This is something that I’ve alluded to in the past, in other articles and blogs. What is the likelihood of an SME suffering and Scam as opposed to a more technical hack. There is a lot of evidence to suggest that, for most SMEs, the probability of suffering a scam/social engineering attack is significantly higher than experiencing a sophisticated technical hacking attack.
A useful rule of thumb from cyber insurance claims, law enforcement reporting, and incident response firms is:
70–90% of financially damaging incidents affecting SMEs involve people being manipulated (phishing, invoice fraud, CEO fraud, business email compromise, fake suppliers, fake tech support, payment diversion, etc.).
10–30% involve primarily technical exploitation (ransomware through unpatched systems, web application attacks, malware exploiting vulnerabilities, credential stuffing, etc.).
But you can argue that ransomware is often a hybrid of the two, starting often with phishing for credentials, obtaining a login, and then inserting malware.
The exact percentages vary by industry and geography, but the pattern is remarkably consistent.
Why scams are more common
Humans are easier to compromise than systems
A criminal can send 10,000 phishing emails in minutes at almost no cost.
Convincing one employee to:
Click a link
Approve a payment
Share credentials
Change bank account details
is often easier than discovering and exploiting a software vulnerability.
SMEs usually have weaker business processes than technology
Many SMEs now use cloud services from companies like Microsoft, Google Workspace, and Amazon Web Services, which has improved their security.
However, they often lack:
Payment verification procedures
Supplier validation processes
Security awareness training
Segregation of financial duties
Generally inadequate security policies
Criminals exploit these business-process weaknesses.
Criminals follow the money
A fake invoice scam may generate £20,000–£100,000 with little technical effort, whereas a sophisticated network intrusion might require:
Research
Malware development
Vulnerability exploitation
Persistence mechanisms
From an attacker’s perspective, scams often provide a better return on investment.
Business Email Compromise (BEC) is extremely effective
One of the largest causes of SME losses is BEC:
Attacker gains access to an email account (often through phishing)
Watches conversations
Sends realistic payment instructions
Diverts funds
Technically, the breach may be simple, but the financial loss comes from deception rather than hacking.
Why technical attacks still matter
Technical attacks tend to receive more media attention because they can be highly disruptive.
Some examples are:
Ransomware
Server compromise
Website defacement
Data theft
Supply-chain attacks
Although less frequent than scams, a successful technical attack can have larger operational consequences:
Business downtime
Regulatory penalties
Customer notification costs
Recovery expenses
What an SME should prioritise
Most, if not all SMEs, will have a limited security budget, and therefore they need to identify the highest-return controls to mitigate their risk. These can include:
Multi-factor authentication (MFA) on all email and cloud accounts.
Staff training on phishing and payment fraud.
Verification procedures for bank account changes and large payments.
Strong backups and ransomware recovery testing.
Endpoint protection and automatic patching.
Monitoring for suspicious login activity.
These measures reduce both scam risk and many technical attack paths. It’s aways worth remembering that scammers and hacker alike will take the path of least resistance. The more difficult you make it for them, the more likely they are to look elsewhere.
A practical estimate
For a typical 20–250 person SME and for illustrative purposes, the distribution of financially damaging incidents based on common industry observations is 80 to 20 in favour of scams.
This is not a universal statistic, but it reflects what many cyber insurers, incident responders, and fraud investigators observe in practice, that is that SMEs are generally more likely to lose money because someone was tricked than because a hacker defeated sophisticated technical defences. The most damaging incidents often combine both, such as a phishing email that steals credentials and then enables fraud or ransomware.
I think these days, pretty much everyone is aware of the UK government-backed Cyber Essentials scheme and those who have undertaken certification or are considering it, will, in the last 12 months, have been subject to the introduction of the “Willow” question set (v3.2), which became the standard for certifications from 28 April 2025. It didn’t fundamentally change the five Cyber Essentials controls, but it did make several requirements more explicit and raised expectations around asset management, authentication, remote working, and vulnerability remediation.
For most organisations, the Willow update was not a complete overhaul. The real shift is that Cyber Essentials is becoming:
More focused on asset visibility
More aligned with modern cloud environments
More accepting of passwordless security
More rigorous about vulnerability management
More realistic about hybrid and remote working
If your organisation already has mature inventory management, MFA, vulnerability remediation, and cloud governance processes, the changes are relatively straightforward. If not, these areas are where most compliance effort will now be concentrated.
Key implications for organisations
Asset management is now much harder to ignore
A significant practical change was a stronger emphasis on maintaining a complete inventory of:
Devices
Software
Cloud services
Network equipment
BYOD assets used for work
Organisations now need a much better visibility of what is connected to their environment. For many SMEs, this means formalising asset registers rather than relying on informal spreadsheets or staff knowledge.
The Implication being that certification becomes more difficult if you cannot prove what systems are in scope. This may mean investing in discovery and asset-management processes.
Firmware is now explicitly in scope
The definition of software has been expanded to include firmware on devices such as:
Firewalls
Routers
Network appliances
Previously, some organisations focused almost entirely on operating systems and applications. Now, neglected network-device firmware can become a compliance issue. The implication being that patch management programmes need to include infrastructure devices, not just laptops and servers.
“Patches” became broader “vulnerability fixes”
Cyber Essentials no longer focuses only on installing vendor patches.
The new language recognises that vulnerabilities may be fixed through:
Configuration changes
Registry edits
Vendor scripts
Other remediation methods
The expectation is that vulnerabilities rated CVSS 7.0+ are addressed regardless of how the vendor delivers the fix. Again, there is an implication that organisations need a vulnerability-management mindset rather than a simple patching mindset.
Passwordless authentication is now recognised
The Willow update formally acknowledges modern authentication methods such as:
Passkeys
Biometrics
Security keys
Authenticator push notifications
These can satisfy MFA requirements where implemented correctly.
This is good news for organisations moving away from passwords. It aligns Cyber Essentials more closely with modern identity-security strategies and NCSC guidance on passkeys. Frustratingly though, I worked with a client recently to obtain CE and the assessor didn’t know what a passphrase was and it had to be explained to him.
Remote working is treated more broadly
The terminology changed from “home working” to “home and remote working.”
That sounds minor, but it reflects a wider scope including:
Hotels
Cafés
Shared workspaces
Other untrusted networks
I’ve blogged about this quite a bit and security controls need to work wherever employees connect from, not just from a home office. Does a VPN suffice, maybe but maybe not.
Greater scrutiny of Bring Your Own Device (BYOD)
Now organisations are expected to have:
Clear BYOD policies
Device security controls
User responsibilities documented
Appropriate protection such as encryption and screen locking
Informal BYOD arrangements can be riskier from both a compliance and security perspective.
V3.3 (“Danzell”)
As if that wasn’t enough NCSC has published v3.3 (“Danzell”) requirements effective from April 2026, which further tighten areas such as MFA and cloud-service requirements. Organisations that have only just adapted to Willow should already be reviewing the next revision to avoid another compliance scramble next renewal cycle.
What changed in the Danzell question set?
The five Cyber Essentials control areas remain the same:
Firewalls
Secure Configuration
User Access Control
Malware Protection
Security Update Management
However, Danzell asks more detailed and specific questions about how these controls are implemented and evidenced.
Key themes covered by the Danzell questions
Multi-Factor Authentication (MFA)
The questionnaire now requires organisations to identify all cloud services in use and confirm MFA is enabled where available. Missing MFA on supported cloud services can result in an automatic failure.
Typical questions include:
What cloud services are used?
Is MFA enabled for all users?
Are administrator accounts protected by MFA?
What authentication methods are used?
Cloud Service Scope
Danzell explicitly brings cloud services into scope, including:
Microsoft 365
Google Workspace
Salesforce
Slack
Zoom
Cloud storage platforms
Organisations must declare these services and demonstrate appropriate security controls.
Typical questions include:
Which cloud services store or process business data?
How are accounts managed?
How is access removed when users leave?
