Is non-compliance the biggest threat to an SME?

As a business sector, small and medium-sized enterprises (SMEs) represent most UK businesses and are the foundation of the UK’s revenue source.

Is non-compliance the biggest threat to an SME?

SMEs face all the same regulations and challenges as large multinationals and PLCs but often do not proportion their investments back into the business as other larger organisations. This is most evident when we review SMEs’ budgets assigned to compliance and data security.

This lack of consideration is leading SMEs onto a dangerous path, with the outcome being that they face two major threats which could end the business, namely ransomware attacks or GDPR failure. 

First, SMEs need to ensure the data privacy of all their consumers and stakeholders. Businesses must be acquainted with the responsibilities related to the processing of data of UK and EU residents. The regulation should not be perceived as an obstacle or an issue for the business but must be recognised as a way to transparent data storage and trusting relationships with customers and staff. 

In today’s marketplace, most businesses provide online services that process and store large amounts of data. This data includes sensitive personal information that becomes a target for cyber attackers who strive to steal this information, sell it, or use it in other fraudulent ways. Personally identifiable information (PII), such as social security numbers, driver’s licenses, passports, etc are the first target for attackers, so the loss of sensitive information can be dangerous for your company and customers.

Data protection for SMEs is especially critical since breaches and information loss can run into large amounts of money due to system rebuilds, fines and reputational damage. As a result, small companies may not be able to carry this financial burden and go bankrupt.

While GDPR compliance can be difficult for all organisations, small businesses face a number of unique challenges. For one, they simply may not have the money to put a detailed, high-tech security program into place. However, regarding risk mitigation, security is not just about preventing a data breach or a cyberattack.

GDPR requires companies to comply and provide evidence of their compliance, including mandates to implement data protection impact assessments and appoint a data protection officer, among several others. GDPR compliance is certainly no small undertaking and requires a major shift for many SMEs that may not have privacy programs in place.

The most common form of data breach is via ransomware which typically enters the business through phishing emails sent to staff. In the 12 months from April 2022 to March 2023, the UK suffered more known ransomware attacks than any country other than the USA, according to a Malwarebytes survey. In general, a strong, secure email system will stop most rogue emails, with staff training being the backstop to spot any others. However, although most organisations install sophisticated email techniques, SMEs often fail to ensure systems are up to date or staff trained, and hence they become easy targets for hackers, as reported in the Cyber Security Breaches Survey 2022 by the Department for Digital, Culture, Media and Sport.

Taking more control of a business’s position to compliance and cyber security has some real benefits and can provide a return on investment made in better processes and systems. Here are the top six:

Cybersecurity enhancements

The compliance requirements motivate businesses to enhance cybersecurity and take data privacy seriously. Therefore, you adopt relevant security measures to protect the personal data of clients and prospects. As a result, you change and improve your cybersecurity approach, do everything to make it up to date, find weak points in your system, and streamline current security-related processes. 

Improved data management

Compliance requires your business to know exactly what sensitive information you store and process. That means you will need to audit all the data you have, put it in order/classify it, and improve the overall data management process. It will help you identify unnecessary data that can be already erased, making a Subject Access Request (SAR) easier to deal with and increasing the productivity of your staff in order to let them focus on critical things, saving precious time. 

Better SEO

Compliance, with GDPR in particular, gives your website a higher ranking in Google since the website becomes more reliable. 


Of course, if a data breach occurs, you can show that your website or infrastructure is GDPR-compliant and that you have all policies, cookies, and terms and conditions on your website. In this instance, you can avoid a significant fine. You will even receive insurance payouts if a cyberattack is proven, as long as you have insurance, that is!    

Higher loyalty and trust from users

When users see that your business complies with GDPR requirements and you want users to feel trust and confidence in your service, it makes them more loyal to your services. Users know how their data is used and processed; they know it can be erased upon request, and vendor-customer relationships are taken to the next level. You demonstrate your concern about users’ data privacy. 

New business culture development

Respect for the security of your business environment and the privacy of your customers creates a new business culture inside your organisation. You will motivate your employees to understand the value of security and become more responsible and determined. Thus, GDPR compliance helps change the mindset of employees and takes a step forward in competitiveness. 

While accountability for tech giants is moving slowly, the overall attitude toward data privacy is shifting. The average consumer has become more aware of how companies collect their information, and privacy concerns have become central to conversations about technology. However, SMEs must consider the risks due to poor data compliance and evaluate their customer data practices and data security systems and make sure their data management is secure and up to date.

Colin Tankard
Colin Tankard

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