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Challenges SMSs Encounter in Safeguarding User Data Privacy
Thursday, 15th June 2023
Sara Buccino, consultant at The Lisbon Council asbl

Small and medium enterprises (SMEs) face unique challenges in protecting user data in today’s digital landscape. This article explores the hurdles SMEs encounter and proposes concrete solutions to address them. It ultimately advocates that by solving these issues, SMEs can enhance data protection practices and build trust with customers, establishing themselves as responsible custodians of sensitive information in an increasingly data-driven world.


User data protection: A fundamental requirement for SMEs

In today's digital landscape, small and medium enterprises (SMEs) face an uphill battle when it comes to safeguarding user data privacy. 

With the proliferation of online transactions and the increasing value placed on personal information, the protection of user data has become a paramount concern for businesses of all sizes. 

However, SMEs encounter unique challenges that make the task of ensuring data privacy particularly daunting. This article delves precisely into the challenges faced by SMEs in ensuring the protection of user data, shedding light on the complex landscape in which these businesses operate. 

This important topic perfectly aligns with the data-centric approach of the GLACIATION Project providing valuable insights to empower small and medium entreprises in safeguarding user data.

Taking a step back, it is worth analyzing how data sovereignty has become a fundamental requirement for SMEs. 

Data sovereignty refers to the ability and responsibility of organizations, including SMEs, to retain control over the collection, storage, and processing of user data within their jurisdiction or chosen data governance framework. 

For small and medium enterprises (SMEs), user data protection is not just a matter of legal compliance but a crucial aspect of building trust with their customers. SMEs, with their unique characteristics and resource limitations, face distinct challenges in ensuring the security and privacy of user data. 

By understanding the following challenges, SMEs can then take proactive steps to enhance their data protection practices and maintain the trust and confidence of their customers in an increasingly data-driven landscape. Let’s explore these challenges together.

1. Limited Resources

One of the most significant challenges faced by SMEs in ensuring user data protection is the limited financial and technical resources they have at their disposal. Unlike large corporations, SMEs often operate on tight budgets, allocating their resources to essential business operations and growth. As a result, these companies may struggle to invest in robust cybersecurity measures, employ skilled cybersecurity personnel, or implement advanced data protection technologies to safeguard their customers’ information. Therefore, balancing the need to allocate resources for data protection while managing other operational expenses requires careful prioritization and strategic decision-making. SMEs must explore cost-effective cybersecurity solutions and consider alternative options, such as outsourcing certain aspects of data security to specialized service providers.

2. Lack of Awareness

The lack of awareness about data protection among SMEs represents another significant challenge when it comes to ensuring the security of user data. Many SMEs may not fully grasp the importance of data protection or have a comprehensive understanding of the potential risks associated with data breaches. Therefore, they may not always understand the legal and regulatory obligations surrounding data privacy, making it difficult to prioritize and implement appropriate safeguards. Addressing the lack of awareness requires SMEs to prioritize education and training initiatives to raise awareness among employees about the importance of data protection and the potential consequences of data breaches. By enhancing awareness and knowledge about data protection, SMEs can develop a culture of data privacy within their organizations, effectively prioritize the implementation of appropriate safeguards, and take proactive steps to protect user data from potential threats.

3. Changing Regulatory Landscape

The rapidly evolving digital landscape surrounding data protection challenges SMEs to ensure compliance with relevant laws and regulation. Complying with data protection regulations, such as the EU’s General Data Protection Regulation (GDPR) can be complex and demanding, particularly for organizations with limited expertise and resources. Understanding and interpreting the technical and legal requirements of these intricate regulations can be daunting for SMEs, which also need to continuously keep track of the updates and amendments made to these laws to adapt to the evolving data privacy concerns. To address this challenge, SMEs can seek guidance from legal professionals, consultants specializing in data protection or industry associations and networks to help interpret the regulations and develop compliant practices. By allocating resources to navigate the changing regulatory landscape and seeking external support, SMEs can enhance their compliance efforts, reduce legal risks, and build a reputation for responsible data management practices.

4. Third-Party Risks

The reliance of SMEs on third-party vendors and service providers introduces a significant challenge when it comes to ensuring the protection of user data. Many SMEs rely in fact on third-party vendors and service providers to handle various aspects of their business operations, including data processing and storage. However, SMEs do not often retain control of how the data is used, stored, and processed by the third parties they rely on once the information is in their hands. To address this issue, SMEs could prioritize due diligence when selecting third-party vendors, establish clear contractual agreements that outline data protection responsibilities and leverage industry standards and certifications to guide their selection of trusted vendors. By actively addressing the challenges of third-party risks and implementing robust vendor management processes, SMEs can enhance the security of user data throughout the supply chain and minimize the potential for data breaches or unauthorized access.

5. Cyber Attacks

The misconception that SMEs are less attractive targets for cyber attacks can be misleading. In reality, SMEs are not immune to cyber threats, and in some cases, they may be even more vulnerable than larger organizations. Cybercriminals often target SMEs precisely because they may have weaker security measures in place, making them easier targets for exploitation. Some of the most prominent forms of cyberattacks targeting SMEs are ransomware, phishing attacks, and data breaches and can dangerously compromise the ability of companies to protect user data. To address the challenge of cyber-attacks, SMEs must prioritize cybersecurity as a fundamental aspect of their business operations. This includes investing in robust security measures, training employees, investing in cybersecurity skills and preparing incident response plans. By acknowledging the potential risks and actively implementing preventive measures, SMEs can strengthen their defenses and protect user data from the detrimental consequences of cyber-attacks.


SMEs as responsible custodians of sensitive information

As it clearly emerges from this picture, protecting user data is of paramount importance for small and medium enterprises (SMEs) in today's digital landscape. However, SMEs face unique challenges in ensuring data sovereignty and safeguarding user data against breaches, unauthorized access, and mishandling. Throughout this article, we have explored several key challenges that SMEs encounter in their efforts to protect user data: (1) limited resources, (2) lack of awareness, (3) the changing digital landscape, (4) third-party risks, and (5) cyberattacks. By addressing these problems head-on, SMEs can enhance their data protection practices and build trust with their customers. Prioritizing data sovereignty not only safeguards user data but also establishes SMEs as responsible custodians of sensitive information. Ultimately, by embracing data protection as a strategic imperative, SMEs can navigate the complex landscape of data sovereignty, adapt to evolving threats, and secure the future of their businesses in a data-driven world.


Resource list

European Commission. Do the rules apply to SMEs?

European Commission. Data protection: Better rules for small businesses.

European Commission. (October 4, 2022). Data Sovereignty in the Digital Decade – For a stronger digital Europe in the world [webinar].

OCED. (October 29, 2020). Digital Security and Data Protection in SMEs. How to ensure SMEs are less vulnerable for a post-Covid digital world?

Business Advisor. What are the common data protection and privacy challenges for small and medium enterprises (SMEs)? Linkedin.