Small businesses fail to take heed of technology risks

UK small and medium-sized enterprises (SMEs) are underestimating the security risks that come with increasing use of new technology, finds research.

Many don’t see the scale of potential risks, despite regular news of online reputational damage, data loss and information security breaches, with just 6 per cent of SMEs seeing new technology trends as having a negative impact, according to a study carried out by the Economist Intelligence Unit.

Nearly three quarters (73 per cent) of small businesses say they are investing effort in assessing trends in technology and the impact they have on their business – slightly behind the 80 per cent level for larger enterprises (50-250 employees).

While emerging technologies are evolving rapidly, both lowering cost barriers and increasing efficiency and competitiveness, just 20 per cent see the risks associated with emergent trends such as cloud computing, internet-based services, social media and mobile workforces as a ‘major threat’.

Up to 1.2 million of the UK’s 4.8 million SMEs do not recognise data loss, cyber-attack or electronic theft or fraud as either a major or of some threat to them. ‘Human error’ is likely to be the largest management challenge as skills training and robust policies are not front of mind for smaller businesses.

Less than half of UK SMEs (46 per cent) have given their staff data security training and only 28 per cent of the country’s smaller firms review their data security policies and processes. The UK government recently reported that 87 per cent of SMEs have had a cyber-breach in the last year.

Richard Coleman, director of SME at Zurich says that technology is a great enabler for small businesses, helping them to reduce cost burdens and overheads, improve efficiency and grow rapidly. 

‘But these benefits do not come without risks, and when you’re a small business operating in an uncertain economic environment, the consequences of these risks can be devastating if not prepared for and met with robust action,’ he adds.

‘At a time of hyper connectivity, where businesses rely on cloud services, mobile solutions and social media to operate and manage their internal and external communications, it’s worrying to see so many small businesses not prepared for the threats that can come from these technologies.’

See also: Unsafe data security practices still common in the workplace

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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