For example, banks can start by inquiring whether the SMB has a formal cybersecurity strategy, utilizes regular data backups and has employee training on cybersecurity best practices. Also consider that cybersecurity is much more than IT. For example, ensuring that multi-factor authentication is configured for all online employee accounts, verifying that software-as-a-service platforms are securely configured and not inadvertently exposing information, and ensuring technical risk is appropriately prioritized. As technology touches every aspect of a business and its processes, it is prudent to have a risk-informed view of cybersecurity as a system affecting business operations. Moreover, underwriters may want to consider industry-specific cybersecurity risks. A retail business with an online store, for instance, faces different cyber threats compared to a manufacturing company. Incorporating cybersecurity assessments in loan processes is more than just a compliance issue; it’s a strategic business decision. This approach can lead to reduced default rates and foster a portfolio of financially stable and resilient SMB clients. By emphasizing As technology touches every aspect of a business and its processes, it is prudent to have a risk-informed view of cybersecurity as a system affecting business operations. cybersecurity, banks not only protect their interests but also encourage safer business practices in the SMB sector, contributing to a more secure and financially sound business ecosystem. As we continue to embrace technical solutions in business operations, the importance of cybersecurity in determining the financial stability of SMBs becomes increasingly apparent. Banks and financial institutions have an opportunity to revise their loan assessment processes to include this critical element. By doing so, they can make more informed lending decisions, reduce risk and support the development of a more secure and resilient SMB sector. This evolution in lending practices is not just a response to the growing technical threats but a proactive step towards a safer and more stable business environment. Community Banker 23
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