While the cyber-attacks on high-street big brands have underlined the serious risks posed by cyber-criminals, it is SMEs that remain the most vulnerable to this potentially devasting disruption. With pressure on cashflow, how can firms afford to invest in better protection?

Unsurprisingly, the recent cyber-attacks on Marks & Spencer and Co-op, as well as Harrods, have made the headlines. M&S was worst hit, having to shut down its online sales operations at an estimated cost of £3.8 million a day, while both Co-op and Harrods were forced to close some of their IT systems. All three were large-scale, costly attacks.

However, despite the size of these attacks on three retail/grocery institutions, it is small businesses that face the greater danger, with weak cyber-security systems and a lack of investment in strengthening frameworks causing significant vulnerability.

What is the risk of cyber-attacks to SMEs and how much is it costing?

SMEs are an easier target for cyber-criminals and the damage that attacks cause can be a lot more harmful. These firms don’t have the same resources to respond and recover from attacks that take down trading operations. The costs can be overwhelming for small businesses.

According to new data from Orange Cyberdefense, cyber-attacks on SMEs have increased by 53%, with the surge in the use AI contributing to the rapid rise in activity. These findings follows a Vodafone study that revealed that SMEs have been the hardest hit by cyber-attacks, with the average cost of an attack at over £5,000 for firms with 50 staff or more.

With regard to the reasons for this vulnerability, the research from Orange and Cyberdefense and Vodafone paints a similar picture. A lack of awareness is a critical factor, with only 21% of SME chief executives aware of their cyber-risks according to the former, while the study from the latter found that over a third of smaller businesses spend very little on cyber-security and cyber-training.

Spending on cyber-security and how alternative finance can help

What is causing the reluctance of some SMEs to invest more in cyber-security, in particular as the scale of the risk related to cyber-attacks has grown? Cost is major factor behind the low levels of awareness and lack of spending.

This state of affairs is hardly surprising given the pressure on SME cashflow, with firms battling prolonged austerity and severe market headwinds. Accessing the money to facilitate investment has rarely been so challenging. This is where alternative finance can help.

Small business lending from traditional sources remains subdued in Q2, with 65% more SMEs experiencing difficulty in accessing finance from high-street banks. As a result, alternative lenders have become increasingly embedded in the small business finance landscape.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate. These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

Notably, the Growth Guarantee Scheme is providing a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.

SME finance options for increasing investment in cyber-security

For all the attention that the cyber-attacks on M&S, Co-op and Harrods have generated, the risks related to this type of disruption remain greater for SMEs, not least because investment in protection remains comparatively low.

While it is understandable that firms are proving cautious with regard to investment, it is imperative that they find a way – cyber-attacks have the potential to cause catastrophic damage. This is why, against a backdrop of continued caution from traditional lenders toward small business lending, it is vital that key-decision makers are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.