Cybersecurity Threats to Small Businesses
The average cost of a cyberattack for a small- or medium-size business is more than $250,000, according to the annual 2026 CISO Report from Sophos and Cybersecurity Ventures. This is comparable to the salary of a chief information security officer (CISO), which ranges from $250,000 to $400,000. As a result, many small businesses are forced to gamble with their cybersecurity, hoping they will not be targeted.
This gamble is particularly dangerous, given that small- and medium-size businesses make up the backbone of the American economy. These businesses now rely on the same digital building blocks as large enterprises, including cloud services, payment systems, remote access, customer data, and third-party vendors. However, without senior cyber leadership, cybersecurity often becomes a patchwork of tools, checklists, insurance paperwork, and vendor guidance, which may not provide real resilience.
The Growing Threat
Nearly half of all reported cyber incidents involve smaller firms, with the global economy projected to lose $12.2 trillion annually by 2031. Adversaries are increasingly using AI to automate reconnaissance, develop malware, and run phishing campaigns at scale, reducing the cost and skill needed to target smaller firms. Additionally, adversaries are collecting encrypted data with the intent to decrypt it later when they have access to large enough quantum computers.
Small businesses in defense, healthcare, and financial supply chains often hold sensitive credentials that provide access to larger enterprise environments. However, most are not prepared to adopt quantum-resistant encryption, leaving them vulnerable to attack.
Virtual and Fractional CISO Solutions
The real gap in cybersecurity for small businesses is leadership: someone who can turn technical vulnerabilities into business decisions, set priorities, brief executives, prepare for audits, and hold vendors accountable. For many small businesses, hiring a full-time CISO is financially unrealistic.
A Virtual CISO (vCISO) provides remote, on-demand cybersecurity leadership and advice, typically supporting several organizations at the same time. A fractional CISO (fCISO) is a dedicated, part-time executive who is more deeply integrated into one organization's governance, security planning, and day-to-day operations. Both models give smaller organizations access to senior-level cybersecurity expertise in a flexible, more affordable way than hiring a full-time CISO.
Government Support for Cybersecurity Leadership
Washington should make it easier for small businesses to hire fractional cybersecurity leaders, as the private market is not closing this gap on its own. The Cybersecurity and Infrastructure Security Agency (CISA) and the Small Business Administration (SBA) could help by publishing buyer guidance, including vetted criteria for evaluating providers, example scopes of work and deliverables, and real-world case studies.
The National Institute for Standards and Technology (NIST) should recognize these CISO models in its SMB-focused Cybersecurity Framework guidance, helping smaller firms turn the framework's functions into a clear, accountable leadership structure. Congress and the Treasury Department should consider targeted tax incentives or credits for qualified cybersecurity leadership services, tied to measurable risk-reduction outcomes.
Federal acquisition officials should require contractors that handle sensitive government data to show they have executive-level cybersecurity oversight, whether it is full-time, virtual, or fractional. Finally, CISA and the SBA should support vCISO- and fCISO-led workforce training, as employees improve security when training comes with leadership, regular reinforcement, and clear accountability.
Source: CyberScoop