Three Pillars Of Digital Risk Management For SMEs

In the age of Big Data and digitalization, no business can escape exposure to at least some form of digital risk. Even when it’s indirect, such as through vulnerabilities in supply chains or third-party vendors, businesses that suffer cybersecurity incidents face repercussions that range from negative financial outcomes to reputation damage. In the case of SMEs, the consequences can be especially severe, as statistical data indicates that 60% of those suffering a cybersecurity incident are out of business within six months.

That new reality makes digital risk management a business imperative that no company can afford to ignore. The problem is that the threat landscape is so large and diverse that it can be difficult for small businesses to know what threats to guard against and how to make sure they’re as protected as possible. Crafting a comprehensive digital risk strategy doesn’t need to be complex, however. All that’s needed is the right attention in three key areas to create a solid foundation, supportive processes, and protection from unforeseen events. Here’s where SMEs should focus their attention.

Putting security front and center

The core of any comprehensive digital risk strategy must be a thorough review of all customer-facing digital systems and back-end technologies to look for existing vulnerabilities. That means going through every software and hardware component to make sure that no security updates or patches are missing, as well as assessing all systems to remove software that contains known vulnerabilities or that has reached end-of-life status. Once that’s done, the next step is to invest in a commercial firewall and an up-to-date endpoint security solution.

After addressing any known vulnerabilities in existing systems and upgrading defensive measures, the next step is to engage the services of a penetration testing firm. Penetration testing, or ethical hacking, as it is also known, is a way of putting systems to the test in a real-world situation to root out any remaining operational vulnerabilities. If all systems survive the test without getting compromised, that means that the business has a solid foundation that eliminates all but unforeseeable digital risks.

Creating supporting business processes and policies

The next step in creating a digital risk strategy is to recognize that cybersecurity isn’t a set-it-and-forget-it task. Having a solid foundation will soon become meaningless if business processes aren’t tailored to maintain operational security. In practice, this means creating and executing sound policies with regard to customer data retention and handling. It’s a good idea to make sure that those policies are in line with the European Union’s GDPR, even for businesses that aren’t legally subject to it. That will make future compliance easier if it becomes necessary, as tech industry leaders are already pushing for similar regulations in the U.S. Periodic audits should also become the norm to make sure that all employees follow proper procedures with regard to data handling and systems access.

Planning for the unforeseen

The third and final key to a sound SME digital risk management strategy is to have a plan in place to handle any cybersecurity incidents when they do arise. That’s in recognition of the fact that no defense will ever be perfect, and threats evolve so quickly that becoming a victim is always possible. To militate against a worst-case scenario, it’s critical to maintain operational backups of all critical business data and create a response plan to deal with any potential breach. The plan should include how to notify affected customers, who will be responsible for recovery (either internally or via an outside vendor), and the steps to follow to ensure business continuity while the incident is addressed. These days, it’s even possible to carry cyber and data insurance to offset losses in the event there’s a problem. This part of a business’s digital risk management strategy can mean the difference between surviving a cybersecurity incident and becoming yet another unfortunate casualty, so care is in order here.

Execution is critical

As the old saying goes, the best-laid plans of mice and men often go awry, so ultimately, digital risk management comes down to execution. SMEs that focus their efforts on the three areas set forth here will end up with a roadmap that addresses the major areas of concern, from defending against the risks to recovery when all else fails. Following that roadmap is the only way to turn a good plan into an effective effort, though, so it’s vital to enforce compliance at all levels of the business. As long as the execution is given its due attention, any SME should find itself in good shape with regard to digital risk and stands a good chance of protecting itself from the worst eventualities.