Top 5 Cyber Risks Retail Organizations Should Watch For

Cyber risk doesn't affect every industry in the same way. For retailers, the combination of customer data, digital payments, ecommerce platforms, and interconnected third-party vendors creates a unique set of cyber exposures. According to Gitnux's Retail Cybersecurity Statistics Report, 62% of retail data breaches are linked to financially motivated organized crime, highlighting the sector's ongoing appeal to cybercriminals.

As online and in-store experiences become increasingly interconnected, the consequences of a cyber incident can extend far beyond technology systems. Whether the issue involves compromised payment information, account takeover fraud, ransomware, or a third-party breach, retailers may face customer complaints, regulatory obligations, disputed transactions, and other downstream impacts that continue long after the incident itself has been contained.

Understanding today's most significant retail cyber risks is an important step toward strengthening preparedness, response, and recovery efforts. Below are five cyber risks that retail organizations should be monitoring as part of their broader cyber strategy.

1. Digital Skimming and E-Commerce Payment Compromise

Digital skimming, often referred to as e-skimming or Magecart attacks, occurs when cybercriminals inject malicious code into online payment pages. The code operates behind the scenes, capturing sensitive information as customers complete purchases through an ecommerce site.

How the Threat Works

As consumers enter payment card details, billing information, and other personal data, the malicious code intercepts the information in real time and transmits it to an attacker-controlled environment. Because the compromise occurs during the checkout process itself, these attacks can be difficult to detect before significant customer data has been exposed.

Business Impact

Digital skimming directly targets a retailer's ecommerce ecosystem and customer payment experience. In addition to potential regulatory obligations and notification requirements, organizations may face direct financial losses, customer concerns, reputational damage, recovery costs, and challenges of rebuilding trust following the incident.

Retailers can help reduce exposure by:

• Monitoring ecommerce platforms and third-party scripts for unauthorized changes
• Conducting regular website security assessments
• Establishing response procedures for payment card compromise events

2. Ransomware and Double Extortion

Ransomware attacks occur when threat actors gain access to a network and encrypt critical systems or data, preventing organizations from accessing them. Many modern attackers now employ a "double extortion" model, stealing sensitive information before encryption and threatening to release it publicly if demands are not met.

How the Threat Works

Retailers may face the simultaneous loss of system access and exposure of customer, employee, or business information. Critical retail technology environments, including ecommerce platforms, point-of-sale systems, and fulfillment operations, may be disrupted during the incident.

Business Impact

A ransomware event can interrupt sales, affect customer service capabilities, delay fulfillment operations, and create significant financial and recovery costs. Even after systems are restored, organizations may continue managing customer communications, remediation efforts, regulatory obligations, and other operational challenges resulting from the event.

Retailers can strengthen resilience by:

• Maintaining offline backups and recovery plans
• Regularly testing incident response procedures
• Providing employee training in phishing and social engineering tactics

3. Supply Chain and Third-Party Vendor Vulnerabilities

Modern retailers rely on an extensive network of vendors, software providers, payment platforms, and technology integrations to support daily operations and customer experiences.

How the Threat Works

Cybercriminals often target third-party providers as a pathway into larger organizations. A compromised ecommerce plugin, payment application, marketing platform, or software vendor can introduce risk across multiple retail environments simultaneously.

Business Impact

A third-party compromise can extend beyond a single retailer and affect entire business ecosystems. Organizations may experience operational disruption, exposure of customer information, service interruptions, recovery expenses, and increased scrutiny of vendor risk management practices.

Organizations should consider:

• Evaluating the cybersecurity practices of key vendors
• Reviewing access permissions for third-party providers
• Incorporating cyber risk into vendor management programs

4. Customer Account Takeover (ATO)

Account takeover attacks occur when threat actors gain unauthorized access to legitimate customer accounts, often using credentials obtained through previous data breaches and automated credential-stuffing tools.

How the Threat Works

Once inside an account, attackers may access personal information, stored payment methods, loyalty rewards, and digital wallets. The compromise often appears to originate from a legitimate user account, making detection more challenging.

Business Impact

Account takeover incidents can lead to fraudulent purchases, misuse of rewards programs, financial losses, increased customer service demands, and potential reimbursement obligations. Because affected customers often associate the incident with the retailer, these events can also impact customer confidence and brand trust.

To help mitigate risk, retailers can:

• Implement multi-factor authentication where appropriate
• Monitor for unusual login activity and account behavior
• Encourage customers to use strong, unique passwords

5. Card-Not-Present (CNP) and Chargeback Fraud

Card-not-present fraud occurs when stolen payment card information is used to make purchases through online or other remote channels where the physical card isn't required.

How the Threat Works

Without the ability to physically verify a customer's identity or payment card, retailers face greater challenges validating transactions. Fraudsters exploit these environments using compromised payment credentials obtained through criminal marketplaces, phishing campaigns, and prior breaches.

Business impact

Card-not-present fraud can result in direct financial losses, chargeback expenses, inventory losses, and increased payment processing costs. Over time, excessive fraud activity may affect profitability, operational efficiency, and customer experience while creating additional administrative and recovery burdens.

Retailers can help reduce exposure by:

• Using fraud detection and transaction monitoring tools
• Implementing address and identity verification controls
• Monitoring chargeback trends and investigating recurring patterns

How Gallagher Bassett Can Help

Cyber incidents can create complex claims, operational, and recovery challenges that extend long after the initial event has been contained.

Gallagher Bassett partners with organizations across industries to help navigate the impacts that can follow cyber incidents, from financial losses and liability exposures to business interruption and recovery efforts. By combining claims expertise with a focus on recovery and resilience, we help organizations address the business challenges that arise before, during, and after a cyber event.

To learn more about our cyber capabilities and insights, visit:

https://www.gallagherbassett.com/solutions/claims-management/cyber-tech-eo-liability/