User Access Control
The questionnaire places greater emphasis on:
Administrative accounts
Privileged access management
Account lifecycle management
Typically questions include:
Are administrator accounts separate from standard user accounts?
How are privileged accounts controlled?
How are unused accounts identified and removed?
Industry discussions indicate auditors are applying the separate-admin-account requirement strictly.
Security Update Management
Danzell asks for clearer evidence regarding:
Operating system patching
Application patching
Firmware updates
Patch deployment timescales
Applicants need to be able to identify:
How are vulnerabilities are identified?
Are high-risk vulnerabilities patched within 14 days?
How is firmware kept up to date?
The 14-day patching requirement is now a critical assessment point.
Password and Authentication Controls
Questions now focus on:
Minimum password length
Password managers
Common-password blocking
Passwordless technologies and passkeys where used
Cyber Essentials v3.3 introduced a minimum 12-character password requirement in many scenarios.
Structure of the questionnaire
The Danzell question set generally requires organisations to provide:
Asset inventories
Cloud service inventories
User account information
Details of security policies
Evidence of patch management processes
Details of MFA deployment
Administrative account controls
Assessors may ask follow-up questions if answers are unclear or inconsistent.
What, typically, is the effect on SMEs?
This will change from company to company of course, many will already have much of this covered and some won’t. Many will require guidance and assistance in making sure that they are prepared to what is now required, and that guidance will need to focus on how they need to change to meet the requirement.
But arguably the biggest operational issue is that CE now requires Owners/CEOs/Boards to certify that they will maintain the standard through its 12-month lifecycle, and not just at the point of certification. That means monitoring their estate to maintain compliance, constantly, which in turn means having the means and resource to do it. Not easy for many SMEs and they will be worried about cost.
The obvious answer though is a managed service. SMEs often outsource their IT environment and see benefits in terms of cost and operational efficiency. The same can be said for Cyber Security and monitoring, but the mindset tends to be different. There is still the thought that their IT outsourcing company has this covered, or that cyber is a bit of black art and it will be expensive.
Let’s face it, the majority of SMEs aren’t going to try and hire cyber expertise full time, it would be expensive and unnecessary. Having a managed service spreads cost and makes it affordable. If you have a service that offers:
Continuous monitoring of endpoints, servers, and some cloud environments
Monitoring patching, including CVEs issued by vendors and comparing them against your estate
Vulnerability assessment
Rapid detection of ransomware, malware, insider threats, and advanced attacks
Expert-led response
Phishing simulations
Cyber awareness training programme
Dark web monitoring
Then you are a long way towards meeting the requirement for continuous monitoring and assessment, and if you can do this for £15-£18 per user per month, then it can be very affordable.
Cyber security is often seen as a cost centre, not a value driver. That’s not just a problem for SMEs but that attitude is still often sound at a corporate level. Within SMEs it’s not too rate to find it positioned as an insurance or compliance spend, not as something that enables trust, customer retention or business continuity. Often there is no ownership at the top, no board pressure until something goes wrong. If no one owns the risk, it stays floating below the surface.
We need to flip the mindset. Cyber security needs to feel like it’s part of the core business and should be framed as:
Protecting revenue not systems.
Protecting customers not servers.
Protecting the ability to operate.
Cyber incidents must be seen as business stopping events, not just technical inconveniences. Once that is recognised at the top, it tends to be moved into core business territory very quickly.
Measuring ROI (Return on Investment) in cyber security solutions is tricky because unlike traditional investments, the “return” often comes in the form of avoided losses, reduced risk, and improved resilience rather than direct revenue, and is often seen as proving a negative which produces a circular argument. In the blue corner we have the bean counters saying we don’t need to spend much because we’ve never been attacked, and in the red corner we have the techies telling management that you haven’t been attacked because we have spent on protections. There is often no meeting of minds until we frame it in business terms. There are well-established approaches.
Here’s how ROI in cybersecurity is typically measured:
Define the Investment (Costs)
This includes all direct and indirect costs of the cybersecurity solution:
Returns are usually risk reductions and operational gains, such as:
Avoided breach costs:
Average cost of a data breach (detection, remediation, legal fees, fines, customer churn, downtime).
Likelihood (probability) of an attack succeeding without the solution.
Operational efficiency:
Fewer false positives, reduced downtime, less staff time spent on manual tasks.
Regulatory compliance:
Avoidance of fines and penalties.
Business continuity & reputation:
Reduced likelihood of lost customers and brand damage.
Cybersecurity ROI Calculator Template
This can get quite complex very quickly, so SMEs need to take from it what they need and discard the rest. Be wary though that you understand what you need and what you don’t. The best way of doing this is to carry out a risk assessment on the assets you are trying to protect. Until you’ve done that the ROI will be almost impossible to predict.
If you need to understand the risk assessment procedure, then this short video will guide you:
Once you have a good grasp of cyber risk management and you understand the threats and what you may need to do to protect yourself from those threats, then you can use this framework in Excel, Google Sheets, or whatever you use. The formulas are structured so you can plug in your own assumptions and automatically calculate:
Now clearly you need an understanding of the threat to assess the annual probability, and you need an understanding of how long it would take you to recover from that threat becoming a reality. You may need advice or you may feel that you have sufficient information to make that calculation yourself.
Step 2 — Add Security Controls
Now estimate how much each cybersecurity investment reduces
Producing an ROI in cyber security is not easy and to do it you must pull together several different but related issues, starting with a good grasp of cyber risk management. I know that when I suggest that you should get some help and guidance, I am often accused of just trying to drum up business, and OK, maybe that has a play, but by showing the calculations and what is required to identify those calculations, what I am actually trying to do is to show you that this isn’t easy and needs thought and a bit of work to achieve a good end result, which is to give leadership a financially justifiable reason for a cyber security spend. ROI in cyber security is less about “profit” and more about quantifying avoided losses, improved efficiency, and reduced risk relative to the cost of controls.
This is another foray into cyber risk management and strategy for SMEs. I make no apologies for covering it again because it should be a vital part of any SMEs business planning. In a nutshell it’s the business process of identifying and addressing digital threats to protect operations, revenue, and reputation. Rather than just a technical IT task, it is a strategic function focused on ensuring business continuity and managing potential financial losses.
A strong cybersecurity risk management strategy for SMEs should focus on reducing the highest risks first while staying practical and affordable. Most SMEs do not need enterprise-scale security programs, they need disciplined fundamentals, clear ownership, and resilience.
Core Principles
Protect what matters most
Customer data
Financial systems
Email accounts
Intellectual property
Operational systems
Assume attacks will happen
Focus on prevention and recovery.
Design for resilience, not perfect security.
Keep it simple and repeatable
Overly complex controls fail in SMEs due to limited staff and budget.
A practical SME strategy can follow five pillars inspired by the National Institute of Standards and Technology Cybersecurity Framework:
Identify
Protect
Detect
Respond
Recover
Alternatively, for those attempting or having achieved Cyber Essentials, one of the most effective ways to secure a business is to follow the UK government’s National Cyber Security Centre (NCSC) recommendations. These five steps are designed to be cost-effective and provide protection against the majority of common cyber-attacks.
Secure your data with back-ups.
Protect with strong authentication (MFA).
Keep devices and software up to date.
Guard against malware.
Train staff on cyber awareness, phishing in particular.
But beware, the latest iteration of CE requires CEOs/MDs to sign a certification that they will ensure that the standard is maintained throughout the year and not just at point of achieving the standard. That is a game changer which requires some form of monitoring to be put in place to ensure that the standard continues to be met.
No two businesses are the same. They all have certain threats and vulnerabilities in common, and adherence to the NCSC guidelines and/or Cyber Essentials will set you on the right path, many of you will either have gone down that route or will be actively discussing it internally. But there will still be differences, perhaps only nuances, that can drive a hole through your defences, and that is why you need a risk management strategy to ensure you have built robust defences.
Identify Your Risks
The first stop is to create an Asset Inventory:
Document:
Devices
Servers
Cloud services
SaaS platforms
User accounts
Critical data
Vendors
Even a spreadsheet is enough initially.
