Small and medium-sized businesses (SMBs) are the backbone of the economy, driving innovation and providing jobs worldwide. SMBs make up 99% of all businesses in America, employing 61.7 million people, nearly half of America’s private workforce. However, operating in today’s fast-paced and dynamic environment comes with inherent risks—many of which often go unnoticed. From cybersecurity vulnerabilities to compliance challenges, these risks can jeopardize operations, reputation, and profitability. Implementing a strong Governance, Risk, and Compliance (GRC) strategy can help SMBs tackle these hidden threats head-on.
The Hidden Risks Lurking in SMB Operations
Cybersecurity remains a significant concern for SMBs, as they are increasingly targeted by cybercriminals who exploit limited resources and defenses. A staggering 61% of SMBs were the target of a cyberattack in 2023. Phishing attacks, ransomware, and data breaches can disrupt operations, compromise customer trust, and incur significant costs. The average total cost of a cyberattack for businesses with less than 500 employees is $2.98 million, with some incidents costing as much as $4.45 million.
Regulatory compliance is another challenge. From international and federal laws such as GDPR, HIPAA, GLBA, and FTC privacy safeguards to state privacy laws like the California Consumer Privacy Act (CCPA), regulatory requirements are continually evolving and it is difficult for SMBs to keep up. Failing to comply can result in hefty fines, legal battles, and reputational harm. Alarmingly, 74% of Managed Service Providers (MSPs) say their clients struggle to meet regulatory compliance requirements.
Operational disruptions, whether due to employee errors, supply chain failures, natural disasters, or IT outages, pose additional risks. Such incidents can bring business to a halt, leading to lost revenue and dissatisfied customers. Furthermore, third-party partnerships, while often essential, can introduce vulnerabilities that are hard to monitor or control. In fact, 29% of companies have no visibility over third-party cyber risks.
Finally, reputation management is a critical yet often underestimated area. A single negative incident, poorly handled, can spiral into a public relations crisis that impacts long-term customer loyalty and business growth. A UK study showed that 60% of small businesses will close within six months of a cyber attack.
How GRC Can Help
A well-implemented GRC strategy provides a cohesive structure to address these risks and build resilience into SMB operations.
A true GRC strategy provides the appropriate structure and tools to conduct thorough risk assessments, uncover hidden vulnerabilities, and identify critical risks to the business before they escalate. Cybersecurity practices are integrated into broader operational policies, ensuring risks are continuously monitored and addressed. This is crucial, as 51% of small businesses have no cybersecurity measures in place.
Compliance becomes more manageable with automated tools and processes that keep track of evolving regulations, helping businesses avoid fines and maintain trust. GRC also supports robust business continuity planning, enabling swift recovery from disruptions while minimizing operational downtime. This is particularly important as 50% of SMBs report that it took 24 hours or longer to recover from a cybersecurity incident.
Moreover, implementing GRC demonstrates a commitment to integrity and accountability, enhancing stakeholder confidence. Customers, partners, and investors are more likely to trust businesses that prioritize governance and proactive risk management.
Achieving Long-Term Security and Success
For SMBs, implementing a GRC strategy is more than risk mitigation—it’s a growth enabler. By identifying and addressing risks systematically, businesses can focus on innovation and customer satisfaction, knowing they are prepared for whatever challenges come their way. This is especially important considering that 43% of cyberattacks are aimed at small to medium businesses, while only 14% of SMBs are prepared to defend themselves.
At KeyStone Solutions, we understand the unique challenges SMBs face. Our tailored GRC services help you safeguard your operations, meet compliance requirements, and build a foundation for sustainable growth.
Let’s work together to protect your business. Contact us today to learn how GRC can empower your operations and help you join the 66% of companies that say compliance mandates are driving spending, ensuring your business stays secure and compliant in an increasingly complex digital landscape.
