Has your computer ever crashed in the middle of creating a big presentation or writing a long document? A day's work can be lost in a flash. Similarly, if you run an e-commerce business and your website crashes, you could lose business. Cyberattacks are also becoming more commonplace as businesses increasingly depend on internet technology.

Small-business owners are particularly vulnerable to technology risks because they lack the risk management resources of larger firms. Many small-business owners obtain business insurance as a form of protection, but 31 percent do not take any actions to protect themselves against security breaches. While data breaches are perhaps the most prominent technology risk, many other factors can compromise your business's technology and data.


A security breach can be deadly to a small business. Estimates show that more than 70 percent of cyberattacks target small businesses. The average cost of recovery from a data breach for small businesses is $36,000 and can range to more than $50,000.

Protection starts with awareness. Malware, hackers, viruses or phishing can compromise the security of your business data and information, but you can prevent some of these attacks through proper communication and training. Management and staff all play a role in thwarting potential attacks.

Create a policy on acceptable use of technology, internet resources and data. This policy should contain guidelines on:

  • Password creation and privacy
  • Avoiding downloads from unknown sources
  • Not opening emails from unknown senders
  • Regularly installing security updates
  • Access to sensitive data

If your business accepts payment from credit or debit cards, you also need to comply with the Payment Card Industry Security Standards requirements on data privacy. Implementing a validated payment application can help alleviate this burden.

Physical Threats

Technology used by small businesses is also vulnerable to physical threats. For example, a fire could potentially wipe out all the sensitive data on a server located on-site. Spilling coffee on your laptop could erase important files if you don't have them properly backed up. Theft or vandalism can also obliterate essential technology or data.

A clear policy on technology use can once again be helpful to mitigate some of the physical risks associated with technology dependence. To prevent unauthorized access, instruct employees not to leave their devices unattended in public places and to log out of their computers when they are away from their desks. Destroy hard disks on any computer that you need to dispose of or recycle.

Taking measures to protect your technology and the data it holds against physical threats can only go so far. Storing your data and business information in the cloud is a best practice — and easier than ever in today's digital business world. Cloud data and file storage does not require any hardware and is just as convenient and secure as an on-site server. Online storage providers' services vary, including whether they offer data encryption or have bandwidth limitation, so do your research before picking a provider.

Storing your business information online can help alleviate physical threats to data, but you still need to worry about threats to physical equipment. Lost, damaged or stolen devices all have price tags. A disaster recovery plan and business insurance are also important for protecting yourself against these threats.

Technology Failure

Technology is not bulletproof, nor is it failproof. Most businesses will experience a technology failure at some point — often at the most inopportune times.

Technology performance has the power to boost or block your business. An outage during peak hours or in the middle of a big campaign can be costly. If your website takes too long to load, potential customers may look elsewhere. But if it runs at lightning speed and the technology is flawless, customers can move through the sales funnel more efficiently, gain trust and enjoy a better experience with your brand.

Monitoring your performance can help maximize potential and mitigate technology risks. If you're running out of bandwidth on your servers, you can upgrade before you surpass capacity. If you have a call center and track volumes throughout the week, you can add extra staff for peak hours. Those operators can also monitor problems — for example, calls may spike if a service interruption or technology failure affects customers.

Additionally, pay attention to software updates and warnings and perform routine maintenance and checks. Heed warnings on your computer or phone that it's running out of disk space or that your software is out of date, and take action immediately if it's a work device. Low disk space can affect your computer's performance and hinder your productivity.

More severe technology failures can affect business continuity and possibly lead to a loss of income. Obtain an insurance policy to protect your business against cyberattacks, physical damage to your technology and loss of income in the event your technology fails. Work with your IT service provider to plan how you will get back up and running if your service is interrupted.

Every business that uses technology is vulnerable to these risks. Understand which threats your business could be exposed to, raise awareness through communication and training your staff and take measures to protect yourself with insurance and other technology management solutions.

Read more about protecting your business when using cloud services and from data breaches here.

Stay up-to-date on all the latest trends and insights for business owners: Subscribe to our e-newsletter.

Automatic Data Processing Insurance Agency, Inc. (ADPIA) is an affiliate of ADP, LLC. All insurance products will be offered and sold only through ADPIA, its licensed agents or its licensed insurance partners; 1 ADP Blvd. Roseland, NJ 07068. CA license #0D04044. Licensed in 50 states. All services may not be available in all states. This information is not intended as tax or legal advice. If you have any questions, contact a tax or legal professional.

Tags: Technology Risk Management Data Security