Financial data security is an aspect of cybersecurity that aims to protect financial information from the prying eyes of hackers, data loss, or manipulation. Every company holds important information on employees or customers, whether financial statements, tax records, bank account numbers, or payroll information.
Worried now about the data security of your company? Then don’t just sit back and let a hacker steal your financial data. Seriously—the cost of cybercrime is growing exponentially, with Cybersecurity ventures expecting it to reach $8 trillion in 2023.
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It’s time for you to get real about it, so join us as we explore the landscape of financial data security and present 8 ways that SMBs can reduce the likelihood of cyberattacks.
In this blog, we'll cover:
- The importance of financial data security for SMBS
- 8 steps for SMBs to ensure financial data security
- Keep your financial data secure
The importance of financial data security for SMEs
Financial data security is, in a nutshell, essential for any organisation to treat seriously. And this is especially true for SMEs who might think that cybercriminals are more focused on other, more valuable targets (they’re not).
The reality is, cybercriminals will target any system they think they can break. The biggest mistake that you can make is to think that these issues are only affecting other firms, or that your security is already robust enough to withstand a hack.
No financial data system is impenetrable—and developers are locked in a perpetual race to patch vulnerabilities before they are exploited.
Let’s look at a case study of a firm that got it badly wrong.
In March 2023, Latitude Financial suffered a major cyberattack in which the records of 14 million customers were stolen.
This included sensitive documents such as driver’s licence numbers, passport numbers, and financial statements—which obviously didn’t go down well with their clientele. And to make matters worse, they massively understated the extent of the hack in their initial press release.
There’s no doubt that, sooner or later, your business will be the target of a cyberattack.
And if that cyberattack should succeed, your customers aren’t going to care about whether your security measures were deemed “effective” or not. They will care about how you respond to it: Were you truthful? Did you really do enough? What will you do to make the situation better?
Hold that thought
It sounds like a real nightmare, doesn’t it? Because beyond your company facing legal sanctions, your customers' trust will be instantly eroded, and some of them will outright leave your service behind.
How do you think Latitude Financial is doing these days? Well, their share price dropped 8% overnight and has stagnated for 5 months since.
It’s scary to think about, but it’s better to face the threat of cyberattack head-on, rather than suffer the consequences when it’s already too late. Otherwise, your customers could have their identities stolen, and your business could end up being sued.
8 steps for SMBs to ensure financial data security
Get started on improving your organisation’s financial data security by implementing the following strategies (and regularly reviewing them):
1. Enforce robust password policies and encryption
This might seem basic, but it’s worth repeating for those at the back of the room: If you don’t set strong passwords, you’re risking serious financial harm to your business. After all, the most common password in 2023 is still as easy to guess as “123456”. Shocking, I know!
To prevent this, you need to begin having conversations with all of your staff about data security best practices—ideally integrating this into your onboarding and training programs.
You need to teach them that passwords should have numbers, symbols, different case letters, and shouldn’t contain simple words. Your employees shouldn’t be writing these down on scraps of paper or using them for other accounts, either.
2. Implement encryption
In addition, your business should also implement encryption to protect sensitive data during transmission and storage. This method works by transforming it into unreadable code, making it worthless to the naked eye, and acting as a double layer of defence against hackers.
Without this protection, cybercriminals will have free roaming of your financial databases, which could be an unmitigated disaster for your business.
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3. Employ the use of secure, regularly updated networks and firewalls
To ward off unauthorised access attempts, your network needs to be configured appropriately.
For starters, you should implement a system of access controls wherein only administrators can edit rules or view the most sensitive documents. Remember, strong passwords are key here! Further, firewall software can block suspicious incoming (and outgoing) traffic on your network, highlighting when and where an attack is coming from.
Neglecting updates or using outdated security tools poses a pitfall, as cybercriminals exploit gaps that emerge in older systems. This is an especially important step for software packages that you’ve recently installed—as zero-day vulnerabilities could be known to hackers from the offset.
