber attacks. Small business owners and leaders must take it upon themselves to ensure their businesses are in line with best practices regarding security and data protection.

This includes encrypting sensitive data and implementing strict access control to systems. Not taking proactive measures to safeguard data will expose the business to unnecessary risk and scrutiny from increasing data privacy regulations.

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Author: Catherine Weitzman