The impact of phishing on SMEs

When you think about business phishing attacks, what comes to mind?

Most people imagine a hooded hacker in a dark room draining the company bank account. But the true impact of phishing extends far beyond stolen funds. A single attack can have consequences that cascade through your entire organisation for weeks, months, or even years.

Charting the real impact of phishing

From costly productivity losses and regulatory fines to damaged customer relationships, phishing attacks strike at the very foundation of your business.

Financial consequences that compound quickly

The most obvious impact of phishing is theft. Once cybercriminals have tricked victims into handing over sensitive information, like bank account details, they can use it to steal company funds. But as scary as that thought is, the hidden expenses often dwarf these initial losses.

When phishing attacks take your systems down, productivity plummets. Employees can't access essential files, emails, or applications. You can’t process orders or service requests, and business grinds to a halt.

According to research on UK SME downtime, the median cost ranges from £1,800 for micro business to £15,000 for medium-large ones. So, a phishing attack that takes your systems offline for even half a day could cost you tens of thousands in lost productivity alone.

Then there are the recovery costs, which include:

• Investigating the incident
• Repairing or rebuilding your systems
• Retrieving or recreating lost data
• Upgrading your cyber defences
• Regulatory fines
• Legal fees

It all adds up. You may also have to pay a higher cybersecurity insurance premium following an attack, depending on your provider.

Learn how CyberSmart Phish can help your team spot phishing attempts before they cause harm

Reputational damage that erodes customer trust

Falling victim to a phishing attack can seriously harm your reputation. When customers discover that a phishing attack has compromised their personal data, trust evaporates almost instantly.

Among businesses that have experienced a cyberattack, 47% said they struggled to attract new business and 43% said they lost existing customers as a result.

Bad news spreads quickly. Negative reviews appear online, cautionary tales permeate through industry networks, and potential customers choose competitors they perceive as more secure. The impact on your brand persists long after you restore your systems and improve security.

Phishing attacks are particularly damaging to financial and professional services firms. Responsible for highly sensitive information, their clients expect the highest data privacy and security standards. A single breach can completely erode trust and destroy relationships you've built over years.

Regulatory repercussions that cost time and money

Under data privacy regulations like GDPR, you have a legal duty to protect it with “appropriate technical and organisational measures”. If you suffer a phishing attack and regulators determine that you didn’t have reasonable safeguards in place, you could face serious penalties. GDPR fines can reach up to €20 million or 4% of global annual turnover – whichever is higher. 

The compliance impact of phishing is about more than financial penalties. Under GDPR, you have just 72 hours to report certain types of data breaches to regulators. But when you’re trying frantically to understand the full scope of an attack and contain the damage, this can fall through the cracks.

Lastly, regulators may decide to investigate a data breach – particularly if it resulted in the loss of sensitive information, affected a large number of people, or both. Investigations take time and can cause significant disruption.

7 phishing prevention tips to protect your business

1. Train employees to spot red flags

Your employees form your first and most important line of defence against phishing. Host regular cybersecurity awareness training sessions to teach them to spot red flags, like:

• Urgent demands for action
• Unexpected payment requests
• Obvious spelling mistakes
• Requests for sensitive information

2. Implement multi-factor authentication

Multi-factor authentication (MFA) provides added layers of security to sensitive accounts and documents. 

A skilled and determined hacker can crack even the strongest passwords. Reinforcing your defences with supplementary verification methods (like an authenticator app or one-time SMS code) helps to keep them at bay. Most cloud services – including Microsoft 365 and Google Workspace – offer MFA at no extra cost.

3. Verify requests through separate channels

One of the most effective defences against sophisticated phishing is surprisingly low-tech. If someone requests a payment change, bank transfer, or sensitive information via email, verify the request through a separate channel. For example, by calling a colleague.

This simple step is particularly effective at stopping CEO fraud and spear phishing attempts by neutralising the attacker’s primary weapon – urgency and authority.

4. Enable email security

Most major email providers offer some level of phishing protection as standard. Gmail, Outlook, and other major email services have spam and phishing filters that flag malicious emails before they reach your inbox. 

Ensure you configure these features properly and install patches as soon as they’re available to protect against emerging phishing techniques.

5. Keep systems updated and patched

Outdated software provides easy entry points for attackers. Configure devices and software to update automatically to take the pressure off your team.

This simple step closes many vulnerabilities that phishing attacks attempt to exploit, such as outdated web browsers or unpatched email clients. Regular vulnerability management helps you identify and address these security gaps.

6. Control access and privileges

Not everyone in your organisation needs access to everything. Review who has access to financial accounts, administrative dashboards, customer databases, and other critical systems – updating permissions based on the principle of least privilege. 

By restricting access rights, you limit the potential damage if someone falls victim to a phishing attack.

7. Create an incident response plan

t’s impossible to eliminate the threat of phishing attacks entirely. Whether it’s a momentary lack of concentration or a sophisticated scam that would fool the most diligent employee, someone will click a phishing link eventually. 

To minimise the damage, create an incident response plan that outlines the steps employees should take if they fall victim to an attack. Make reporting easy and blame-free so employees feel comfortable sharing potential incidents immediately rather than worrying about getting in trouble.

Shield yourself from the impact of phishing

The impact of phishing reaches far beyond your bottom line – reputation, operations, and regulatory compliance are all at risk. The good news? Most attacks exploit simple gaps rather than sophisticated systems. 

Basic steps like employee training, multi-factor authentication, and strong email security can prevent most of these threats. By focusing on these fundamentals, you can dramatically reduce the impact of phishing and keep your business secure.

Want to give your people the skills to recognise phishing scams before they turn into breaches? Check out CyberSmart Learn, our cybersecurity focused learning management system.

Frequently asked questions