Classify Critical Assets
Rank systems by business impact:
High: payroll, CRM, finance, production
Medium: internal collaboration
Low: public marketing systems
Identify Likely Threats
For SMEs, the biggest risks are usually:
Phishing
Business email compromise
Ransomware
Weak passwords
Insider mistakes
Third-party/vendor compromise
Unpatched software
Cloud misconfiguration
Protect the Business
Multi-Factor Authentication (MFA)
This is one of the highest-value controls and you need MFA for:
Email
VPN
Admin accounts
Cloud apps
Banking systems
Use authenticator apps or hardware keys where possible.
Strong Identity & Access Management
You need to apply:
Least privilege access
Separate admin accounts
Role-based permissions
Immediate removal of leavers
Review access at least quarterly.
Endpoint Protection
Deploy modern endpoint security on all company devices:
Antivirus/EDR
Device encryption
Automatic updates
Screen lock policies
Focus first on laptops because they are commonly targeted.
Patch Management
Set strict update timelines:
Critical vulnerabilities: 24–72 hours
High-risk patches: within 1 week
Routine updates: monthly
Automate updates whenever possible but you will still need some form of monitoring patch management to ensure that you have this under control.
Email Security
Since email is the number one attack vector:
Anti-phishing filters
DMARC, DKIM, SPF (these require DNS entries and will need to be monitored)
Attachment sandboxing if affordable
User reporting button for suspicious emails
Backup Strategy
Use the 3-2-1 rule:
3 copies of data
2 different storage types
1 offline/immutable copy – don’t rely on on-line backups, they may make restoring quicker, but they can be encrypted in a ransomware scenario, just like the rest of your systems.
Test restores regularly. Recovery in a disaster or ransomware situation depends on this.
Secure Cloud Usage
For cloud platforms like Microsoft 365 or Google Workspace:
Disable legacy authentication
Enforce MFA
Monitor sharing permissions
Limit external access
Audit administrator activity
Detect Threats Early
Centralised Logging
This is often a particularly difficult thing for SMEs because they don’t have any on staff cyber security personnel and often their IT support company doesn’t offer this service. However, it is still important to collect logs from:
Email systems
Firewalls
Endpoints
Cloud platforms
A managed service is often the way forward.
Monitoring & Alerts
This is another issue that is very hard for SMEs, for the same reasons as log collection. You need to receive alerts on:
Failed login spikes
Impossible travel logins
Admin privilege changes
Large file downloads
Suspicious mailbox rules
A managed service is often the only way to achieve this.
Vulnerability Scanning
You should aim to run monthly scans internally and externally.
Prioritise:
Internet-facing systems
Critical vulnerabilities
Unsupported software
There are a variety of scanning tools available to purchase however you need to have someone who can interpret the results, identify critical issues and eliminate false positives. Once again, a managed service maybe the answer for many SMEs.
Incident Response Plan
Every SME should have a documented response process which includes:
Who makes decisions
Who contacts customers
Legal/compliance steps
Cyber insurance contacts
IT recovery procedures
Create Playbooks For:
Ransomware
Phishing compromise
Lost/stolen device
Data breach
Vendor compromise
Run tabletop exercises twice yearly.
Recovery & Business Continuity
Define Recovery Objectives
Set:
RTO (Recovery Time Objective)
RPO (Recovery Point Objective)
Examples are below and show the amount of time the business can survive with the loss of each system, but this will be determined by business priorities:
System
Max Downtime
Max Data Loss
Email
4 hours
1 hour
Payroll
24 hours
4 hours
CRM
8 hours
2 hours
Business Continuity Planning
Prepare for:
Cloud outages
Cyberattacks
Staff unavailability
Power/network failures
Document manual fallback procedures to keep the business running whilst you recover from the crisis.⸻
Governance & Leadership
Assign Ownership
Even small companies need accountability:
Security lead
Executive sponsor
Incident coordinator
Security without ownership fails.
Establish Policies
Minimum essential policies:
Acceptable use
Password policy
Data handling
Remote work
Vendor management
Incident reporting
Keep them concise and enforceable and importantly, rolled out so that staff know where to find them and what they contain.
Human Risk Management
Most SME breaches involve human error.
Security Awareness Training
Train employees on:
Phishing
Social engineering
Password hygiene
Safe file sharing
AI/deepfake scams
Reporting suspicious activity
Short monthly sessions work better than annual training.
Phishing Simulations
Measure:
Click rates
Reporting rates
Repeat offenders
Use results for coaching, not punishment.
Third-Party & Supply Chain Risk
SMEs increasingly rely on vendors.
Vet Critical Suppliers
Review:
Security certifications
MFA usage
Breach history
Data protection controls
Prioritise vendors with access to:
Financial data
Customer data
Internal systems
Compliance Considerations
Depending on industry/location, SMEs may need alignment with:
International Organisation for Standardization ISO 27001
National Cyber Security Centre Cyber Essentials
GDPR/Data Protection Laws
PCI DSS
For UK SMEs, Cyber Essentials is an excellent baseline.
Recommended SME Security Stack
A practical modern stack often includes:
MFA platform
Endpoint detection & response (EDR)
Password manager
Secure email gateway
Cloud backup
Mobile device management (MDM)
Firewall with IDS/IPS
Security awareness platform
For those considering Cyber Essentials for the first time, or for renewal, some form of monitoring is required to ensure that that standard is maintained throughout the life cycle.
Budget Prioritisation (Highest ROI First)
For SMEs budget is always limited and must be prioritised. This is a general guide and may change dependent upon business priorities:
MFA everywhere
Backups
Endpoint protection
Email security
Patch management
Security awareness training
Logging/monitoring
Vulnerability scanning
Managed security services
Advanced zero-trust controls
In order to decide your budget, you need to work out your priorities and again, this will depend on what the company does. A suggested 12 month roadmap, for someone starting from scratch, is:
Months 1–3
Asset inventory
MFA rollout
Backup improvements
Patch automation
Security policies
Months 4–6
Endpoint protection
Vulnerability scanning
Staff awareness training
Incident response planning
Months 7–9
Logging and monitoring
Vendor risk reviews
Phishing simulations
Access reviews
Months 10–12
Tabletop exercises
Business continuity testing
External security assessment
Cyber insurance review
Metrics SMEs Should Track
I talked about measuring your security stance and your compliance. Some useful KPIs might be:
MFA adoption %
Patch compliance %
Phishing click rate
Mean time to detect/respond
Backup recovery success
Number of critical vulnerabilities
Security training completion
Common SME Mistakes
Turning now to some common mistakes. I don’t want to dwell on these too much as they are self-evident, but you should avoid:
Treating cybersecurity as only an IT problem
Buying too many disconnected tools
Ignoring backups
Giving staff admin rights
Failing to test recovery
Depending entirely on one IT provider
No incident response process
I hope that this provides some guidance but I’m fully aware that it contains issues that will appear as a bit of a ‘black art’ to some people. Get advice from cyber security professionals, don’t think that because someone knows about IT, they have the nuances of security covered, they often don’t. Remember that some cyber security solutions are procedural not technical.
Cyber Essentials has changed recently and one of the most significant changes, in my opinion is the requirement for a senior executive to formally declare that security controls are continuously assessed throughout the year. A fundamental change, not just a paperwork tweak. It shifts accountability and how organisations approach compliance.
What does this change really mean?
Accountability moves to the top
Executives (often a CEO, CFO, or board-level director) are now personally attesting that controls aren’t just “point-in-time compliant” but actively maintained. This raises the stakes, false declarations could have legal, reputational, and contractual consequences.
End of “annual checkbox” compliance
Previously, many organisations treated Cyber Essentials as a once-a-year exercise. This change pushes toward continuous assurance, more in line with standards like ISO/IEC 27001 or frameworks such as NIST Cybersecurity Framework.
Increased audit and insurance implications
Cyber insurers and regulators may view this declaration as evidence of due diligence or even negligence if something goes wrong. Expect more scrutiny if a breach occurs.
