AI on the Rise: New Tech Brings Cybersecurity Concerns for Small Businesses

Artificial intelligence (AI) is rapidly reshaping industries, offering impressive benefits and creating vulnerabilities concerning small business owners. According to a recent survey by the Insurance Bureau of Canada (IBC), a significant majority—65%—of Canadian small and medium-sized enterprises (SMEs)—worry that AI is making it harder to protect against cyber risks. The stakes are high, as cybercriminals increasingly exploit AI for more sophisticated and harder-to-detect attacks, often outpacing business owners’ cybersecurity measures.

Mahan Azimi, Manager of Catastrophic Risk Policy at IBC, highlighted the dual impact of AI in today’s cybersecurity landscape. "AI has made cyber attacks easier to automate and harder to detect and can pose a real threat to the integrity and security of any business," said Azimi. Applications like ChatGPT can generate highly convincing social engineering emails, while other AI-based tools evolve in real time to counteract traditional security measures. With these developments, the call for businesses to enhance their cyber resilience has become more pressing than ever.

However, the survey found that while awareness of cyber risks is increasing, businesses are not always taking corresponding action. In 2023, 69% of SMEs reported proactive measures to combat cyber risks, yet in 2024, this number dropped to 61%. Despite the rising risks, 62% of businesses still do not prioritize cybersecurity in their budgets. Azimi stresses the importance of accessible solutions, noting that cyber resilience does not have to be expensive or burdensome. IBC provides resources and guidance to help business owners better understand cyber risk and suggests that familiarity with cyber insurance is key to building a robust cybersecurity plan.

The survey’s findings further reveal that:

• Nearly half (45%) of businesses believe they may be vulnerable to cyber attacks, yet a significant number still do not make cybersecurity a financial priority.

• Only 45% have implemented defenses against cyber threats, and a mere 31% enhanced their cybersecurity protocols in the past year.

• A concerning 18% have cyber insurance, which could protect against costly cyber attacks but remains underutilized.

  
  

These statistics underscore a worrying trend: while AI-driven cyber threats are increasing, many SMEs are underprepared. David Shipley, CEO of Beauceron Security, points out that small businesses are particularly vulnerable, with as many as 38% falling victim to cyber crimes, incurring an average cost of $7,800 per incident. Patrick Sullivan, CEO of the Halifax Chamber of Commerce, sees both opportunity and risk in AI adoption. While AI can drive productivity for businesses, it also necessitates stronger cybersecurity to prevent potential exploitation by cybercriminals.

IBC is actively promoting cybersecurity best practices through its annual Cyber Savvy public education campaign, and a 10-question self-assessment tool for SMEs considering cyber insurance is now available on CyberSavvyCanada.ca. This tool outlines critical cybersecurity protocols and best practices to help businesses protect themselves and meet insurer requirements. By staying informed and prepared, business owners can mitigate risks, improve cyber resilience, and navigate the evolving challenges posed by AI in the cybersecurity landscape.

In today’s digital age, understanding the security risks associated with AI and taking proactive measures are essential steps for any business. With the support of resources and tools provided by IBC, Canadian SMEs have a unique opportunity to safeguard their operations and continue to benefit from AI’s transformative potential responsibly.