Middle-Market Companies Underestimate Data Security Threats

The MMLC surveyed 700 U.S. executives in the first quarters of 2015 and 2016 to provide year-over-year comparisons on questions revolving around security. The goal was to learn how firms are evolving in their perception and handling of threats to sensitive company and customer information.

While the number of firms reporting data breaches doubled from 5% to 10% in the past year, 61% said they feel an incident is “somewhat unlikely” or “very unlikely” to happen at their company. “Many middle-market organizations feel they are too small to suffer a breach, but in today’s environment, all information has value,” said Damion Geopfert, RSM Leader for Security and Privacy Services.

Middle-market firms are certainly at risk. Companies with revenues between $50 million and $1 billion accounted for nearly half of all cyber claims, according to the NetDiligence/McGladrey 2015 Annual Cyber Claims study. The median claim per company was nearly $77,000.

“Many middle-market organizations feel they are too small to suffer a breach, but in today’s environment, all information has value.”

Debra Innocenti, partner with the Strasburger & Price law firm in Dallas, Texas, told the Dallas Business Journal that many middle-market companies think they don’t have valuable data. She said companies are especially at risk when they are vendors for larger organizations. Those vendors need to accept responsibility for due diligence to prevent breaches and view data security measures not as cost centers but as efforts that can save money and boost opportunities. Due to rising risks, larger organizations are now taking a closer look at data security efforts of the middle-market companies they do business with.

“If they are a vendor for a large company, like (recently breached) Home Depot or Target, they are a target,” she said. “These larger businesses are learning that they need to police their own vendors so they don’t subject themselves to risk.”

The MMLC survey showed that companies are responding to the threats in a number of ways. Between the first quarter of 2015 and the first quarter of 2016, most mid-marketers increased their security initiatives. Fifty-six percent said they had updated security protocols and nearly half said they had purchased new or upgraded software. The biggest changes were that 23% added security staff compared to only 8% the year before. Many companies had also updated privacy policies.


Craig Guillot

Craig Guillot is a business writer based in New Orleans, La. His work has appeared in Wall Street Journal, Entrepreneur, CNNMoney.com and CNBC.com. You can read more about his work at www.craigdguillot.com.

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