Cultural shift toward operational security
Security becomes an ongoing business process, not an IT task. It requires coordination across the company up to and including management.
How organisations can actually deliver “continuous assessment”?
This is where many companies will struggle, because the declaration implies evidence, not intention.
Continuous monitoring of key controls
Use tools that provide ongoing visibility into:
Patch management status
Vulnerability scanning
Endpoint protection health
Firewall and access control configurations
Common tooling might include:
Endpoint detection & response (EDR)
Vulnerability management platforms
Security configuration monitoring tools
Defined control testing schedule
Not everything needs real-time monitoring, but you should have:
Monthly or quarterly control checks
Automated scans (minimum of weekly vulnerability scans)
Regular access reviews (e.g., user permissions)
Centralised logging and alerting
Implement:
An MDR solution.
Alerts for control failures (e.g., antivirus disabled, patch failures)
This creates an audit trail—critical if leadership is signing a declaration.
Periodic internal reviews or external assessments that help validate that controls are actually working.
Practical example
Instead of saying:
“We apply patches”
You now need to demonstrate:
All devices report patch status daily
Alerts trigger if patches are overdue
Reports show compliance over time
Exceptions are tracked and approved
The real challenge
The hardest part isn’t technology, it’s evidence and governance.
Many SMEs certified under Cyber Essentials don’t currently have:
Centralised visibility
Documented control testing
Board-level security reporting
So, this change may force investment in:
Better tooling
Clearer processes
Stronger governance structures
Bottom line
This declaration effectively aligns Cyber Essentials with modern security expectations: continuous control validation, not annual self-assessment.
If an organisation can’t produce evidence of ongoing monitoring and review, executives are being asked to take a significant personal risk by signing.
How can an SME meet this requirement without breaking the bank?
You don’t need an enterprise SOC or a six-figure toolchain to meet these new expectations, but you do need joined-up tooling that produces continuous evidence.
The principle: “Good enough + visible + provable”
For an executive to sign the declaration, you must:
Cover all five control areas
Be centrally visible
Generate reports + alerts automatically
Require minimal manual effort
The issue for many SMEs that a system that integrates many of the issues simply hasn’t existed in a form that is financially viable, and that doesn’t require a dedicated cyber individual on staff, until now. Such a system does now exist, and I have put up a short video on the features section of my profile page on LinkedIn, the link is A short video on protective monitoring for SMEs. This should help you without having to read reams of information. You will also find a couple of articles on that particular subject.
H2 provides affordable and flexible one-off and ongoing data protection and cyber risk protection services.
Last week, we wrote about managed detection and response, and how it benefits SMEs, at a price they can afford. In that article, we did use a scenario where there was an inadvertent data breach, but the article concentrated more on how breaches can be detected, rather than prevented. This week, we want to expand on how we can detect and prevent data leaks, and if they do sneak through, there is no such thing as 100% security, then how we can encrypt your most sensitive data so that any impact of a data breach is minimised.
Company profile
A small but growing haulage and cold store company that offers haulage of fresh produce from the grower to a cold store, and then onwards to the wholesaler. It services growers mostly in their local area, a radius of about 4 counties in all directions. This area covers a large agricultural sector which relies heavily on getting its produce to the wholesaler promptly, with minimal time in cold storage.
Phase 1: The Quiet Entry (Weeks 0–2)
An employee in the accounts team receives what looks like a legitimate email from a known software provider asking them to “re-authenticate” their account. The link leads to a convincing fake login page.
The employee unknowingly enters their credentials.
No alarms are triggered. The company does not have multi-factor authentication (MFA) enabled on this system.
Phase 2: Undetected Access (Weeks 2–8)
Using the stolen credentials, the attacker logs into the firm’s cloud-based CRM system. Because access controls are overly broad, the compromised account can view and export large volumes of client data.
The attacker:
Gradually downloads customer records to avoid detection
Accesses archived documents containing invoicing data and financial statements
Sets up a forwarding rule in the employee’s email to monitor communications
There is no real-time monitoring or anomaly detection in place, so this activity goes unnoticed.
Phase 3: Data Exploitation (Weeks 6–10)
The stolen data is sold on the dark web. Some clients begin experiencing:
Fraudulent loan applications in their name
Unauthorised bank transactions
Phishing attempts using highly personalised information
Still, the SME remains unaware.
Phase 4: The Discovery (Week 10)
A long-standing client contacts the firm after his accountant flags suspicious activity linked to financial activity, which the accountant deems suspicious.
He says:
“The fraudster replicated your invoice template but with different bank details. The invoice matched the activity between us which only we would know. How did they do that?”
Initially, the company assumes it’s an isolated incident. But within days, two more clients report similar issues.
The company initiates an internal review and brings in external cybersecurity consultants. They discover:
Unusual login activity from foreign IP addresses
Large volumes of data exports
The compromised employee account is identified
At this point, leadership realises the breach has been ongoing for weeks, possibly months.
Potential Consequences
Regulatory & Legal Impact
Mandatory reporting to regulators (e.g., data protection authorities)
Potential fines for failing to protect personal data (e.g., under GDPR-like frameworks)
Investigations into inadequate security controls
Lawsuits from affected clients
Financial Losses
Direct costs:
Incident response and forensic investigations
Legal fees
Customer notification and credit monitoring services
Indirect costs:
Loss of business
Increased Insurance Premiums
Potential Compensation Payouts
Reputational Damage
Loss of client trust, especially critical in ‘just in time’ delivery systems
Negative media coverage
Clients moving to competitors
Difficulty acquiring new customers
Operational Disruption
Systems taken offline during the investigation
Staff diverted from normal operations
Implementation of urgent security upgrades
Client Harm
Identity theft
Financial fraud
Emotional distress and loss of confidence
Internal Consequences
Accountability questions for leadership
Potential recruitments or restructuring
Pressure to overhaul cybersecurity policies
Long-Term Strategic Impact
Shift from growth to damage control
Mandatory compliance upgrades
Board-level scrutiny of risk management
Key Underlying Failures
The breach wasn’t just bad luck; it stemmed from:
Lack of multi-factor authentication
Overly broad access permissions
No monitoring or alerting for unusual activity
Limited employee phishing awareness training
Summary Note
What makes this scenario particularly dangerous is that the company didn’t discover the breach itself; the client did. That delay significantly worsened the damage, turning what might have been a contained incident into a full-scale crisis.
How can this be prevented?
I have already said that there is no such thing as 100% security, and if anyone tells you otherwise, you need to take a long, hard look at them and recognise BS when you see it. What we are trying to do is reduce your risk to a level you find acceptable for your business. What we call the risk appetite. That appetite will differ between businesses depending upon what they do and what can damage them, rather than the business next door.
Most Data Loss Prevention (DLP) systems are designed for the corporate market, are expensive and have a considerable admin and maintenance overhead. All the things that SMEs simply can’t afford and don’t have the staff to run. We took a good look at this and did a lot of research on the market. We came up with a solution that works in terms of cost and overhead. It allows us to offer a managed service at a price and service level that SMEs are comfortable with.
One of the things that we come up against pretty much every time we get into discussions with a prospective client is that they aren’t quite sure what data they are holding, and where it’s stored. Now this seems strange. You will no doubt argue that you are very clear about what you hold and where it is. Well, maybe, but during the 14-day free trial we offer, I am pretty sure that we will discover things that will surprise you.
How are we different?
What we are offering is a unique, comprehensive, and autonomous data security platform that can transform how organisations secure their sensitive data. Unlike legacy DLP systems that are based on an event-driven approach and require extensive ongoing rules management built for LAN perimeters, our system is different. It is based on analysing data risks and applying pre-emptive encryption that handles both external threats and insider carelessness, all in a world of no security perimeters, providing full coverage no matter where your staff are operating from, the office, home or on the move. Moreover, our set-and-forget method requires little to no maintenance and can be up and running, securing data, in less than 3 working days.
