Sophisticated cyber criminals have followed businesses into the online world; they now can steal everything from intellectual property to credit cards en masse. And that's just the start! Add social security numbers, addresses, and other personally identifying information to the list and you can essentially reconstruct and hijack entire identities. What's worse is that cybercriminals benefit from anonymity: They can compromise entire databases of sensitive information and leave only a masked IP address behind as a trail—and that trail often ends in a foreign country where both jurisdiction and law enforcement are limited.
Regulators Focus On Large Enterprises
As cyber criminals successfully raided corporate databases and siphoned away credit card, tax, banking, healthcare and other consumer information, regulators took notice. In an effort to protect consumers, governments and industry consortiums imposed regulations and mandates like Sarbanes-Oxley Act (SOX), the Health Insurance Portability and Accountability Act (HIPAA), the Gramm-Leach-Bliley Act (GLBA), and the Payment Card Industry (PCI) standard. The initial round of enforcement and deadlines, however, was mostly targeted at large enterprises. Thus it is not surprising that over the last few years, large enterprises have made significant investments in cyber security and have at least increased the barrier to such breaches.
When Cybercrime Moves Downstream
Undeterred, cybercriminals are finding it easier to move downstream and target small to medium businesses, which are increasingly online but do not have the necessary safeguards. The Privacy Rights Clearinghouse website lists a long chronology of breaches. Take a look and you'll find that while familiar names like ChoicePoint, the US Department of Veterans Affairs, TJX, and Circuit City have endured highly publicised breaches, the majority of breaches actually occur at small to medium merchants.
Regardless of whether you are a small retailer, a credit union with a single location, or a doctor's office or clinic, you face the same problems as a global enterprise when a breach occurs: potential fines, bad press, class-action lawsuits and customer attrition. In fact, the costs of security breaches can be more devastating for a small enterprise that has fewer financial and other resources.
The squeeze doesn't end there. Regulations increasingly apply to small and medium-sized businesses, not just larger ones. The PCI Data Security Standard (PCI DSS) must now be met by any business that stores, processes, or transmits credit card information—regardless of annual transaction volume. Similarly, publicly traded companies with a market capitalisation under US$75 million must now comply with SOX. HIPAA, of course, applies to the smallest doctor's office and the largest hospitals and insurance firms.
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