Data security in small business: Threats from  artificial intelligence

Article updated January 20, 2025

Data security in small business is starting to feel the impacts of artificial intelligence (AI).

AI is rapidly reshaping how businesses operate, bringing both incredible opportunities and significant risks. For small businesses, it’s vital to understand the dual role AI plays in driving innovation in data protection while potentially threatening data security and security practices.

Here’s the harsh truth about AI: it is both a friend and foe to your business. Let’s explore its advantages, the risks of its adversarial role, potential threats and how you can protect your business.

Benefits of AI for Data Security in Small Business

AI’s transformative potential is undeniable, especially for medium and small business owners looking to optimize operations and enhance customer relationships. Here are some key advantages:

• Efficiency and Automation: AI can handle repetitive tasks, allowing you to focus on the most important components of your business.
• Smarter Insights: With its ability to analyze vast amounts of data quickly, AI helps uncover trends and improve decision-making.
• Enhanced Customer Service: AI-powered chatbots and virtual assistants provide 24/7 customer support, improving customer satisfaction.
• Personalized Marketing: AI tailors marketing strategies to individual customers, boosting engagement and sales.
• Cost Savings: Automating tasks with AI can reduce operational costs and free up valuable resources.

Risks of AI for Data Security in Small Business

While AI offers many benefits for data security in small business, it also introduces new security challenges. Below are some of the most pressing concerns for small businesses:

1. AI-Driven Cyberattacks

Cybercriminals are leveraging AI to launch sophisticated cybersecurity and phishing attacks. For instance, AI can create highly convincing phishing emails, mimicking your company’s communications to deceive customers or employees.

Traditional spam filters and firewalls often struggle to detect these advanced tactics. And, the new capabilities of generative AI (e.g. ChatGPT and many others) are making the problems even worse.

To combat this, small businesses need robust cybersecurity tools and security measures, such as AI-driven threat detection systems, that evolve alongside these threats to protect customer information and data loss.

2. Resource Constraints

Investing in AI-enhanced security tools can strain the budgets for data security in small busnesses. However, solutions like managed security services or open-source AI tools can provide cost-effective ways to stay protected from cyber security risks to critical data. Partnering with experienced vendors and security teams specializing in AI-driven cybersecurity can also bridge the resource gap.

3. Data Security in Small Business Privacy Concerns

AI relies on large data sets to function, but mishandling sensitive information can lead to data breaches or regulatory violations. For example, improperly configured AI tools in healthcare or finance could inadvertently expose sensitive data, which will significantly impact your customer trust.

Protect your business from scams by implementing strong encryption, access controls and AI systems designed to prioritize privacy.

4. Lack of Expertise

The use of AI is growing dramatically, and finding skilled professionals to manage and secure AI systems is challenging. Outsourcing to consultants or training existing staff in AI basics can help close this knowledge gap.

5. Insider Threats to Data Security in Small Business

AI technology can monitor employee activity to detect unusual behavior, but implementing these systems without transparency can harm trust. Be clear in your employee training about how and why AI is being used and establish ethical boundaries to ensure employees feel respected.

6. Ethical Challenges are Real with AI

AI isn’t perfect. It can make mistakes or reflect biases embedded in the data it learns from. Small businesses need to ensure that AI tools are used responsibly, avoiding scenarios that could harm their reputation, invite legal consequences or create financial losses.

Emerging AI threats Small Businesses Need to Know

In the last 18 months, new AI-related risks have emerged, including:

• Deepfake Technology: Cybercriminals can use AI to create convincing fake videos or audio, leading to fraud or reputational damage.
• Ransomware-as-a-Service (RaaS): AI is making it easier for less-skilled hackers to launch sophisticated ransomware attacks, targeting SMBs with fewer resources to defend themselves.
• AI Manipulation of IoT Devices: Many small businesses use internet of things (IoT) devices, such as smart cameras or thermostats. AI-powered malware can exploit vulnerabilities in these devices to gain unauthorized access to networks.

We recently read a great, but chilling article from Malwarebytes titled: How to recognize AI-generated phishing emails. It’s worth a read to learn more about what to look for and what to do.

How Small Businesses Can Safeguard Their Data

Protecting your business from AI-driven cyber threats doesn’t require a Fortune 500 budget. Here are practical steps small businesses can take can take:

1. Adopt Strong Access Controls: Limit data access to only those employees who need it.
2. Regularly Update Software and Apps: Keep all antivirus software and systems patched to close security gaps.
3. Train Employees: Educate your team on identifying phishing attempts and following data security best practices.
4. Invest in Encryption: Encrypt sensitive customer and business data.
5. Create a Response Plan: Develop a clear strategy for responding to data breaches.
6. Partner with Experts: Work with managed security providers to implement AI-driven cybersecurity solutions tailored to small businesses.
7. Multi-Factor Authentication and Strong Passwords. These are tried-and-true tools that still help today.

The Road Ahead: Data Security in Small Businesses is Under Attack

AI is here to stay, and its role in business will only grow. By understanding its risks and benefits, small businesses can harness its potential while safeguarding their most valuable asset: data. Investing in AI-driven cybersecurity solutions, educating employees and partnering with trusted experts will go a long way in keeping your business secure.

As technology evolves, staying proactive about data security is not just smart—it’s essential. Don’t let your business fall behind. Take action now to protect your company’s future.

If your business is larger, read our recent article on the impacts of AI on medium-sized small businesses.