Cybercrime and its effect in Small Businesses - Cyber law in India

Bhargavjyoti Saharia
LLB hons. (Business Law)
NEF Law College, (Gauhati University) Guwahati

Keywords: Cyber attack, data breach, hack, phishing, small and medium business.

Abstract:

Cybercrime, encompassing a spectrum of illicit activities conducted through internet platforms, computers, and the web, poses significant threats to businesses worldwide. Activities such as hacking, phishing, identity theft, and online scams have far-reaching consequences, often leading to severe financial losses, operational disruptions, and reputational damage. Despite misconceptions about the security of small and medium-sized businesses (SMBs), they remain prime targets for cybercriminals.
This article delves into the multifaceted impacts of cybercrime on small businesses, highlighting financial damages, operational disruptions, compliance challenges, and reputational harm. It emphasizes the necessity for businesses to develop robust cybercrime business continuity plans to mitigate risks effectively.
Moreover, the article underscores the importance of proactive measures in addressing cyber threats, including implementation of strong password policies, encrypting data, conducting regular security updates, and investing in cybersecurity training for employees. Additionally, it discusses strategies for protecting against cybercrime, such as multi-factor authentication, vulnerability assessments, firewall usage, and continuous monitoring of suspicious activities.

With cybercrime evolving and posing persistent threats, businesses must prioritize cybersecurity to safeguard their assets, reputation, and longevity. By adopting comprehensive cybersecurity plans and proactive measures, businesses can better shield themselves from the detrimental effects of cyber breaches.

Introduction

Cyber crime is some illegal activities carried out using the internet, computers, the web, etc, which are done for most of the fraudulent activities, and offenses, including Hacking, Phishing, identity theft, cyberstalk, online scams, and many more.
The consequences of cybercrime on a business can be devastating, sometimes leading to permanent closure. This underscores why industry experts recommend developing a cybercrime business continuity plan, complementing your existing disaster management strategies.
To effectively recover from a cyberattack, the most crucial step is to have a well-prepared plan. Proactively addressing potential threats is essential for effective risk management.
Cybercrime encompasses a wide range of activities, including unauthorized data access, committing fraud through computer communications, and using digital means to hold systems for ransom.
Even when a company believes that it is safe, there us a high probability that it is not. Cybercriminals often target small and medium-sized businesses (SMBs). According to the National Cybersecurity Alliance, the misconception that SMBs are too small to be targeted due to the perceived lower value of their information is a myth. In reality, small businesses are more prone to ransomware attacks.

Cyber law in India

Cybercrime is an unlawful act. It involves criminal activities that are traditional in nature , such as theft, defamation, fraud, and mischief, all of which are subject to the Indian Penal Code, which is now ‘Bharatiya Nyaya Sanhita’.

The abuse of computers has also given birth to a gamut of new-age crimes that are addressed by the Information Technology Act, of 2000. (which is the first cybercrime law to be approved by the Indian Parliament.)

Provisions under the IT Act :
Section 43 of the act, deals with individuals who indulge the cybercrime such as damaging the computer of the victim without obtaining the due permission of the victim.
Section 66: Any conduct described in Section 43 that is deemed dishonest or fraudulent can result in imprisonment for up to three years or a fine of up to Rs. 5 lakh.
Section 67 involves electronically publishing obscenities, and if any are convicted, then imprisonment is up to 5 years and a fine up to Rs. 10 Lakhs

Impact of Cybercrime on Small Businesses

The impact of hacking and other cybercrimes on small businesses can be profound, affecting business continuity in several ways.

Financial Damage

Financial loss is one of the primary consequences of cybercrime. When a cyber-attack occurs, the financial repercussions can manifest in various forms.

Direct Theft: Hackers can directly siphon funds from corporate bank accounts. Additionally, if personal information is compromised, employees may suffer from identity theft. Compromised customer credit card information can also lead to significant financial liabilities.
Ransomware: These attacks can force businesses to pay a ransom to regain access to their systems. The National Cybersecurity Alliance reports that 46 percent of small businesses have been targeted by ransomware, and 73 percent of those affected have paid the ransom.
Additional Costs:
– Notifying clients about data breaches.
– Providing records to law enforcement.
– Increased insurance premiums.
These financial burdens can escalate, particularly if the cyberattack disrupts daily business operations, leading to lost of revenue.

