A recent survey from Nationwide has found that one-quarter of small business owners (SBOs) in the U.S. have been targeted by AI-driven scams over the past year. These scams, which often use generative AI for email, voice, or video impersonations of senior-level employees, have left many small businesses vulnerable to fraud. As cyber threats like ransomware, phishing, and malware remain top concerns, AI-powered scams are emerging as a significant new threat.
The survey also revealed that more than half (52%) of SBOs admitted to being fooled by a deepfake image or video in the last year. Additionally, nine in 10 respondents believe that AI scams are becoming more sophisticated, with many expressing a need for help in protecting their businesses. While most SBOs recognize that the rise in generative AI makes cyber insurance more necessary, less than half of them actually carry the coverage they need.
Key Insights from Nationwide’s Survey:
- Small Businesses Have Improved Cybersecurity, But Still Need More Protection
- Since the COVID-19 pandemic, 69% of SBOs are now worried about a potential cyberattack on their business, a significant increase from 2022.
- Two-thirds (65%) feel prepared to prevent an attack, with 71% providing formal cybersecurity training for employees at least once a year.
- However, 23% of SBOs have already been victims of a cyberattack, with many reporting that it impacted their finances and customer trust.
- Business Owners Underestimate the Costs and Recovery Time of Cyberattacks
- 81% of SBOs believe a cyberattack would cost them less than $5,000, while 22% think they could recover in a month or less.
- Nationwide’s claims data shows that the average cyber claim for a small business is between $18,000 and $21,000, with recovery often taking up to 75 days.
- Confidence Is High, But Plans Are Lacking
- Although 66% of SBOs are confident in their ability to recover from a cyberattack, only 42% have purchased cyber insurance.
- Additionally, 66% of SBOs expect non-cyber insurance to cover cyberattack losses, or they have not considered what to do in the event of an attack.
- 69% have an incident response plan in place, but 28% admit that their plans are outdated.
The Need for Proactive Cybersecurity
Nationwide’s survey highlights the importance of SBOs being proactive in protecting their businesses from AI-driven cyberattacks. With the sophistication of generative AI scams increasing, Lentz emphasized the need for updated incident response plans and comprehensive cyber insurance.
By adopting a proactive cybersecurity approach that includes robust practices, up-to-date response plans, and comprehensive coverage, small business owners can protect their businesses from evolving cyber threats.
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