Key principles
Perimeter-less world with hybrid cloud and on-prem usage
The local area networks and the notion of a security perimeter are no longer valid with the transition to hybrid cloud, work-from-home, and zero-trust architecture. In such a setup, sensitive files are spread across on-premise repositories (File Server, NAS) and different cloud-based repositories. These cloud-based repositories are divided between the ones that you manage (managed cloud, such as organisational OneDrive), shadow IT (such as communication apps like Slack or WhatsApp), and 3rd party portals. We provide an answer to this new data landscape with our cross-platform discovery functionality, coupled with the data flow monitoring capabilities.
Remediate Data Risk rather than handle files
We provide a detailed breakdown of the data risk and leverage the data risk for data
flow monitoring, auditing and remediation. This approach greatly simplifies the process.
Pre-emptive vs Reactive
Most DLP solutions try to prevent a data leakage event by blocking the exfiltration of the file. This approach has a couple of shortcomings:
It does not help with an external threat, like ransomware stealing data.
It requires an initial extensive effort of setting up all the blocking rules with ongoing maintenance.
Our pre-emptive approach provides an answer for both shortcomings by encrypting files automatically.
How does it work?
It is a cloud-based management platform coupled with a lean agent for workstations
(both Windows and Mac), File Servers, NAS and Terminal Servers, and a sidecar Docker
instance for cloud-based file shares (. i.e., OneDrive).
Step 1: Data Risk Discovery and Quantification
Based on predefined privacy regulations and Personal Identifiable Data (PII) definitions, the system immediately starts scanning for sensitive data using smart patterns. It then quantifies data risk per PIl type in financial terms.
Step 2: Data Risk Monitoring and Auditing
Tracks and audits data risk in real-time by continually monitoring incoming and outgoing sensitive data flows from and to the perimeter-less organisation.
Step 3: Data Risk Remediation by Encryption
Its patented transparent encryption process automatically secures sensitive data across all endpoints, cloud apps, 3rd party portals, and shadow IT. The entire process, from initial deployment through data risk analysis to remediation by automatic encryption, takes as little as 72 hours.
The system not only pre-emptively encrypts sensitive private data in files, but it also transitions the data to a safe harbour, per all privacy regulations requirements. The solution helps organisations comply with all statutory data privacy regulations.
So, what does it do for you?
Sensitive File Discovery. SMEs frequently have an incomplete picture of where sensitive data is dispersed and who has access to it. The system locates and maps sensitive data across all your systems, devices, and the cloud.
Data Risk Quantification
Actifile calculates the data risk for every PIl type by applying an algorithm that multiplies every PII record by its potential total damage, then aggregates that across all the files and PIl records of the organisation. The aggregation is across file types, file locations, and different silos to provide a complete data risk quantification. The quantification is always up to date, in real time.
Real-Time Data Flow Monitoring
The system works silently in the background, monitoring real-time data flow across your entire IT ecosystem through user activities at the endpoints. This real-time monitoring shows how much data is being exfiltrated outside the organisation or imported into it. The monitoring capability does not require any type of integration to the sending or receiving application or website.
• Full Audit and Indelible Log
We automatically log all data-related events, including data ingress and egress and the creation of sensitive data. You can instantly audit back to specific dates, times, and locations. The log is never deleted, covering you in the event of a breach. You also have the option to generate alerts on specific events and to integrate the alerts to 3rd party systems, such as SOC or SIEM.
3rd Party Integration and Reporting
3rd party event integration: Everything that we capture can be seamlessly integrated
into a third-party security central system (SOC or SIEM). Users can capture and correlate all events that happen within the organisation.
Online and offline reporting: Conveniently export system reports and analyses in PDF format and white label them as required.
• Risk Remediation by Encryption
Automatic encryption is a fast and convenient remediation process that secures sensitive data across your entire IT ecosystem, including remote devices and the cloud. Even if data is stolen or misplaced, the AES 256 encryption mechanism prohibits bad actors from opening or using the file. Invisible decryption allows employees to automatically use encrypted files with no latency and without the need for a password. Your employees can work without disruption, but sensitive data remains useless to any hostile actor. Automatic decryption by channel enables users to automatically decrypt any encrypted file when it’s attached to an application. The system easily meets the demands of modern high-tech working environments. Delayed encryption gives you the flexibility to balance security with the demands of daily workflows. You can create a pragmatic, tailored approach to the management of sensitive data.
In a nutshell, this service is designed to protect your data from being stolen or inadvertently leaked by employee action. It is a layer below intrusion detection and prevention, stopping the scenario outlined above, where a cybercriminal had infiltrated the system and was exfiltrating data without the knowledge of the organisation. If they had been using this system, their data would have been encrypted and useless to the attacker.
Security architecture is the structured design of systems, policies, technologies, and processes used to protect an organisation’s IT systems, networks, and data from cyber threats. Easy to say, not quite so easy to do.
When working on a major IT infrastructure deal, the security architect would be brought in, or at least should be brought in, very early on, usually after the first logical design has been done. What that means is that a logical design is basically a bunch of boxes on paper that represent systems with connection arrows in between, identifying data flows. OK, I’m being a bit simplistic, but you get the idea. Once that’s done, the security architect has something to work with to start putting in security layers. As the design evolves, so does the security architecture.
So now let’s look at the real world. Most SMEs are way past this phase, with their systems having grown organically as the company grows. SME management is focused on how well the systems work for them, whether they meet the need, can the staff operate the systems efficiently, are the systems robust, etc. Security then tends to get bolted on, often using software and/or hardware that the company’s contracted IT provider recommends, which in turn is whatever software and/or hardware that the contractor sells.
Many SMEs had set up their system before COVID, and they were often set up using what we called the Bastion security model. That was named after the old castle design, a big wall around it with a moat and a portcullis to protect it, or in modern terms, a protected network, accessed via secure firewalling, with some sort of access control and other protections such as anti-malware. A good model had network segregation, but I’m afraid my experience is that network segregation was often lacking. Just to be clear, what segregation means in this instance is a breaking up of functions within the company, i.e., finance, HR, operations, management, etc., with relevant access controls of some sort. And of course, all this on premises.
In many cases, COVID drove a coach and horses through that model. First, it stopped people from going into the office, and owners/managers had to quickly come up with a way of working remotely through some form of remote access. Many at that point weren’t using cloud-based systems, and in fact, there was still some reluctance to embrace cloud tech because owners didn’t trust storing their data with what they saw as being out of their control. It took some persuasion and education to bring many of these owners/managers around. These days, of course, cloud storage and remote access are largely the norm, but there is still the question of exactly how secure existing systems are, having often been put together rapidly and from a position of necessity rather than choice.
A realistic cybersecurity architecture for an SME should balance security, manageability, and cost. Most SMEs are now operating in a cloud-based environment, so the architecture typically centres on identity security, endpoint protection, and cloud controls rather than heavy on-prem infrastructure. But let’s not forget monitoring and auditing, and, depending upon your business, data encryption.
Identity Layer (Core Security Control)
Identity management is core to a secure system. It is vital to ensure that only the right people have access to the right systems. SMEs need to consider some form of identity management, but they might feel this is expensive and unnecessary for them. Owners and managers need to decide their own risk appetite, i.e., what they see as an acceptable, as well as what they see as an unacceptable, risk. But it doesn’t have to be expensive. Many SMEs will be using MS365, for example, and will be able to get a reasonable deal on Microsoft Entra ID, formerly known as Azure AD. I know many of my colleagues in the security world will argue that Azure had its issues in the past, but it is better now.
It will help you implement controls such as:
Mandatory Multi-Factor Authentication
Conditional access policies
Single Sign-On (SSO)
Privileged identity management
Automated user provisioning/deprovisioning
Endpoint Security Layer
Endpoints are the primary attack surface. This typically includes:
Endpoint detection and response (EDR)
Device management
Encryption
Controls it should cover include:
Automated patching
Encryption:
Full disk encryption comes built into Windows with BitLocker and Mac with File Vault, but it has drawbacks in that it encrypts your disk at rest, protecting your data from a stolen device, but it is unencrypted on boot up, so it isn’t much protection against an intrusion or a mistake made by an employee.
