Cybercrime doesn’t just affect mega-corporations and big business, it could also jeopardise the future of many small Welsh businesses, warns a leading Insurance Brokers.

Jelf Insurance Brokers has highlighted the need for even the smallest Welsh businesses to ensure they are protected should the worst happen, and a cyber-attack cost them not just huge amounts of money, but also their reputation.

The recent cyber-attack on telecom company Talk Talk has been well documented in the press, but the news that a modestly sized Yorkshire tearoom has been a victim of hacking might come as more of a surprise and further emphasises the need for caution.

With a rise in small local businesses in Wales in recent years, especially in Newport, there are even more companies for enterprising hackers to target.

Betty’s Tearoom recently confessed that their database of 120,000 customers was subject to a data breach, allowing hackers to illegally access customer data including names, email addresses and encrypted passwords.

Although no financial data was stolen, the main concern is that the hackers can now use the stolen customer credentials to try and access other websites using the same names and passwords, since many people mistakenly use the same login details across several services.

Many would be forgiven for thinking that losing 120,000 email addresses is more of an inconvenience than a disaster, but the reality is very different. The cost of rectifying this data breach and protecting customers could potentially reach the millions, even for a small tea room like Betty’s.

For example, the cost of legal advice can cost up to £360 per hour, and uncovering the root cause through forensic experts can cost up to £260 per hour.

When it comes to directly notifying and protecting their 120,000 customers, it can cost up to £1.80 per letter to make customers aware of the breach, up to £5 per call for customers they don’t have addresses for, and up to £50 per person to track each customer’s credit and check against fraud. Worst case scenario for Betty’s is that the overall cost for completely rectifying the matter could cost millions of pounds, far more than a year’s worth of turnover.

Cybercrime costs the UK economy £27bn per year, with the average business losing £3,926 through fraud and data loss.

Most of the cyber-attacks reported in the press surround the bigger corporations, but two thirds of all recorded cases occur at companies with 11 to 100 employees, much like Betty’s.

The results of such a breach can be catastrophic, with 70 per cent of small firms who experience a major data loss going out of business within a year.

Julian Hilton, regional managing director for Jelf in South Wales, said: “The case of Betty’s Tearooms shows just how much of a reality it is that small businesses can be affected by cybercrime.

“With the Welsh economy currently thriving, it would be such a shame to see local businesses collapse because they can’t afford the cost of rectifying a data breach.

“It’s easy to think that the only risk you face is from hackers, but in reality, human error can be just as destructive. Cyber liability insurance covers you for any type of data loss, no matter how it occurred.

“Your customers, data and reputation are arguably the most valuable assets to your company, so it makes sense to ensure they are protected from day one.”