Cloud computing is helping startups equalize the playing field with larger corporations, because they have the same resources available. Cloud computing also gives startups the ability to have flexible storage to scale up or down depending on their needs. Small businesses can use the cloud to store company applications like email and sales software, operations such as payroll or performance management tools and website traffic. While there are positives to cloud storage it is important for entrepreneurs to also know the potential security risks.

1. Data Leak

Cloud service provides store a large amount of data from people and businesses throughout the world, so they are targets for hackers. Cloud providers typically have their own security protocols, but companies are responsible for protecting their own data. It is recommended for businesses to use encryption and password protection to prevent data security breaches. Companies can incur fines, lawsuits or criminal charges as well as brand damage and loss of business because of the breach.   

In fact, the website Ashley Madison, were married men and women can meet, was attacked by cybercriminals in 2015. The account information for 32 million members was stolen and later published publically. There is no solid evidence on how the hackers were able to obtain Ashley Madison’s data. This type of attack reminds businesses that cybercriminals can skillfully conceal themselves and remain a dangerous threat to important information such as financials, customer data and credit card information. The cloud application security market is expected to reach USD 23.07 Billion by 2026, according to a new report by Reports and Data.

2. Hacked Accounts

Another security risk when using the cloud is the ability of hackers to obtain credentials in order to access private information. They use a variety of methods to obtain usernames and passwords, but one of the most common is phishing scams. This could be a tainted email sent to thousands of employees and if just one clicks on the link or opens the attached document, the whole system can be compromised.

Luckily there are security measures to help prevent unauthorized people from accessing private information such as employee education, patient data and multi factor authentication systems. Security education classes can help employees understand what phishing scams are and remind them the importance of security safety to protect private information. Multi-factor systems require multiple pieces of information in order to access information and include one-time passwords, phone-based authentication and smartcards. These extra precautions make it harder for hackers to access data just by gaining username and password information.  

For example, Anthem’s cloud data was breached in 2015 compromising 80 million patient records including some of their own employees. The cybercriminal was able to obtain the necessary credentials and because Anthem didn’t use a multi-factor authentication system was easily able to access the information.

3. System Vulnerabilities

Cybercriminals will try to exploit system vulnerabilities in security programs in order to access business data. Multitenancy is creating new spaces for attacks, because organizations are sharing memory, databases and other resources in close proximity to one another. Basic IT process can help prevent these attacks by conducting regular vulnerability scans, patch management and quick follow ups to reported threats. Patches need to be created and introduced to the software quickly to prevent potential damage.

Cloud computing has many advantages for startups to be able to compete with large established companies, but it is important for entrepreneurs to know the risks that can hurt their business growth as well.