10 Cybersecurity Risks to Small Businesses in 2025

Building trust with your small business’s customers takes time and effort – but it can disappear in an instant if a cyber-attack or data breach compromises their personal and financial information.

A 2023 study by Mastercard found data protection measures (57%), accountability (53%), and transparency about cyber incidents (52%) are among the highest factors influencing Canadian consumers’ perceptions of small business security and trustworthiness.

Cyber-related threats and attacks on businesses are constantly evolving. However, data from a poll of Canadian business owners conducted by the Insurance Bureau of Canada (IBC) found that 69% don’t consider cybersecurity a financial priority, and only 20% intended to purchase a cyber insurance policy, believing they’re too small to be targeted. 

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Cyber liability insurance is an important component of any business insurance policy, but so is being aware of the threats that could imperil your business, improving your company’s cybersecurity, and knowing what to do if your business suffers a cyber-attack.

Here are 10 cybersecurity risks small business owners need to know about in 2025:

1. Artificial Intelligence-Fuelled Attacks

Artificial intelligence (AI) is changing all facets of our lives and businesses online. Just as you might explore how AI can help you grow your business, cybercriminals are also keen to use it to create more sophisticated attacks that are far more difficult to detect.

This increases the threat of more sophisticated phishing and social engineering attacks, which could compromise your business’s data and security.

2. Advanced Ransomware Attacks

According to cybersecurity provider Sophos, an estimated 59% of Canadian organizations were hit by a ransomware attack last year, with an average initial ransom demand of $2 million. The majority (94%) of those organizations paid the ransom.

The scary truth? Ransomware attacks are becoming more advanced and ruthless. Hackers use data encryption, theft, AI-powered tactics, and even threats of public exposure to pressure businesses into paying up.

3. Data Breaches

Some business owners may think data breaches are minor and easy to resolve. That isn’t the case. For example, IBM’s “Cost of a Data Breach Report 2024” found the global average cost of a data breach in 2024 was US$4.88 million  – a 10% increase versus 2023 and the highest total ever.

Data breaches can happen in multiple ways, often due to human error, weak cybersecurity measures, or cybercrime. For example, using and reusing weak passwords, unencrypted Wi-Fi, or outdated software and operating systems with known vulnerabilities criminals can exploit.

4. Threats to Employees

Successful social engineering attacks on a business’s employees can compromise its systems. Social engineering is a technique used by hackers to manipulate people into voluntarily providing confidential information about themselves or their organizations in good faith, such as passwords and banking information.

5. Malware

Malware (malicious software) is software designed to harvest confidential data or destroy computer systems. Examples of malware include viruses, worms, Trojan viruses, spyware, adware, spyware, and ransomware.

6. IoT and Mobile Device Vulnerability

Many small businesses rely on internet-of-things (IoT) devices, such as smart appliances, for their operations daily. Some of these devices are easy for hackers to exploit to access a business’s network.

Also, the mobile devices business owners and employees use that are connected to a company’s system can be compromised. Data suggests that 85% of small businesses rely on smartphones to improve productivity, and 75% of their employees use smartphones to check their work email accounts. There are ways small businesses can enhance the cybersecurity of their mobile devices.

7. Cloud Storage Breaches

Misconfigured or poorly secured cloud storage systems can be a ticking time bomb for data breaches. 

When businesses fail to properly set up security settings, use weak access controls, or leave storage environments exposed, they risk leaking sensitive customer data, financial records, intellectual property, and other confidential information.

Cloud storage is convenient and scalable, but without proper cybersecurity measures, it can become a major liability. 

8. Zero-Day Software Vulnerabilities

Almost all software contains bugs. A zero-day vulnerability in software is typically a bug unknown to a software vendor that hackers exploit before a patch or other fix is available. It’s called “zero-day” because a vendor has zero days to prepare a patch.

9. Advanced Persistent Threats

An advanced persistent threat is a continuous, clandestine, and sophisticated hacking technique used to gain access to a computing system and remain inside for a prolonged period of time undetected. Hackers use these types of attacks over longer periods of time to steal a company’s data.

10. Supply Chain Partner Attacks

Your business may have rigid, robust cybersecurity measures in place, but do all of your supply chain partners? According to Wikipedia, a supply chain attack is a cyber-attack that seeks to damage an organization by targeting less secure elements in its supply chain. These types of attacks may target the software supply chain partners use or involve physically tampering with electronic devices.

What Type of Insurance Helps Businesses Recover From Cyber-Attacks?

Cyber insurance policies, including cyber liability insurance and cybercrime insurance, are designed to cover a business’s financial losses due to cyber-attacks and data breaches that occur on mobile devices and other computers and systems.

Zensurance can help your business get cyber insurance coverage quickly and easily.

Fill out our online application for a free quote.

We’ll shop our partner network of over 50 insurers to get the cyber insurance you need at a low cost.