Smaller and mid-sized businesses are cutting back on security due to the effects of the recession, even though most SMEs expect security threats to increase.

And many don't see it as a high priority - fewer than a quarter of SMEs see security as a high priority.

That's according to a survey by security software company GFI, which found that 37 percent of SMEs regarded security as an area of minimal investment - or one that could be cut if necessary.

Not only that, the SMEs often have the wrong target, with four times as many of them seeing external threats asthe most pressing for any company. According to the survey, 78 percent see internal aytacks the biggest threat, whereas a company's own employees can do much more damage.

According to recent survey from the Ponemon Institute, six out ten employees stole company data after leaving their jobs, while McAfee calculated that the total economic losses from insider security breaches reached $1 trillion last year.

Announcing the results of the survey, GFI CEO Walter Scott said employers had an unrealistic expectation that none of its employees would betray the company. As an example, he cited how one of his former employees, with an exemplary work record, had joined a small business and went on to embezzle $600,000, something that could not have been predicted. But, he said, if not criminal activity like this, businesses could also be at risk from memory devices like USB sticks, bearing viruses, or from smartphones and netbooks.

"Too many small businesses think that they're too small to be at risk," said a GFI spokesman. "There's an attitude that it will never happen to me,"

He acknowledged that the way that the workplace was changing would throw up a new set of problems. The growing use of social media, the proliferation of smartphones and the move towards a flexible workplace - with more employees on the move or working from home - all throw up obstacles. "You can't just give up because it's hard," said the spokesman, "You can't close the door completely but you just put as many obstacles in the way as possible."

The recession is set to have a harder effect on small businesses - according to the survey, 46 percent have experienced declining sales and 44 percent are expecting to cut their IT budgets.

GFI is set to take on board the smaller IT budgets, by offering some of its products for free in an attempt to pick up sales when the economy recovers. The company is set to make its Languard vulnerability management software available for download within the next month, followed by MailEssentials, MailArchiver and WebMonitor. The company is also set to add a back-up product to its portfolio within the next quarter.