Are small businesses doing enough to protect themselves from online threats?

Wake Smith Solicitors 19 August 2008

Wake Smith & Tofields has today warned that small firms in Sheffield may not be doing enough to protect themselves from online threats, which in turn could leave them vulnerable to legal action.

A recent survey by internet content security technology provider Trend Micro has shown that 83% of Small and Medium Enterprises (SMEs) do not think they have been a victim of cyber crime. However, with three million online crimes* committed in this country each year, firms that do not think they are being targeted are underestimating the problem and probably not taking the appropriate measures to protect themselves.

Peter Rawlinson, partner specialising in IT and telecoms law at Wake Smith & Tofields, said: "SMEs have many legal requirements placed on them by central and local government. There is more red tape than ever and often the owners or directors of companies can feel overwhelmed by the amount of bureaucracy they face, which distracts them from their day to day job of running a successful business

"However, if they neglect their online security, not only could their business suffer, but their customers could too. The bad publicity created by such a breach and possible investigation by the Information Commissioner will cause considerable damage to a company's reputation. Business to business contracts will often contain indemnity clauses regarding the loss of data. Consumers may also start to sue companies who have not adequately invested in security and subsequently had their details stolen.

"Every business, no matter what its size, has an obligation to keep its customers' details confidential. If a company does not have the proper systems in place, such as appropriate firewalls, adequate password protection and appropriate safe back-up procedures etc, they are acting negligently and could be open to legal claims. Without proper measures in place companies could also find that their insurance cover is void."

Wake Smith & Tofields advises SMEs on these regulatory issues and recommends that any owner or manager of a business should seek specialist legal advice on their responsibilities to customers. Businesses should take as much care with their online security as they do with the physical security of their premises

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