Compliance Problems

If your industry is subject to government regulations, cybercrime can wreak havoc. Your business might need to halt operations or face increased scrutiny to continue serving your clients.

Operational Disruption

Investopedia notes that beyond financial damages, cyberattacks can cause significant operational disruptions, leading to lost revenue. Consider how such interruptions can affect your staff, clients, and personal finances. The criminal actions of others can have far-reaching impacts on your business.

Reputational Damage

The effects of hacking and cybercrime extend beyond finances. While you might recover lost funds, restoring your company’s reputation is more challenging. ISACA explains that many organizations use incident response teams to analyze attacks and restore operations, preventing future incidents. However, regaining public trust and customer retention takes much longer.
Your response to cybercrime can affect your business’s reputation for years. In industries that handle sensitive data, like healthcare, a data breach can lead to a permanent loss of trust. Any business can suffer long-term damage to its reputation from a cybersecurity incident.

Time and Cost to Recover from Hacking

Recovering from a cybersecurity breach can take time, but a well-managed response can aid the process. However, the cost of recovery can be much higher than what many business leaders realize. According to the National Cybersecurity Alliance, the average cost of a data breach for small-to-medium-sized businesses (SMBs) was Rs.12,438,012/- in 2019. Most SMB leaders, however, estimated it at around Rs. 8,43,000/- , with only 19 percent acknowledging that costs could exceed Rs. 8,347,560/-.

Prevention is the best approach, but if a breach occurs, having a solid cybercrime business continuity plan is crucial. For every businesses a plan should be ready to handle attacks of any size and severity.

Its Effects

Cybercrime has become a significant and costly issue for businesses of all sizes. Cybercriminals exploit technology vulnerabilities through methods such as data breaches, ransomware, and phishing scams to steal valuable corporate data or extort money. These attacks not only cause financial losses but can also result in reputational damage, regulatory fines, and prolonged litigation costs.

To protect against cybercrime, businesses should proactively implement security measures like firewalls and antivirus software, keep systems updated with the latest patches, use strong passwords, and train employees to identify potential threats.

General Strategies for Protecting Against Cybercrime

To protect against cybercrime, consider these strategies:

Implement Strong Password Policies: Ensure that all employees use complex, unique passwords and change them regularly.
Encrypt Data and Communications: Use encryption to protect sensitive data both in transit and at rest.
Perform Regular Security Updates: Keep all software and systems updated with the latest security patches.
Invest in Cybersecurity Training: Train employees to recognize and respond to potential threats like phishing emails.
Use Multi-Factor Authentication (MFA): Add an extra layer of security by requiring multiple forms of verification for access.
Conduct Regular Vulnerability Assessments and Penetration Tests: Regularly test your systems to identify and fix security weaknesses.
Use a Firewall: Protect your network from external threats with a robust firewall.
Monitor for Suspicious Activity: Continuously monitor your network for unusual or suspicious activity.

Having a comprehensive cybersecurity plan in place can help protect your company from financial losses and reputational damage that can result from a cyber breach.

Conclusion

In today’s digital age, cybercrime poses a severe threat to businesses of all sizes, encompassing activities like hacking, phishing, identity theft, cyberstalking, and online scams. The impact of cybercrime can be devastating, often leading to financial loss, operational disruption, compliance issues, and long-term reputational damage. Small and medium-sized businesses (SMBs) are particularly vulnerable, with many suffering significant financial and operational consequences from cyberattacks.
To mitigate these risks, businesses must implement strong cybersecurity measures. This includes enforcing robust password policies, encrypting data, performing regular security updates, and investing in employee cybersecurity training. Multi-factor authentication, regular vulnerability assessments, penetration tests, and continuous monitoring for suspicious activity are also essential. Additionally, using firewalls and having a comprehensive cybercrime business continuity plan can help ensure business resilience.
By proactively addressing potential threats and being prepared with a solid response plan, businesses can better protect themselves from the damaging effects of cybercrime. For expert assistance in staying ahead of cyber threats, consider partnering with the expert team of cybersecurity professionals in StickmanCyber for comprehensive threat monitoring, detection, and response services.