Is cyber risk just a big business concern — or a big threat to small firms too?

Cyber threats are no longer just a big business problem. Small and medium-sized enterprises (SMEs) are increasingly in the crosshairs of cyber criminals and the risks are growing more complex by the day.

Vulnerable connections

One of the most significant shifts in the cyber threat landscape is the rise of third-party risk. Many SMEs depend on external IT providers, software vendors, and service partners to keep their operations running smoothly. But when one of those providers is compromised, the consequences can cascade across interconnected supply chains, pulling your business into the fallout. Recent cyber incidents involving school software platforms and auto dealership systems have shown how a single breach can disrupt hundreds of businesses simultaneously, underscoring the urgent need for robust vendor risk management.

Random ransomware  

When it comes to ransomware, there’s no clear pattern or method of approach, with attacks becoming more unpredictable, and AI helping to make cyber criminals’ attacks more effective and efficient.  

Despite this, many companies still believe they’re ready. Our research shows 80% of  executives of SMEs based in Canada feel confident in their cyber preparedness, up from 64% in 2024. But our claims data tells a different story. The most common cause of claims? Phishing attacks, where an employee inadvertently clicks on a malicious link. It’s a simple mistake, but one that can have serious consequences. 

Vital support

SMEs often lack the internal resources to manage cyber incidents, making comprehensive risk management support essential. Without expert support, a cyber incident can be devastating, potentially leading to bankruptcy for cash strapped businesses and overwhelmed management teams.  

In Canada, 27% of executives are planning to explore insurance options this year that include risk and crisis management services, a clear signal that cyber protection is evolving. These enhanced policies go beyond covering first- and third-party financial losses; they help address the full spectrum of cyber risk. To build a resilient cybersecurity ecosystem, cyber insurance should offer SMEs access to expert incident response teams and cybersecurity specialists. This support helps businesses stay ahead of emerging threats, prepare effectively, and, if an incident occurs, minimise disruption and recover swiftly.

Complex regulatory web

Another challenge SMEs face is navigating regulatory differences across regions. Even SMEs with a relatively local footprint may handle data that is subject to differing international regulatory requirements – as companies serving customers in the US, UK, the EU and Asia will face a patchwork of rules from each jurisdiction. And keeping abreast of the latest regulations can be hard. Making managing international, cross-border cyber security difficult without expert help, and risky, as costly fines are likely for firms not compliant with local regulations.

Preparation is paramount

Strong cybersecurity and risk management can deter many threats, especially since most cyber criminals seek the path of least resistance. But recent headlines have made one thing clear: no business is impenetrable. Companies of all sizes must shift their mindset from reactive panic to proactive preparation. A well-rehearsed business continuity plan, paired with cyber insurance that includes access to incident response teams and cybersecurity experts, is now essential in today’s digital and interconnected world.

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