Cyber Attacks Are Killing Small Businesses: Here’s What They Can Do to Survive

The biggest cyber weakness, as these authors so adroitly illuminate, is "between the monitor and the chair," i.e., the human susceptibility to falling for a cyber scam.
By: and | September 5, 2019

It happened again.

According to the Texas Department of Information Resources, on August 16, 2019 twenty-two Texas towns were simultaneously targeted by a coordinated ransomware attack.


While the vast majority of the towns hit were small local governments, this incident sheds light on a popular misconception in today’s society: Cyber thieves only target large enterprises.

This unprecedented attack also begs the question, will we see a new trend where smaller firms are extorted in a “bundled packaged?”

Cyber Incidents by the Numbers

Aviation disasters and cyber breaches share one common thread — large catastrophic events tend to dominate headlines.

According to the National Transportation Safety Board, out of the 350 U.S. aviation fatalities in 2017, none were attributed to any of the major domestic carriers.

General aviation (i.e. private aircraft) accounted for 94% of these fatalities, but when a large domestic airliner carrier is involved, the news cycle amplifies the fallout and stories can last for weeks.

Tim Foley, director of information security, Dataprise

According to a 2017 study by The Ponemon Institute, 43% of cyber attacks targeted small business.

Given the intense coverage of breaches affecting behemoths such as Equifax and Capital One, it is easy to believe that large entities are victims of breaches by a wide margin.

This idea can lull small business into a sense of complacency, adopting a mindset that breaches are only a large enterprise problem.

Not only are small businesses more susceptible to breaches due to factors such as lack of capable IT resources, but they also suffer the greatest in the aftermath of an attack.

The same Ponemon Study found that 60% of small companies shutter their doors within 6 months of a cyber attack, a fact buried in the headlines.

The majority of these attacks are phishing/social engineering in nature, something that can be limited in scope with proper cyber hygiene training for the staff at these smaller firms.

Combating Coordinated Attacks

Don’t expect these attackers to change their tactics, techniques, or procedures (TTPs) anytime soon, for one simple reason — it’s working.

Until U.S.-based businesses, both large and small, become more resilient against these types of attacks, we will to continue to see large volumes of ‘multiple reuse’ phishing-based email compromise/ransomware attacks.

This scenario is a goldmine for bad actors, a literal extortion economy of scale, multiplying the effect of attacking just one small entity.

This attack vector requires very little overhead, as they can be developed once by an attacker and reused many times, ensuring a low level of effort, high volume and devastating consequences when successful.

Threats never disappear completely, they simply shift their target, strategy or method of delivery and reemerge in new ways.

Whether it’s internet pop-ups, credit card fraud or phishing email sophistication, we continue to witness a threat climate evolving in real time. The 2017 Google Docs phishing email marked the first coordinated phishing attack on a massive scale.

As the threats continue to evolve, the bar to achieve cyber resiliency continues to rise.

Les Williams, partner and chief revenue officer, Risk Cooperative

Ten years ago, a strong network perimeter, managed operating system patching and endpoint protection defined a strong cyber hygiene posture for many organizations.

Today, the same posture would be, quite literally, the bare minimum requirement in place and hope to show ‘due diligence’ within your corporate environment.

As the dust settles on yet another ransomware attack, there are always tangible takeaways for businesses of all sizes to consider and adopt.

We must align our security programs toward a “Layered Security” approach: having multiple layers of security so that a single attack cannot bypass all in-place security controls.

When it comes to the threat of ransomware and many complex threats, some best practices include:

  • Implement a cyber hygiene program to strengthen the “human firewall.”
  • Assess your risks and security gaps and plan for their remediation.
  • Store offline backups of critical assets.
  • Plan your response well in advance. According to Vanson Borne, an independent UK-based research firm, more than two-thirds of 3,100 organizations interviewed said they were hit by a cyber attack in the last year. What does this mean? A cyber breach is definitely a “when,” not an “if” scenario. Response plans should be created and tested prior to an actual event occurring.

There is no panacea when it comes to these cyber threats, but there are well-founded best practices that, when used properly along with a security metrics program, can help to ensure a minimal attack surface and a reduced scope and impact of any cyber event.

Aftermath of the Texas Cyber Event

The Texas cyber breach will most likely lead to smaller entities scrutinizing their outsourced IT service providers in greater detail.

Evidence of this can be found today by simply reviewing ‘due diligence’ questionnaires entities are requiring these service providers to complete. Expect to see these same entities require independent audits/certifications for outsourced providers as well.


Given the effectiveness of coordinated attacks an inevitable domino effect will ensue; municipalities can expect to pay higher insurance premia for cyber extortion coverage, more cities and towns will add cyber extortion coverage to their policies with increased limits, and outsourced IT service providers may charge higher fees for increased service level agreements to fulfill stricter security requirements.

Although Atlanta and Baltimore refused to pay a ransom in the aftermath of their breaches, smaller municipalities with smaller budgets may not have the same luxury.

This scenario for smaller towns is exacerbated by the length of time it took these larger cities to recover, and the additional expenses incurred by not paying the ransom demanded.

Watch: Here’s a one-on-one interview with Les Williams on cyber risk and covers.

Besides reviewing cyber policies in greater detail, scrutinizing outsourced IT service providers more closely and following the best practices mentioned earlier, the most often-overlooked factor municipalities must consider is the implementation of a robust cyber hygiene program.

The biggest threat lies between the keyboard and the chair — by adding resiliency to this human element in our governments, we add resiliency to our nation. &

Les Williams, CRM, is Co-Founder and Chief Revenue Officer of Risk Cooperative. He holds a B.S. in Mechanical Engineering from the University of Virginia and an MBA from Harvard Business School. Tim Foley joined Dataprise in 2011 and currently serves as Director of Information Security for the Dataprise CYBER division. A former advisor to the Department of Defense, he is a proven leader who brings over 15 years of cross-sector industry experience in information security.

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.


As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.


Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &


Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]