Top cybersecurity risks for small businesses

Part of running a successful business is protecting what you've built: your customers' trust, your financial data and your operations. Cybercriminals know that small businesses often have leaner IT resources than large enterprises, which makes them attractive targets.

The good news is that a strong cybersecurity plan starts with understanding the risks and putting practical protocols in place.

"Small Business Month is a reminder of how much owners are already juggling day to day," says Mark Valentino, Head of Business Banking at Citizens. "Cybersecurity often feels like one more complex issue competing for attention, but the reality is that the most effective protections are usually straightforward. Clear processes, consistent habits and a culture of verification can significantly reduce risk without requiring enterprise-level resources."

Top cybersecurity risks threatening your business

Cybersecurity threats come in many forms, but a handful of risks account for the majority of incidents hitting small and mid-sized businesses (SMBs).

Here's what to watch for.

1. Phishing attacks and business email compromise (BEC)

Phishing is one of the most common entry points for cybercriminals, and one of the most costly. In a phishing attack, a fraudster sends a deceptive email designed to trick an employee into clicking a malicious link, handing over login credentials or transferring funds.

Business email compromise (BEC) takes it a step further. Criminals impersonate a trusted contact, often a CEO, CFO or vendor, to push through an urgent wire transfer or request sensitive information.

These scams are getting harder to spot: Generative AI allows cybercriminals to produce near-perfect impersonations in minutes. An estimated 43% of BEC phishing emails utilize AI. According to a 2025 FBI report, BEC caused over $3 billion in reported losses.

Remote and hybrid work add another layer of risk. Employees outside the office may be less likely to pause and verify an unusual request in person.

Protect your business: Train employees to recognize phishing emails and social engineering tactics. Set a firm rule: Always verify any financial request through a second channel, like a direct phone call, before acting, even if it appears to come from leadership.

2. Ransomware attacks

Ransomware is malicious software that breaks into your network, encrypts your data and demands payment to restore it. Many attacks now go a step further with "double extortion," where criminals also threaten to publish or sell stolen data if you don't pay.

Small businesses bear a heavy share of this risk. According to Verizon's 2025 Data Breach Investigations Report, 88% of all ransomware incidents involve small and mid-sized organizations, many of which lack the tools to detect an attack before it spreads. The average recovery carries costs well beyond any ransom: lost productivity, IT recovery, legal fees and lasting reputational damage.

Protect your business: Back up data regularly and store copies offline or in a secure cloud. Keep all software updated — ransomware frequently exploits known vulnerabilities. And invest in employee training, since phishing remains one of the most common ways ransomware gets in.

3. Payment and financial fraud

Business payments are a prime target. According to the 2025 AFP Payments Fraud and Control Survey, 79% of organizations experienced attempted or actual payment fraud in 2024.

Your banking partner can be a strong line of defense. Services like Positive Pay automatically verify checks and flag unauthorized transactions. ACH filters and dual-approval workflows add checkpoints that stop fraud before it happens.

Protect your business: Require dual approval for outgoing payments and always verify changes to vendor banking information with a direct call before updating your records. Ask your bank about available fraud detection services and visit our business fraud protection hub.

4. Compromised credentials

Stolen login credentials are one of the most reliable tools in a cybercriminal's kit. They can be lifted through phishing, bought on dark web marketplaces after an unrelated data breach or obtained through remote desktop protocol (RDP) attacks that exploit exposed access points to get inside your network. Once in, attackers can move quietly through your systems, reaching customer information, financial accounts and sensitive business data.

Many employees reuse the same passwords across accounts, meaning a breach somewhere else can unlock access to your systems.

Protect your business: Require strong, unique passwords and change them on a regular schedule. A reputable password manager makes this easier for your whole team. And enable multi-factor authentication (MFA) on every system you can. It's one of the most effective safeguards available, even after credentials have been stolen. Business credit cards with strong digital controls are also worth considering. Learn more about company credit card policies that reduce your financial exposure.

Build your cybersecurity defenses

For most small businesses, the most effective defenses come from consistent habits and a security-aware culture. "Strong cybersecurity for small businesses is about knowing what to look out for, developing good habits and being consistent," Valentino says. "Clear policies, regular training and the right financial controls can dramatically lower exposure without slowing a business down."

Start with "cyber hygiene"

Cyber hygiene is the everyday habits that make your business harder to attack. Simple, consistent security practices can make cybercriminals move on to an easier target. "Cyber threats don't operate on a schedule, and bad actors aren't going to wait for teams to build better habits," says Brendan Goode, Chief Security Officer at Citizens. "That's why security needs to be front of mind across the organization. Putting simple, consistent protections in place helps ensure your small business isn't caught off guard."

Start with the essentials:

• Enable multi-factor authentication across all business systems, email and financial accounts.
• Require strong, unique passwords and change them regularly. A password manager makes this realistic for your whole team.
• Keep software, browsers and operating systems updated ;automatically to close known vulnerabilities.
• Install reputable anti-malware and antivirus software and keep it current.
• Back up data automatically and frequently, storing copies separately from your main network.
• Create a mobile device policy for work use. Securing mobile devices is a step many businesses overlook, and jailbroken or rooted devices should never be used for work.
• Avoid public Wi-Fi for business transactions. Use a VPN for remote work instead.
• Use dedicated devices for financial transactions with limited browsing and email access.
• Keep a written incident response plan so your team knows exactly what to do if something goes wrong.

Virtual cards are another smart layer of protection, as they generate a unique number per transaction, significantly reducing credit card fraud risk.

Invest in employee training

Your team is your first line of defense, and your biggest vulnerability when undertrained. In fact, according to Mimecast's State of Human Risk report, most data breaches come down to simple human error, like a misdirected email or a quick click on a suspicious link.

Despite the risk, fewer than 25% of small businesses conduct regular cybersecurity training, and more than half of employees can't reliably recognize a phishing email.

Fortunately, most human error incidents are preventable. Take action by investing in ongoing training and create a culture where employees feel comfortable flagging suspicious activity. Short, frequent sessions on phishing, social engineering, password security and reporting go a long way. Remind employees to be thoughtful on social media too. Oversharing about your business or team can give cybercriminals the context they need to craft a convincing attack. Put your security protocols in writing so everyone, whether a new hire or a 10-year veteran, knows what to do when something looks off.

"The single most important thing a small business can do to protect itself is to build a culture of security," says Goode.

Partner with a bank that offers fraud protection

Ask your bank about tools and services that protect your accounts, including Positive Pay for check verification, ACH filters and blocks, dual-approval processes for outgoing payments and real-time account alerts. These aren't reserved for large corporations. They're available to small business owners and can make a real difference in your exposure to fraud. You can also visit the Citizens Business Fraud Hub for additional tools, guidance and protections.

Protect your business

Cybersecurity threats are real and growing, but so is your ability to defend against them. By understanding the risks, building good habits, keeping your team trained and working with the right financial partners, you can protect the business you've worked hard to build — and the customers who count on you.

For practical guidance, tools and resources to help safeguard your business, visit the Citizens Business Fraud Hub.