Cybersecurity Risks of Generative Artificial Intelligence in Small and Medium-Sized Enterprises

Abstract

Generative artificial intelligence is rapidly entering small and medium-sized enterprises through public chatbots, AI-enabled office applications, programming assistants, customer-service systems, security tools, and autonomous software agents. These technologies offer substantial productivity advantages while simultaneously changing the cybersecurity environment. Generative AI lowers the cost of producing personalized phishing messages, accelerates reconnaissance, assists vulnerability analysis, and creates new risks involving prompt injection, sensitive-information disclosure, model and data poisoning, insecure AI supply chains, shadow AI, and excessive agent privileges. At the same time, AI can improve phishing detection, vulnerability remediation, code review, security-log analysis, threat-intelligence processing, and incident triage. This paper examines whether generative AI increases or decreases overall cybersecurity exposure for SMEs. The evidence suggests that AI should be understood as a force multiplier for both attackers and defenders. SMEs are particularly vulnerable because adoption of inexpensive AI tools frequently occurs faster than the development of governance, access controls, cybersecurity expertise, and data-protection procedures. Security outcomes therefore depend on whether AI is integrated into identity management, data governance, least-privilege controls, human approval, logging, vendor management, and incident response. Generative AI does not inherently make SMEs less secure, but uncontrolled shadow AI and highly privileged autonomous agents can create new pathways for compromise.