Cybercrime and recession

Why cybercrime goes up when the economy goes down

Studies show a clear relationship between economic instability and an increase in cybercrime. At the height of the 2009 recession, the UK saw a 40% rise in cyberattacks. The question is, why?

Corporate cutbacks

One of the biggest issues with reducing your cybersecurity budget is that it makes you more vulnerable to online threats. Cybercriminals are opportunistic. They know that many businesses will slash their cybersecurity budgets during a recession, and like any successful predator, they’re quick to exploit that weakness.

Similarly, staff redundancies can increase the pressure on employees. Stressed employees make more mistakes and are more likely to cut corners to stay on top of their mounting workload. Patch management can also suffer as the people responsible for monitoring, maintaining, and updating business systems are no longer around. This makes them the perfect target for social engineering attacks, like phishing emails, which work by generating a sense of panic or urgency to trick the victim into clicking on a spurious link or handing over their credentials.

40%

Cybercrime increased by 40% in the UK at the height of the 2009 recession

Unemployment

Cybercriminals aren’t immune to the effects of a recession. During periods of recession, cybercriminals often step up their efforts to protect their finances amidst rising costs and unemployment.

It’s easy to demonise hackers as predators who prey on less tech-savvy people or vulnerable businesses. But not all of them are career criminals. For example, a software developer who suddenly finds themselves unemployed may turn to cybercrime simply to make ends meet. Or an ex-employee may steal sensitive business data and sell it on the dark web to make some quick cash – possibly in retaliation for being made redundant.

Even non-techies can get in on the act, thanks to the growing trend of cybercrime-as-a-service. The ransomware affiliate marketplace, for example, allows people to execute ransomware attacks using existing tools that require little or no expertise to use. In return, they earn a percentage of the money gained from the attack.

The continuity imperative

SME business owners must make many tough decisions to in a recession. They’ll do anything to keep their business afloat, and that makes them the perfect target for ransomware attacks.

If they’re struggling financially, many businesses will simply pay the ransom because it’s better than the alternative: prolonged disruption, lost revenue, and public disclosure of potentially sensitive customer information. Cybercriminals know this, and deliberately target vulnerable SMEs.

Cybercrime is on the rise

Cyberattacks are becoming more frequent and easier to launch.

Automated tools and the ransomware as a service model mean perpetrators don’t need in-depth technical knowledge to execute a successful attack. And with SMEs conducting more of their business online, they’re more vulnerable to attack than ever.

What is ransomware as a service?

Ransomware as a service allows users – known as affiliates – to execute cyberattacks using pre-built software tools. Affiliates don’t need any technical knowledge or specialist tools. They simply pay a one-off fee or a monthly subscription to gain access to the software. Affiliates earn a percentage of the gains on each successful attack, while the ransomware’s author incurs less personal risk by distancing themselves from the attack.

Hackers don’t discriminate

Opportunistic attacks are far more common, and cybercriminals often target SMEs specifically because they don’t have the expensive and rigorous cybersecurity framework of a Fortune 500 company. To a hacker, SMEs are the low-hanging fruit.

A common misconception among SMEs is that they’re too small to attract attention. It simply isn’t worth the hacker’s time or resources to launch the kind of sophisticated attack you see on the news at a small business. So, they think they can get away with the most rudimentary defences. This is true to an extent, but these aren’t the attacks you should worry about.

Every business relies on tech

No matter your industry, you have some form of online presence. Even a one-person consultancy firm will have a business email address, if nothing else. And without proper protection, that makes them a potential target.

When we say proper protection, we don’t mean installing the most advanced antivirus software on the market or hiring an in-house cybersecurity team. Often, attacks happen because businesses run on outdated software and unpatched systems, resulting from poor cyber hygiene. A successful attack can have serious consequences that impact the business and its customers. For SMEs that run almost exclusively on third-party apps, it could even mean going out of business.

The human element

What do you picture when you think about cyber threats? Chances are, it’s a hooded youth sitting in front of a monitor in a dingy basement, forcing their way into a corporate system through a combination of skill and persistence. It’s a popular image, but one that doesn’t consider the human element of cybersecurity.

Human error is one of the biggest causes of data breaches. This could be because a careless employee who left their work phone unlocked on a table in Starbucks when they popped to the toilet or downloaded pirated software harbouring malware onto a company laptop. Disgruntled employees may also deliberately leak company data in retaliation for being made redundant.

Then there are social engineering attacks that target humans instead of computer systems to steal business data, encrypt files, or install malicious software on corporate networks.

Supply chain risks

77% of SMEs are part of a supply chain. Yet few businesses evaluate their suppliers’ cybersecurity controls and strategies during the tender process.

This is a problem because supply chains have become a popular target for cybercriminals. As demonstrated by high-profile incidents like the SolarWinds attack of 2020, all it takes is one weak link in the chain to put you and other connected businesses at risk.

How much does a Cybersecurity breach cost?

According to the latest government statistics, the average cyberattack costs UK SMEs £4,200. This figure includes costs associated with recovering stolen or encrypted data and lost revenue due to prolonged disruption.

However, this estimate doesn’t factor in potential financial penalties or the reputational damage that may follow an attack. 19% of consumers won’t shop with an e-commerce store that’s suffered a breach, which has a noticeable impact on your bottom line.

31%

of UK SMEs polled in a recent government survey said they were attacked at least once a week in 2022.

82%

of data breaches involve a human element.

13%

Only 13% of businesses assess supplier risks posed by their immediate suppliers.