File-level encryption works by encrypting files that you have deemed to be sensitive and need protection. It encrypts the files using an agent-based system and unencrypts the files when shared or accessed by someone who also has the agent and therefore the permission. Sounds complicated, but it really isn’t, and it can be shown to you very easily.
Application control
USB restrictions
Remote wipe
Email and Collaboration Security
Email is still the No 1 entry point for attacks, and using cloud-based software such as MS365 or even Google Workspace, both affordable for an SME, has security features that are highly desirable if not essential.
Anti-phishing protection
Attachment sandboxing
URL scanning
DMARC, SPF, DKIM email authentication – these all refer to entries in your DNS (your network provider should be able to brief you), which help ensure email isn’t being spoofed and is coming from a trusted source.
Network Security Layer
Even cloud-heavy SMEs still need basic network protection.
Key components:
Next-generation firewall
VPN or Zero Trust remote access
Network segmentation
DNS filtering
Good firewall segmentation would include:
Company devices
Guest WiFi
Servers
IoT devices
Cloud Security
SMEs often rely heavily on Software as a Service (SaaS) and cloud infrastructure. Again, this needs some controls, which could include:
Secure configuration monitoring
Data leakage prevention
Access monitoring
Key policies may include:
No public file sharing by default
Alert on impossible travel logins
Monitor privileged activity
Data Protection Layer
Protect sensitive data even if systems are compromised. Controls might include:
Data classification
Data leakage prevention
Full disk and file-level encryption
Policies might include:
Prevent the sharing of sensitive records externally
Block download of sensitive files on unmanaged devices
Monitoring where your data is and how it transits the network, alerting to movements of data outside of the norm.
Backup and Recovery
This is critical for recovering from ransomware and other data compromises, as well as technical faults.
Best practice:
Immutable backups
Offline copies
Regular restore testing
Don’t forget cloud backups; that’s something that is often forgotten. Check your Ts&Cs with your provider, don’t just assume they are backing up as you would require.
Security Monitoring
You need visibility into attacks, and security monitoring is something that many SMEs simply don’t consider, possibly because in the past, it was considered very expensive and over the top. That is no longer the case. There are systems now available specifically for SMEs.
Typical SME approach:
Centralised log collection
Security alerts
Managed detection and response
Many SMEs outsource this to an MDR provider like H2. I know you would expect me to say this, but it really is recommended.
Security Awareness and Policies
Technology alone cannot protect the organisation. Cyber awareness training is a subject that I bang on about all the time. It really should be a no-brainer and is arguably the cheapest quick win an SME can make.
What you need as a minimum is:
Security training platform
Phishing simulation
Acceptable use policy
Incident reporting channel
Strangely enough, we provide all of these within our managed service.
Incident Response and Business Continuity
I have blogged about this in the past. You need to be prepared for security incidents. This means not just having a plan to bring your systems back online and to restore your data from backups, but also having a business continuity plan to enable you to continue your business whilst the technical work is being undertaken. Test these systems and plans and make sure they work.
Key elements include
:
Incident response playbooks
Legal and breach notification procedures
Disaster recovery and business continuity plans
Security metrics dashboard
Standards
Consider adhering to a standard such as Cyber Essentials, the Government standard, which has been taken into use by many SMEs.
Summary
Security architecture is the structured design of policies, technologies, and controls used to protect an organisation’s systems, networks, and data from threats.
It acts as a blueprint for implementing security to ensure Confidentiality, Integrity, and Availability (CIA Triad) of information. It really is something SMEs should consider and need to take advice about. Do not rely on your network provider, they will focus on the core services they provide and the products they have deals to supply.
Stopping data leaks from your organisation is an important part of data protection; it is a subset, if you like, of that ever-evolving subject. The rules are evolving here in the UK, with new legislation coming online, and there is a wide requirement that starts with a good mindset and sound rules and processes to guard your most sensitive data. We refer to data leakage when talking about a service we provide to SMEs, which we don’t like to frame as data protection because it is, as I said, a subset of the requirements. However, it is an important subset that lies at the sharp end of the whole thing.
First of all, let’s clarify what Data Loss Prevention (DLP) is. It is a cybersecurity strategy that identifies, monitors, and prevents sensitive information from being accessed, shared, or transmitted without authorisation, whether accidentally or maliciously, across endpoints, networks, cloud services, and email systems. In short, DLP stops sensitive data from leaving where it shouldn’t.
Sounds great until you investigate such systems, which can be extremely effective if you are a large corporate organisation. That’s because these systems can be very expensive, difficult to set up and come with a heavy admin burden. It’s not terribly surprising that SMEs don’t know much about these systems because the organisations that market them simply don’t target SMEs. After all, SMEs, in general, can’t afford them.
A data leak, however, can be one of the most damaging incidents an SME can face. Unlike large enterprises, SMEs often have fewer financial reserves, less technical expertise, and limited crisis-management capacity, making the impact proportionally greater.
Threats to an SME from Data Leakage
Taking a quick glance through the threats to an SME business from a data leak:
Financial Loss
Legal costs from customer or partner lawsuits.
Compensation payments to affected individuals.
Incident response and forensic investigation costs.
Business interruption losses during system shutdowns.
Regulatory fines (e.g., under data protection laws such as GDPR).
For SMEs, even moderate fines can significantly impact cash flow or survival.
Reputational Damage
Loss of customer trust.
Negative media exposure.
Damage to brand credibility.
Loss of competitive advantage.
SMEs often rely heavily on local reputation or niche trust; once damaged, recovery can be slow and costly.
Loss of Customers and Contracts
Clients may terminate contracts.
Prospective customers may choose competitors.
Larger partners may require stronger security compliance before continuing relationships.
Operational Disruption
Systems may need to be taken offline.
Data recovery efforts consume time and resources.
Staff productivity drops during investigation and remediation.
Theft of Intellectual Property
Loss of trade secrets.
Exposure of proprietary processes.
Competitors gaining access to confidential pricing or strategy information.
Increased Cyber Targeting
Once breached, a company may:
Be seen as an “easy target.”
Experience follow-up phishing or ransomware attacks.
Appear on dark web data marketplaces.
What are the Requirements of a Data Leakage Protection Solution?
In a nutshell, a solution that would fit an SME should be proportionate, cost-effective, scalable, and manageable without a large in-house security team.
Such a system needs to:
Identify sensitive data (customer data, financial records, IP).
Classify data based on sensitivity.
Map where data is stored and who has access.
It needs role-based access control (RBACS) using a least privileged principle, with multi-factor authentication and strong password policies. It needs encryption at rest, preferable file level encryption, and use TLS for encryption in transit with secure key management. Such a system needs to be set up with monitoring, logging, alerting for suspicious activity and periodic audits. It needs backup and recovery.
For SMEs specifically, the solution should be:
Affordable and scalable
Cloud-friendly
Easy to manage
Automated where possible
Supported by managed security providers (if no internal team exists)
How Do SMEs View Such Systems
All too often, we come up against the attitude that such a loss is very rare amongst SMEs, and the threat doesn’t justify the expenditure. That is often because this is a very under-reported issue, and those that are reported are just the tip of the iceberg.
What Is the Source of the “Tip of the Iceberg” Claim?
Many breaches are only discovered during unrelated audits.
Cyber criminals often maintain access for long periods.
Academic Research
Studies in cybersecurity economics suggest breach reporting underestimates actual intrusion frequency due to:
Asymmetric information.
Underreporting incentives.
Detection bias.
Threat Intelligence Monitoring
Security vendors monitoring criminal forums consistently find large datasets being traded that were never publicly linked to a disclosed breach.
Bottom Line
The consensus among cybersecurity professionals, regulators, and researchers is that publicly reported data breaches represent only a fraction of actual incidents.
The conclusion is based on:
Detection lag data.
