By Nathaniel C. Gravel, CISA, CISM, CRISC
Gray, Gray & Gray, LLP
Simulated phishing has become an essential component of comprehensive security training programs. This practice isn’t just for enterprise-level organizations – businesses of all sizes can and should implement phishing simulations to strengthen their security posture and meet compliance requirements.
Understanding Phishing and Its Dangers
Phishing is a form of social engineering attack where cybercriminals masquerade as trusted entities to trick recipients into revealing sensitive information, clicking malicious links or downloading infected attachments. These attacks typically arrive via email, though they can also come through text messages, social media or even phone calls. What makes phishing particularly dangerous is its psychological manipulation – exploiting human trust, curiosity, fear or urgency rather than technical vulnerabilities. A convincing phishing email might appear to come from a bank, colleague or service provider, complete with legitimate-looking logos, signatures and contextual details that make even security-conscious employees vulnerable to deception.
Understanding the Value of Simulated Phishing
Simulated phishing is precisely what it sounds like: controlled, fake phishing attempts sent to your employees to test and train them on recognizing and properly responding to these threats. These exercises mimic real-world phishing tactics without the devastating consequences of an actual breach.
The statistics speak for themselves. Organizations that run regular phishing simulations report up to a 75% reduction in successful phishing attacks over time. This is critical when you consider that phishing remains the entry point for approximately 90% of all data breaches, according to recent industry reports.
Implementation Options for Small to Medium Businesses
Many small business owners believe simulated phishing is beyond their capabilities or budget. This couldn’t be further from the truth. There are multiple approaches to implementation that can work for organizations with limited resources.
The internal approach involves designating someone within your organization to create and manage phishing campaigns. Several affordable platforms provide templates and automation tools that make this process straightforward. These solutions typically cost between $15-40 per user annually – far less than the average data breach recovery cost of $25,000+ for small businesses.
Alternatively, outsourcing to a managed security service provider (MSSP) removes the burden from your internal team entirely. Most MSSPs offer tiered pricing models that scale with your business size. While slightly more expensive than the internal approach, outsourced solutions provide expertise and reporting capabilities that many small businesses lack internally.
Designing Effective Phishing Simulations
The most successful phishing simulations follow a progressive difficulty model. Begin with obvious phishing emails that contain multiple red flags like misspellings, suspicious links and urgent requests. As employees improve their detection skills, gradually increase the sophistication to match real-world threats.
Contextual relevance significantly improves training effectiveness. Customize your simulations to reflect actual scenarios your employees might encounter – invoices for departments that handle billing, shipping notifications for logistics teams or industry-specific communications relevant to your business.
Timing also matters. Many organizations make the mistake of running simulations on predictable schedules. Instead, vary the timing and frequency to prevent employees from simply being on high alert during “phishing season.” A random cadence more accurately reflects real-world conditions.
Measuring Success and Continuous Improvement
Effective simulated phishing isn’t a one-time exercise but rather a continuous improvement process. Track metrics including your initial click rate (typically 20-30% for most organizations), reporting rate (how many employees actively report suspicious emails), and improvement trends over time.
The goal isn’t to achieve a 0% click rate – that’s unrealistic. Instead, look for consistent improvement and increased reporting behavior. A healthy program might see click rates drop below 5% while reporting rates increase above 80% after 12-18 months of regular simulations.
Compliance Requirements and Documentation
Many small business owners aren’t aware that simulated phishing isn’t just good practice – it’s increasingly becoming a compliance requirement. The FTC Safeguards Rule, which affects any business collecting consumer financial information, explicitly requires security awareness training that includes phishing recognition.
State-level regulations vary, but many have adopted frameworks similar to the New York SHIELD Act or the California Consumer Privacy Act, which mandate reasonable security measures including employee training. Several industry-specific regulations like HIPAA for healthcare and PCI DSS for payment processing also require security awareness training.
Documentation is absolutely critical from a compliance perspective. For each simulated phishing campaign, maintain records of:
- The content of the phishing simulation
- Dates and times when simulations were conducted
- Employee participation and click rates
- Follow-up training completed by employees who failed the test
- Aggregate improvement metrics over time
This documentation serves as evidence of your “reasonable security measures” should your business face regulatory scrutiny or litigation following a breach.
Avoiding Common Pitfalls
Many small businesses make the mistake of using simulated phishing as a punitive tool. This approach typically backfires, creating fear rather than awareness. Instead, frame these exercises as learning opportunities. When employees fail a simulation, provide immediate, constructive feedback and brief training – not public shaming or disciplinary action.
Another common pitfall is failing to gain leadership buy-in. When executives and managers participate in and champion the program, employees take it more seriously. This includes having leadership undergo the same simulations and training as frontline staff.
An Important Cyber Defense Tool
Simulated phishing represents one of the highest-ROI security investments available to small and medium businesses today. The relatively modest cost of implementation – whether done internally or outsourced – pales in comparison to the potential losses from a successful phishing attack. Beyond the financial benefits, these programs help businesses meet increasingly stringent compliance requirements while fostering a security-aware culture.
The question isn’t whether your business can afford to implement simulated phishing, it’s whether you can afford not to. In today’s threat landscape, where social engineering continues to be the predominant attack vector, this training approach has become as essential as having a firewall or antivirus protection.
Nathaniel Gravel is a cybersecurity expert and consultant with Gray, Gray & Gray, LLP, a consulting, accounting and business advisory firm based in Canton, MA. He can be reached at ngravel@gggllp.com.