4. Use ERP security
Suppose your company relies on cloud-based data storage solutions. In that case, you’ll need to be even more aware of the present threats of cyberattack (as all your data is being kept in one central location).
For example, many SMEs use ERP software to manage data from across their entire business. In this case, ERP security becomes vital to mitigate risks and safeguard confidential financial, employee and customer information. The same is true for your accounting software, you’ll want to make sure you’re using software that’s protected and compliant with laws and legislation.
5. Perform penetration testing and vulnerability assessments
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A penetration test involves deliberately trying to break into your own systems to see whether any vulnerabilities exist. Typically, this involves simulating known attack scenarios and then patching the areas of defence that need strengthening.
Don’t worry if you’re not an expert in this, as someone else is. This profession is called ‘ethical hacker’, and you’ll want to hire certified experts to perform these tests.
Without regular testing, a layperson such as yourself would be blissfully unaware of potential security gaps in your network—that is, until hackers breach your systems and cause actual damage.
6. Develop an incident response plan
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An incident response plan outlines actions in case of a breach. You’ll want a ‘worst-case scenario’ plan in place just in case you need it, as you won’t want to be caught without one.
Generally, these plans follow a structure as follows:
IdentificationDetect and confirm the security breach or incident's occurrence.
ContainmentIsolate affected systems to prevent further spread of the breach.
EradicationEliminate the root cause of the breach and remove any malicious presence.
RecoveryRestore affected systems, applications, and data to their normal operation.
CommunicationNotify stakeholders, including employees, customers, and regulatory authorities, about the breach.
AnalysisInvestigate the incident's impact and origin to understand how the hackers made it into your system undetected.
Training and PreparednessEvaluate the response process and identify areas for improvement to enhance future incident handling.
7. Educate employees and implement protocols on sensitive data
Phishing attacks are the main cause of cyberattacks—and incidentally, they’re some of the easiest to protect against.
This happens when your staff are targeted by ‘social engineering’ tactics rather than your systems being targeted by malicious code. For example, you might receive an email from a supposed client, who asks for a document to be shared, only for them to be an exploitative criminal.
Establishing clear protocols and educating your staff on the handling of data will prevent the risk of one of these attacks succeeding. Get started with a security awareness program today.
8. Ensure compliance with relevant data protection regulations
As a business owner, it’s your responsibility to stay informed about data protection regulations that apply to your industry (such as GDPR)—and implement measures to fulfil their objectives.
Non-compliance doesn’t just leave your business exposed to legal penalties, but it would be a really bad look if your customers’ financial data was compromised as a result. It’s just not worth the risk. Get started with better data protection by setting positive workplace reminders about cybersecurity awareness using posters with top tips for GDPR.
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Incorporate effective data clauses in external and internal contracts
Internally, your employee contracts should strictly outline data handling responsibilities—in addition to this being a major part of your workplace culture and training programs.
But you should also be aware that, sometimes, your staff aren't the only people handling your sensitive business data. For instance, if you rely on the use of cloud-based services, that data is stored on external servers.
This means that if you’ve chosen a cloud-based ERP, the stakes are higher, as it deals with so much of your company’s internal operations, from development to employee management. As such, you’ll need to embed data protection clauses in external contracts to hold third parties accountable for ensuring proper security. Because of this, you should aim to work with transparent providers of cloud technology.
Keep your financial data secure
To wrap up, cybersecurity is more important now than ever before, as businesses increasingly rely on digital infrastructure to handle sensitive financial data. The answer, of course, isn’t to go back to pen and paper—but instead, it’s to embrace the best aspects of modern data security tech and instil a positive culture around regulatory compliance.
We are all aware that cybersecurity is now moving at an unprecedented pace, so make sure that your team remains up-to-date with the ever-evolving cybersecurity landscape — as only a proactive mindset will protect the long-term financial health of your business!