Consequences of a Cyberattack – Damages and Liability Risks for SMEs

A cyberattack is not "just an IT problem." The consequences often ripple through the entire company – and sometimes beyond. Think of production shutdowns, angry customers, legal action, or even business closure.

In this article, we examine the diverse consequences that a cyber incident can have for SMEs and show why proactive security also serves as a protective shield here.

Financial Impact: Direct and Indirect Costs

First, there are the direct costs: IT forensics experts, new hardware, possible ransom payments, or data recovery costs. But indirect damages quickly become relevant: operations are disrupted, orders cannot be fulfilled. Employees cannot work, customers may jump ship.

A Bitkom study quantified the annual total damage from cyberattacks for the German economy at 223 billion € (2021) and rising – this includes many indirect damages, e.g., revenue losses. For an SME, just a few days of downtime can tip the quarterly result or, in the worst case, threaten existence.

There's the often-cited figure (from US studies) that over half of SMEs must close within a year after a severe data loss – although this figure is not exactly verified for Germany, it shows the scope.

Legal Consequences and Liability Risks

When personal data is affected (e.g., customer data, employee data), the General Data Protection Regulation (GDPR) applies. It obliges companies to report data breaches to the supervisory authority within 72 hours and inform those affected. If you fail to do this, sensitive penalties threaten.

Even if you report, authorities may ask: could appropriate protective measures have prevented the incident? Customers or business partners could also demand compensation if, for example, confidential information flowed from your network and caused them damage.

The management of an SME is also under duty of care. If there was gross negligence in IT security, liability claims against managers could theoretically arise (e.g., from shareholders).

Reputation Damage and Customer Trust

Imagine your customers reading in the press that your company was hacked and possibly their data ended up on the dark web. The loss of trust can be serious. It takes a lot of effort and PR work to restore trust.

Some of your customers will look for alternatives in the meantime – especially new customers could be deterred. Reputation is an intangible asset that has a direct business effect. That's why large companies invest so heavily in crisis PR after incidents.

SMEs often lack the budget for large image campaigns, making it all the more important to preventively avoid getting into such a situation in the first place.

Competitive Disadvantages Through Data Loss

Beyond immediate trust loss, an attack can also cost innovations. If, for example, technical drawings, formulas, or proposals are stolen, competitors can benefit from them. In some cases, you don't even know who all copied data – but suddenly a competitor appears with a similar concept.

Economic espionage via cyberattack is primarily an issue for larger medium-sized companies, but SMEs with specialization (so-called hidden champions) are also in the crosshairs.

Psychological Stress for Team and Management

The burden on employees and management should not be underestimated. A cyber incident can feel like an assault – you feel violated, exposed, stressed. The processing can take weeks, which wears down the team.

Especially in smaller companies, where "the company" often feels almost like family, an attack also hits emotionally.

IT Security as Part of Entrepreneurial Risk Management

All these consequences show: cybersecurity is part of entrepreneurial risk management. Just as fire protection is taken seriously, cyber threats should be taken seriously. And like with fire: it can never be prevented with absolute certainty, but precautions can be taken to keep damage minimal.

This includes: regular backups (for quick resumption of operations), cyber insurance (to cushion financial peaks), communication plans (to protect reputation), and of course the constant expansion of protective measures.

Practice Tip: Conduct a risk analysis: what type of damage would be most serious for your company? Data loss? Production downtime? Legal costs? Then set priorities exactly there for your security investments.

If, for example, production failure is your nightmare, invest especially in network segmentation, secure control technology, and emergency processes for production. If customer data is your capital, focus on access protection and encryption of this data. This way, you make your company gradually more resilient – and significantly reduce potential damage.