Forensic investigations.
Legal reporting thresholds.
Dark web intelligence.
Academic economic modelling.
How Can an SME Protect Itself?
Having waded your way through the reasons why SMEs don’t see much data on this subject and therefore don’t see the threat, I’m going to reward you with the pitch. Yes, H2 does have a managed solution that is designed, priced and operated specifically for SMEs. It’s a solution that isn’t as comprehensive as a full enterprise-grade DLP solution, but it does do the job for an SME.
The key advantages for a small or medium-sized enterprise (SME) of using our service in practical, business-focused terms are:
Automates Data Discovery and Protection
The service automatically finds, classifies, and assesses sensitive data (such as customer information, IP, and financial records) across endpoints, servers, cloud applications, and remote devices without manual scanning. This saves SMEs considerable time and decreases dependence on specialised security personnel.
Proactive Risk Reduction
Rather than just alerting after an incident, the service can automatically encrypt or block sensitive data based on risk level, minimising exposure before a breach happens. This helps avoid data leaks and insider mishandling.
Real-Time Monitoring and Alerts
The platform continuously tracks data movement and access, sending notifications for unusual activity. This keeps SMEs aware of potential threats or policy violations, even without a full-time security team.
Simplifies Compliance
The service helps businesses meet data privacy rules like GDPR, PCI, and others by providing reports, audit trails, and documented controls, making audits and regulatory compliance far easier.
Low Maintenance and Fast Deployment
Designed to be lightweight and “set-and-forget”, it can be deployed quickly with little disruption and minimal ongoing management, which is ideal for SMEs that don’t have large IT/security teams.
Cost-Efficient Risk Management
By automating complex security workflows and reducing reliance on manual processes or legacy tools, SMEs can keep security budgets lean while still achieving strong protection.
Centralised Visibility
It comes with a dashboard where you can see where sensitive data resides, who accessed it and what its risk level is, providing clear, actionable insights rather than fragmented logs across multiple systems.
Supports Remote & Hybrid Work
Because it works across cloud, endpoint, and server environments, the service helps secure data no matter where employees work or where the data lives, particularly useful as more SMEs adopt remote/hybrid models.
Reduces Human Error
With automatic classification and encryption, the service helps guard against accidental disclosure, which is a common risk in smaller organisations without dedicated security training.
In summary, for an SME, the service can deliver data leakage protection, risk reduction and compliance support without the heavy cost or complexity typically associated with traditional data loss prevention (DLP) or manual security practices.
Cost is something that is guaranteed to concentrate the mind of the SME owner. This service is priced specifically for SMEs at £15 per user per month. There is no contractual lock-in, and a client can quit with 30 days’ notice. We also offer a 14-day trial to allow a client to see the benefits of the system using their own data, rather than a demo with dummy data. We’d be delighted to discuss this with you further.
Last week, I made a short post about the difference between the perceived and actual threat to SMEs from cyber-attacks and scams, and whether there is any credible evidence to support a conclusion. Taking a hard look at this and doing some research, I have concluded that there is credible evidence from academic research, surveys, and policy reports showing that many small and medium-sized enterprises (SMEs) tend not to report cybercrime incidents, and there are well-documented reasons why. This phenomenon is sometimes described as the “dark figure” of unreported crime in the cyber domain.
We’ll take a look at some of that evidence later, but first, let’s turn to the gap between what people believe is happening and what the data shows is happening. That gap is influenced by psychology, media coverage, reporting behaviour and visibility of incidents.
Let’s break it down into the categories mentioned above.
Perception of Cybercrime Against SMEs
This is shaped by:
Media Coverage
High-profile ransomware attacks or major breaches dominate headlines. They mostly involve large enterprises, and as a result SMEs often feel it’s only those large enterprises that are at risk.
Vendor & Security Marketing
Cybersecurity vendors often emphasise rising threats, which though real, are designed to amplify urgency to drive awareness and sales. However, the use of fear, uncertainty and doubt or FUD, can have the opposite effect if it is seen as a sales tool rather than a real threat, which it all too often is.
Personal Experience
If an SME owner hears about peers being attacked, their perceived risk increases dramatically. Staying quiet about attacks can lower the perceived need for defences.
Fear of the Unknown
Cyber threats are invisible and technical. Lack of understanding increases anxiety and exaggerates perceived exposure. Taking a technical approach to educating business people is counterproductive and generally turns them off.
Underreporting Assumptions
Not all attacks are reported; in fact, the evidence suggests that the instance of underreporting is high.
Result
The result is that perception is often that, whilst cybercrime is constant. Underreporting of attacks on SMEs, coupled with the lack of education, and what education there is tends to be of a technical instead of business focused, leads many SMEs to view the threat as being covered off by technical barriers such as firewalls and anti-virus, and to be far more targeted at the corporate sector, not the SME sector.
SMEs are frequent targets, especially for phishing, ransomware, and business email compromise.
Most attacks are automated and opportunistic, not targeted.
Many incidents are low-level (phishing attempts), not catastrophic breaches.
Severe attacks do happen, but not every SME experiences them.
The actual level is significant but uneven:
Some SMEs face repeated attacks.
Others may experience mostly low-impact attempts.
Many attacks are blocked before damage occurs.
Is Perception Higher or Lower Than Reality?
It can go both ways:
Perception is Higher Than Reality When:
• SMEs assume every business is constantly breached.
• Media focus on extreme cases.
• Attempts are confused with successful compromises.
Perception is Lower Than Reality When:
• SMEs believe “we’re too small to be targeted.”
• Minor incidents go unnoticed.
• Staff do not recognise breaches.
Interestingly, many SMEs underestimate their exposure before experiencing an attack, and overestimate overall catastrophic frequency after exposure.
In Summary:
The perceived level of cybercrime against SMEs is shaped by media attention, fear, and anecdotal experience, while the actual level is determined by measurable incidents and verified data. The gap exists because cyber threats are both highly publicised and often poorly understood.
Evidence That SMEs Often Don’t Report Cyber Crime
Survey data show high levels of non-reporting
A recent Europe-wide survey found that 44% of cybercrime incidents experienced by SMEs were not reported to anyone, not the police, not a regulator, not a service provider, and that only a minority of attacks were reported formally.
The same EU study found that when SMEs did report incidents, it was more often to a service provider than to public authorities, and that many businesses simply handled incidents internally or judged them “too trivial” to report.
Research identifies specific reluctance factors
Scholarly reviews and empirical work indicate that SMEs are less likely to report cyber incidents for reasons including:
Fear of reputational damage if customers or partners learn the business was breached.
Concern over regulatory or legal scrutiny once an incident is disclosed.
Perceived cost (time, money) of reporting, especially if there’s no regulatory obligation or clear benefit.
Belief that incidents are minor or can be more efficiently handled internally than involving law or regulatory bodies.
These findings align with broader research on businesses and cybercrime reporting, noting that decisions to report are influenced by the perceived severity of impact and whether the firm prioritises cybersecurity or has formal incident-response capabilities.
Structural and awareness challenges contribute to under-reporting
More general research into SMEs and cybersecurity shows that many smaller firms lack the awareness, training, resources, and formal incident-response processes that make reporting to authorities likely in larger firms. This lack of technical know-how and prioritisation often means incidents aren’t even recognised or escalated to reporting.
Why SMEs Might Choose Not to Report
There are several reasons, and looking across studies and surveys, as well as my own experience, common themes emerge explaining this reluctance:
Risk perception: SMEs often don’t think they’re targets, underestimating the likelihood or impact of cybercrime.
Internal handling: Many breaches are kept in-house, either managed by IT support or resolved without escalating to law or regulatory bodies.
Reputational fear: Owners worry about being seen as vulnerable or incompetent.
Cost of reporting: Time and money spent on reporting (especially when not legally required) can seem unjustified.
Does Under-reporting Matter?
