Prepare Your Small Business Against Cyberattacks

Preparing a small business against cyberattacks involves understanding the threats most likely to target its operations, taking practical steps to reduce exposure and having a plan for recovery if an incident occurs. Small businesses face risks such as phishing, ransomware, business email compromise and data breaches. Because many operate without dedicated IT support, they are often targeted by attackers. This guide explains why small businesses are at risk, how common attacks work and the steps that can help protect operations and data.

For many small business owners, the challenge isn’t awareness – it’s knowing how these cyber risks apply to their specific operations and what steps to take to reduce them. This guide explains common threats, why small businesses are often targeted and how a small business owner can help protect their business with practical, manageable actions.

The impact of cyberattacks on small businesses

A cyberattack rarely affects just one part of a business. The consequences tend to compound, generating costs from multiple directions at once. While the specific consequences vary, most incidents create challenges that can be difficult to manage without preparation.

Financial loss can occur quickly and from multiple sources. 
Businesses may face direct costs such as fraudulent payments, ransom demands or expenses related to investigating and resolving an incident. There may also be indirect costs, including lost revenue from downtime, recovery expenses and potential legal or regulatory obligations.

Operational disruption can interrupt critical business activities. 
A cyberattack may limit access to systems, delay transactions or disrupt communication with customers and vendors. Even a short disruption can create backlogs, missed deadlines and added strain on a small team.

Data exposure can create complex and time-consuming responsibilities. 
If sensitive information – such as customer data, employee records or payment details – is accessed without authorization, businesses may need to notify affected individuals, respond to inquiries and take steps to prevent further misuse.

Reputational impact can affect customer trust and future growth. 
Customers, partners and vendors expect businesses to protect their information. A cyber incident may influence how their business is perceived and can impact retention and new opportunities.

Repeat attacks exploit unaddressed vulnerabilities. 
According to the Travelers Cyber Risk Index, cyberattacks are a leading business concern, and 60% of businesses that report an attack say they have been victimized more than once.  Without changes to systems, processes or employee awareness, the same weaknesses may be exploited more than once.

Why small businesses are targeted – and how cyberattacks work

Small businesses are often targeted by cybercriminals for a few key reasons:

• Fewer security resources - Many businesses lack dedicated IT support or advanced protections. 
• Common vulnerabilities - Outdated software, weak passwords and delayed updates are easy to exploit.
• Valuable data - Small businesses store customer, payment and operational information.

Types of cyberattacks on small businesses

Cyberattacks can take many forms, but most fall into a few common categories. Understanding these threats can help small business owners recognize potential risks and take preventive action.

Phishing and social engineering attacks

These attacks trick employees into sharing sensitive information or granting access.
Phishing uses fraudulent emails, messages or websites that appear to come from trusted sources, making them difficult to identify without proper awareness.

Social engineering expands on this approach by using tactics such as phone calls, text messages or impersonation to manipulate individuals into providing information or access.

Ransomware and malware threats

These threats use malicious software to disrupt systems, steal data or block access to business operations.
Ransomware is a type of malware that locks or encrypts data until a payment is made. Malware more broadly includes software designed to damage systems or gain unauthorized access.

These attacks are often delivered through phishing emails, compromised websites or unsecured networks and can quickly disrupt business operations.

Business email compromise (BEC)

These attacks use compromised or impersonated email accounts to request payments or sensitive information.
Business email compromise occurs when attackers gain access to – or impersonate – a legitimate business email account to request payments or sensitive information. For example, an attacker may pose as a vendor or company executive and ask an employee to transfer funds or update payment details.

Because these requests often appear legitimate, they can be difficult to detect and may result in significant financial loss.

Data breaches and unauthorized access

These incidents involve sensitive information being accessed, exposed or stolen without permission.
Data breaches can result from weak passwords, unpatched systems or stolen credentials that allow attackers to enter business systems.

They can lead to financial loss, regulatory obligations and reputational damage, especially when customer or employee data is involved

Steps to help protect and reduce cyber risk

Small businesses can help protect against cyberattacks by strengthening passwords and access controls, keeping systems updated, securing networks and data, training employees and following cybersecurity best practices. 

Strong password and access management practices 

Strong access controls can help prevent unauthorized entry into business systems.

• Use strong, unique passwords for all business accounts.
• Enable multifactor authentication (MFA) whenever possible, especially on all privileged and administrator level accounts.  
• Limit access to sensitive systems based on employee roles.
• Require secure password storage, such as password managers.
• Establish a password strength policy review process.
• Perform recurring access reviews to ensure timely revocation of excessive account access. 

Regular software updates and system monitoring

Keeping systems up to date can reduce vulnerabilities that attackers often exploit.

• Regularly update operating systems, applications and security software.
• Enable automatic updates when available.
• Monitor systems for unusual activity or unauthorized access.
• Consider endpoint detection and response (EDR) tools, which monitor devices for suspicious activity and can alert to threats before they spread.

Secure networks devices and back up business data

Protecting business infrastructure and backing up data can help limit disruption from cyber incidents.

• Secure Wi-Fi networks with strong passwords and encryption.
• Use firewalls and antivirus or anti-malware protection.
• Regularly back up critical business data and store backups securely.
• Test backups to confirm that data can be restored if needed.
• Enable and enforce MFA for access to business applications processing sensitive data.

Employee cybersecurity training and awareness

Employees play a key role in preventing cyberattacks. Many attacks, especially phishing and social engineering, rely on human error rather than technical vulnerabilities. About 27% of businesses report that employee unsafe practices have put their information or systems at risk.³

• Train employees to recognize suspicious emails, links and requests.
• Require  verification of payment or information requests.
• Establish clear reporting procedures for potential threats.
• Provide ongoing training as cyber threats evolve.
• Establish and enforce an acceptable use policy for endpoints and other company-provided technology resources.

Government cybersecurity resources for small businesses

Government and industry resources can provide guidance to help strengthen cybersecurity practices.

Cyber insurance options for small businesses

Small businesses can get started with cyber protection by combining preventive measures with cyber insurance to help manage financial and operational risks. While steps like strengthening passwords, updating systems and training employees can reduce exposure, they may not fully prevent a cyberattack.

Cyber insurance can help support recovery and reduce financial impact after an incident. Depending on the coverage, policies may help with costs related to data breaches, ransomware attacks, business interruption and recovery efforts.

Small businesses typically choose cyber coverage either as part of a business owner’s policy (BOP) or as a stand-alone policy, depending on their operations and risk profile. 

Talk with a local independent agent to learn more about cyber insurance options for small businesses.

Source:
^1,2,3 Travelers Cyber Risk Index 2025