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Top threats to Australian SMEs in 2024

As work gets underway in 2024, the Australian small business community faces a dynamic and evolving threat landscape in the digital realm. Cyber security has never been more critical, as businesses battle high interest rates, soaring energy prices and workforce shortages.

New research from the Council of Small Business Organisations of Australia (COSBOA) and the Cyber Wardens program has revealed the top 10 concerns for small businesses in 2024.

A survey of more than 2,000 small businesses asked owners, CEOs and employees what factors they thought posed a threat to their businesses over the next 12 months. The results demonstrated the mounting pressure on small businesses as they fight to survive a cost-of-operating crisis.

Cyber security came in at number three, after energy prices and the cost of staff, and is clearly weighing on the minds of small businesses. But it is down from being the number two concern last year as cost issues take precedence.

More than half (51 per cent) of small businesses believed cyber security threats posed a medium or high risk to their business. While 18 per cent of small businesses saw cyber security threats as a high risk, this increased for specific groups, including owners, CEOs and founders (22 per cent), small businesses delivering sales and services online (26 per cent), and those in the business (26 per cent)  and IT sectors (33 per cent).

However, four in 10 small businesses also said they had no or low confidence in how to prepare for a cyber incident (37 per cent) or how to recover from a cyber incident if it occurred (40 per cent). 

“We know that 2024 will be another challenging year for small business with economic headwinds ahead,” COSBOA CEO Luke Achterstraat said.

“This new data reveals the real challenges facing small business with 54 per cent of respondents worried about energy prices and 52 per cent worried about the cost of staff. 

“It is important for small businesses to remain aware of the increasingly acute risk of cyber attacks. Investing in cyber security training and tools is essential to help protect your small business, staff and clients.

“Our Cyber Wardens program can help give small business owners the skills to help mitigate the risks, reducing one of the many worries they are facing.”

Top threats to Australian SMEs in 2024
Table: percentage of small businesses that perceived these ‘threats’ as a medium or high risk to their business in the next five years.

Size matters

Compared to micro and mid-size small businesses, sole traders were more likely to say they had no or low confidence in their knowledge of how to fight a cyber attack (49 per cent)  or where to get help when a cyber incident occurred (38 per cent).

Small businesses in their first year of operating were also less prepared, with more than five in 10 (54 per cent) having no or low confidence about how to recover from a cyber incident. Small businesses in their first year of operating were also much more likely to report that cyber security had never been discussed in their workplace (44 per cent, compared to 27 per cent of small businesses generally).

Almost half (49 per cent) of sole traders thought it was too time-consuming for small businesses to practise cyber security on top of everything else and more than four in 10 (44 per cent) believed it was more important for medium and larger businesses to practise cyber security than it was for small businesses.

The extent to which small businesses were concerned about the risk of cyber attacks varied depending on the type of business. The survey revealed thatwhile nearly six in 10 ‘scale up’ or growing small businesses (58 per cent) were concerned about cyber attacks, only four in 10 ‘side hustle’ small businesses (40 per cent) had the same concerns. Similarly, ‘start-up’ and ‘scale-up’ small businesses were more likely to be talking about cyber security at least twice a year (83 per cent and 80 per cent, respectively) compared to home-based businesses (59 per cent). 

“Cyber security is important for every small business — that includes sole traders, side hustles and micro businesses. It doesn’t matter whether you work in the office or from home, whether you’re growing or shrinking, you still need to take steps to protect your business,” Mr Achterstraat said.

“The latest Australian Signals Directorate’s (ASD) Annual Cyber Threat Report revealed the average cost of cyber crime per incident had risen by 14 per cent to $46,000 for small businesses. That would be terminal for most small businesses.

“Together, we can strengthen the cyber security skills of Australian small businesses and protect our economic backbone.”

Cyber Wardens urges small businesses to take proactive steps to protect themselves, their customers and their futures.

The free, Australian Government-funded Cyber Wardens program provides training to small business owners and employees on how to digitally safeguard their businesses. This includes essential upskilling on the fundamentals of multi-factor authentication, password management, device updates and backups.

According to Scamwatch, Australians lost more than $429 million to scams in 2023, with phishing, false billing, online shopping scams, and identity theft being the most commonly reported scams.

Last year the ACCC reported the number of businesses losing money to scams had increased by 73 per cent.

For more information, please visit www.cyberwardens.com.au

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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