Under-reporting matters because it creates a gap in official data on the frequency with which SMEs are victimised by cybercrime. This “dark figure” undermines effective policymaking, resource allocation, and threat intelligence sharing between the private sector, law and regulatory bodies, all of which are vital for improving cybersecurity resilience across the economy.
Finally I hope that this has provided you with a window into the lack of reporting of cybercrime, which is prevalent in, but not confined to, SMEs, and that it might encourage you to report crime if it occurs in your organisation. I also hope that it might encourage you to look at your own defences with a critical eye and perhaps seek advice and guidance to keep you safe.
Artificial Intelligence (AI) is a fascinating subject, but it’s also a controversial one. These days, we are all using it to some extent. I know I do in the solutions I provide for SMEs, as it allows for a large degree of automation, which in turn lowers costs. Lowering costs is always a priority for an SME.
So what is AI?
Artificial intelligence (AI) refers to computer systems that can perform tasks typically requiring human intelligence. This could include visual perception, speech recognition or translation between languages.
That description was one that was put forward by NCSC, and so it’ll do for me, although I’ve no doubt, you’ll find other descriptions if you look hard enough.
Often, what is called AI isn’t all that intelligent. It’s not taking in information, analysing it and coming up with answers. Of course, some very clever versions are doing just that, but they are mostly not available to you and me. The versions we see are very good at being asked a specific question and data mining various sources at an incredible speed and then producing the answer you want, usually with several variations. And that’s pretty much what most of us want to use it for.
As I said above, I use it in the applications I use for cybersecurity managed services directed at SMEs, not least because automation reduces cost, but also because it is very efficient, meaning that the results it produces need minimal human intervention to analyse the output.
But let’s look at the downside of AI in cybersecurity, which is what the cyber criminals are using it for. Firstly, what is it that is at risk:
Data Leakage. AI systems tend to be extremely good at analysing, organising, and harvesting vast amounts of data, raising concerns about privacy breaches and unauthorised access to sensitive information. A good AI-powered attack could capture huge amounts of personally identifiable information (PII) in a ridiculously short amount of time.
Data Integrity. In the good old days (please indulge me – I’ve been around a long time), we used to talk about CIA, no, not the infamous US intelligence agency, but Confidentiality, Integrity, and Availability. We now have something we call the Adversarial Attack. This is where attackers can manipulate AI algorithms by feeding them misleading data, causing them to make incorrect predictions or classifications, in turn destroying the integrity of your data, not just rendering it useless, but also dangerous.
Model Vulnerabilities. This next one is relatively new, at least to me, and as I never tire of saying, I’ve been in this game as long as there’s been a game. It’s something called Model Vulnerabilities. AI models can be vulnerable to exploitation, such as through model inversion attacks or model extraction, where attackers can reverse-engineer proprietary models. So, if you’re in the dev game, this is a very real nightmare.
Bias and Fairness. AI systems may inherit biases from training data, leading to unfair or discriminatory outcomes, which can have legal, ethical, and reputational implications. This could be used as another form of extortion, playing with the integrity of your data, to the point where you can no longer trust it.
Malicious Actors. These can compromise AI systems at various stages of development, deployment, or maintenance, posing risks to organisations relying on these systems. This has a role in supply chain security.
Attackers can leverage AI techniques to enhance the effectiveness of cyberattacks, such as automated spear-phishing, credential stuffing, or malware detection evasion.
What we saw in 2025 is an era where cyber‑attacks are AI‑powered, highly targeted, automated, supply‑chain enabled, multi‑stage, and geopolitically driven. These attacks exploit weaknesses across credential systems, zero‑day exploits, deepfake tools, and ransomware as a service (RaaS) platforms.
We are in an accelerating digital arms race that calls for AI‑driven defence capabilities, real‑time insights, deception environments, zero‑trust architectures, and quantum‑safe cryptography.
Cybercriminals are leveraging AI to automate vulnerability scans at astonishing speeds, up to 36,000 scans per second, resulting in massive volumes of stolen credentials (1.7 billion) and drastic upticks in targeted attacks.
AI is also generating hyper-realistic phishing messages, deepfake audio/video, and even “CEO fraud” to manipulate individuals into transferring funds, like a deepfake trick that siphoned US $25 M in Hong Kong.
RaaS platforms now enable less skilled attackers to run ransomware, complete with support and updates. Over 70% of attacks now use these services.
Attackers have shifted to double/triple extortion schemes, encrypting data, threatening to leak it, and sometimes targeting associated partners or customers.
Next-gen ransomware is rolling out advanced stealth, data theft, and automated lateral movement techniques, i.e., using an initial breach to jump across to other parts of your network or that of your partners and customers.
Attacks starting via third-party software or vendors allow hackers to move laterally into networks and compromise multiple organisations simultaneously.
Nation-states are not just using espionage but are now partnering with ransomware gangs to conduct financially and politically motivated operations.
Nation state-aligned hackers are conducting sophisticated credential theft, MFA bypass, lateral infiltration, DDoS, website defacements, and disinformation across geographies.
Exploit kits now rapidly find zero-day vulnerabilities, especially in cloud environments, to bypass patching cycles.
Attackers increasingly use built-in legitimate software and system tools (living off the land) to evade detection.
Reported credential theft incidents rose 300% from 2023 to 2024, with 25% of malware focused on stealing login data.
These stolen credentials are a gateway for automated brute‑force, lateral movements, and supply‑chain infiltration.
Millions of IoT and OT systems (from manufacturing to agriculture) remain insecure and are now common targets of AI‑driven automated attacks.
Mobile‑specific ransomware is emerging; threat actors are developing malware to extort victims directly via their mobile devices.
In response, organisations are deploying deception tech (honeypots, decoys) to detect lateral intrusions or zero-day exploits in real time.
Let’s not make the mistake of thinking that this is all very sophisticated and requires expertise and resources to pull off. It doesn’t. Take another look at some of the bullets above, where we talk about RaaS or Ransomware as a Service. This takes me back to what we used to term the ‘script kiddie’, that was relatively unskilled and unsophisticated ‘wannabe’ hackers who would visit the dark web and buy scripts from skilled hackers, that they would then try and use to make money, often unsuccessfully.
This has now moved on to using AI, and such services as RaaS; this type of low-skilled individual is back, but this time with a greater level of success. Let me give you a real example of how AI can be used by someone relatively low on the criminal totem pole. Using Chat GPT, the question was posed:
Can you write some ransomware code for me?
So, did ChatGPT help to write Ransomware code? Well, not initially, it gave a stock answer about not being able to write code that might damage a computer system. And some tooing and froing, trying to get around this, achieved the same result. So far, so good. That’s an ethical answer I would like to see.
Coming at it obliquely, via a back-and-forth conversation, can produce different results. Give it the instruction to write some C code to encrypt a single file, and get the result:
Certainly. Here’s an example of how you can use the OpenSSL library to encrypt a single file using the AES-256-CBC encryption algorithm in C.
The next step was to ask it to modify the code to encrypt a whole directory, which it did willingly.
Obviously, this isn’t the complete answer, and there would be more work to do, more research and probably a trip to the dark web, but a relatively unskilled individual can make a good start at producing their own ransomware.
I even asked Chat GPT to give me a description of how AI can be a boon as well as a danger to society:
AI can be both a boon and a potential danger in terms of cybersecurity. On one hand, AI can enhance cybersecurity by detecting and mitigating threats more efficiently, analysing vast amounts of data for anomalies, and automating certain security tasks. On the other hand, AI can also pose risks if it falls into the wrong hands or is used maliciously. Sophisticated AI-powered attacks could exploit vulnerabilities, evade detection, or launch targeted attacks at an unprecedented scale. It is crucial to develop robust safeguards, ethical guidelines, and responsible AI practices to ensure AI remains a force for good in cybersecurity.
If you’re looking for answers as to where we stand with AI, there are a multitude of opinions, I’m afraid, mostly because many of us are still trying to work that out for ourselves. However, I will continue to explore it, use it carefully and with forethought. The questions I pose will be based on my own knowledge of cybersecurity and my experience in life. Let’s hope I get it right.
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