6 Cybersecurity Threats Facing Small Businesses

Quick look: No business is too small to be a cybercriminal’s target, but smart habits and a clear understanding of the risks go a long way, and outside experts can fill in the rest. This guide covers six common cybersecurity threats for small businesses, along with tips to make your team harder to trick and your data easier to protect.

Cyberattacks don’t always start with sophisticated hacking techniques. Sometimes, all it takes is someone clicking a link or approving a request that looked perfectly normal. That’s what makes cybersecurity threats for small businesses a people issue as much as a tech one, and it’s why owners and human resources (HR) managers both have a role to play.

The most common cybersecurity threats for businesses reflect that. Phishing and business email compromise lead the list, and according to the World Economic Forum, 87% of CEOs now rank cyber-enabled fraud as their top concern.

Understanding today’s biggest risks is key, especially as smaller organizations are twice as likely as larger firms to report insufficient cyber resilience. Here are six threats to know, plus potential HR actions that can help reduce risk exposure.

1. Phishing and business email compromise (BEC)

Phishing remains the front door for most attacks, with criminals sending convincing emails and text messages designed to look legitimate, hoping employees will click a link, share login credentials, or transfer money.

Business email compromise goes a step further. An attacker may pose as a trusted executive or vendor to request payment or sensitive information.  Payroll diversion is another variation, in which a criminal poses as an employee and asks payroll to update someone’s direct deposit details.

In 2025, the FBI logged 24,768 BEC complaints and over $3 billion in losses, making it one of the costliest crimes tracked.

HR tips:

• Assign short, regular training sessions to teach employees what a suspicious message looks like and who to tell.
• Establish a clear verification process for requests to change payroll or banking information and walk every new hire through it in their first week.
• Reiterate to employees that it’s safe to question an unexpected request, even one that appears to come from a senior leader.

2. Ransomware and data extortion

Ransomware attacks prevent organizations from accessing their files or systems until a ransom is paid. Attackers increasingly steal data too, and threaten to release it publicly if you refuse to pay.

The FBI received 3,611 ransomware reports in 2025, up from 3,156 in 2024, and many victims never report at all, so the actual number may be higher. Chief information security officers (CISOs) listed this type of attack as their leading concern, and even a short outage can halt payroll, customer service, and revenue.

HR tips:

• Keep an offline copy of employee contact information so you can reach your team by phone or text if email and systems go down. Decide ahead of time who will communicate with employees during an incident.
• Proactively develop an incident response plan, and include cyber incidents in your crisis communication protocol, including what to tell employees and when.
• Establish a process for communicating changes to payroll schedules or other employee services if systems are temporarily unavailable.

3. AI-powered scams and deepfakes

Artificial intelligence (AI) has made scams faster to produce and harder to spot. Attackers can use these tools to write polished phishing messages and to mimic an executive’s voice or face on a call.

In other recent World Economic Forum research, 87% of respondents said AI-related risks grew faster than any other category in 2025, and the FBI tracked AI-related complaints as its own category for the first time, with roughly 22,000 complaints and $893 million in losses.

Because these scams can look and sound convincing, employees need a reliable way to verify requests rather than relying on appearance or familiarity alone.

HR tips:

• Create a policy for verifying any requests involving money or sensitive data, and train your team to pause whenever a request feels rushed, even if the voice sounds familiar.
• Teach managers to expect and welcome a “let me verify that” reply when they send urgent requests.
• Include a short module on voice and video impersonation in your cybersecurity training.

4. Unpatched software and weak access controls

Not every cyberattack requires a convincing scam. Many cyber attacks simply involve things like outdated software, misconfigured cloud settings, or reused and stolen passwords. The Cybersecurity and Infrastructure Security Agency (CISA) added 245 vulnerabilities to its Known Exploited Vulnerabilities catalog in 2025, a 20% jump. These figures show the importance of installing critical patches promptly and following a regular update schedule.

HR tips:

• Tie account access to your hiring and exit checklists so permissions are granted on day one and removed the same day someone leaves.
• Review who can see payroll and employee records each time someone changes roles.
• Coordinate with IT to confirm that access permissions reflect each employee’s current responsibilities.

5. Supply chain and third-party risks

Most small businesses often lean on cloud software and outside providers, from payroll platforms to managed IT services. When one of those vendors is breached, your data could be put at risk.

Nearly two-thirds of large companies cite third-party and supply chain vulnerabilities as their biggest challenge, and small businesses often rely on many of the same vendors.

HR tips:

• Participate in vendor reviews for any provider that stores employee data, and ask how that information is protected and what happens if the vendor is breached.
• Keep a list of every vendor that interacts with employee data and who owns each relationship so that if an incident occurs, you’ll know exactly who to call.

6. Shadow AI and accidental data exposure

Not every threat comes from outside. For example, an employee might paste confidential customer details or employee records into public AI chatbots without realizing that doing so could expose sensitive data.

It can be tricky to determine which AI tools are safe and which aren’t. Per the World Economic Forum, while 64% of organizations have a process to assess the security of these programs, a sizable share still don’t.

HR tips:

• Establish a clear AI use policy that names approved tools and defines what information must stay out of them. Cover the policy in onboarding, refresher training, and your employee handbook.
• Let employees know who they can turn to when they’re unsure whether a tool is approved.
• Work with IT to communicate policy updates as approved tools and security requirements change.

You don’t have to manage cybersecurity alone

Cyber risks keep changing, and so do the data privacy and employment rules tied to them. For small teams, staying current can feel like chasing a moving target, which is why many small employers turn to an HR outsourcing provider to address related risks.

At ExtensisHR, clients receive competitive benefits and HR services like payroll and recruiting, alongside protection from cybersecurity threats through our Information Protection Plan, part of our Employer Protection Plan. It supports everything from incident response and compliance monitoring to awareness training and cyber liability insurance. Coverage can help address eligible costs tied to data breaches and cyber extortion, as well as business interruption, subject to applicable policy terms and conditions.

The threats may keep changing, but your protection doesn’t have to fall behind. Partnering with a team that supports both your HR and compliance needs can help you stay safe and keep your business moving forward.