Cyberattacks Remain Major Threat, Interest Rates Might Rise, AI Use in Reviews

Hey everybody, it's Gene Marks, and welcome to this week's episode of the Paychex Thrive Week and Review. This is where we take a few items of news that impacts your small business and mine, and we talk about it just a little bit.

Before we get started, we all … we all know that we've got lists with tasks that we can cross off. It indicates we're getting things done, right? Well, what if I told you about a list you didn't have to X anything off of? You'd still be accomplishing a lot, right?

Well, the Paychex year-end checklist makes your payroll year end prep so much more manageable. It includes key deadlines and dates, tax form guidance, compensation planning tools, and even steps to start 2027 on the right foot.

So, if you're interested, go to go.paychex.com forward slash yechecklist and, well, check it out. I will make sure that this is in the show notes for this episode, as well. It's go.paychex.com/yechecklist.

All right, let's get to the news of this week. Cybersecurity is in the news. It remains a major issue and often underestimated. It's a risk for small businesses. The FBI data cited by Bank of America shows U.S. internet crime losses reached $20.8 billion in 2025, up 26% from the prior year, with business email compromise alone causing more than $3 billion in losses. Bank of America is responding with fraud prevention checklists, training, and resources focused primarily on phishing, social engineering, and payment fraud.

Now, there was another survey that came out this week from a platform called Clutch. Their survey illustrated why those efforts matter. Because although 95% of small businesses believe they were adequately protected, 68% of them had experienced a cyberattack or breach. Among the affected companies, 70% suffered operational disruption, 52% had financial losses, 46% had customer data theft. Nearly one-third incurred costs of $50,000 to $249,000, while 26% spent anywhere from $250,000 to a million bucks.

After attacks, businesses commonly upgraded software, increased IT spending, and hired outside cybersecurity specialists.

The combined message: Confidence in cybersecurity is not the same as being prepared. Ongoing employee education, updated systems, and outside expertise increasingly needs to be treated as ordinary business expenses.

Okay, so a few comments on this. First of all, this is Cybersecurity Month, at least October is, and as we are in heading into October, I want you, or we're in October now, I want you to be aware that you need to be paying special attention to your cybersecurity because it's getting worse. AI is increasing. The number of scams that are out there, it is tougher and tougher to determine not only emails from bad actors, but also you scam phone calls, and deep faked videos that you think are people asking for money that are legit, and it turns out they're AI generated.

So, what do you do? Well, first of all, nobody, particularly people in your financial system, should be handing over any information or transferring any money without a multiple series of steps to take to make sure that the person making that request is real and legit. There should be more than one person involved, and there should be sign-offs, and there should be proactive activity like calling people back rather than just accepting calls that are coming in.

Training is specifically needed even more so that your employees can identify fraudulent calls and emails. And finally, you really do need to consider cyber insurance for your business. Paychex, I know, offers some help in that area. Cyber insurance will keep you covered if there is a cyberattack or a data bridge that causes loss of interruption or potential liabilities for losing data, particularly customer data.

So, in conclusion, cybersecurity is a big issue. It is underestimated by a lot of businesses. It is something we need to be paying attention to and we need to be budgeting as an ordinary expense, not something that's extraordinary.

The next bit of news from this past week comes from the Federal Reserve. The Federal Reserve officials are signaling that another interest rate increase is likely before the end of 2026, as inflation remains stubbornly above the central bank's 2% target. Minutes from the Fed's September to 1516 meeting showed that most federal open market committee members believed an additional increase in the federal funds rate would probably be appropriate this year.

At that September meeting, officials unanimously raised rates by a quarter percentage point, bringing the target range to about 4%. The policy, the Fed has two remaining meetings this year – one in late October and one in December – giving policymakers two opportunities to tighten monetary policy further. The minutes underscore the Fed's continued concern that inflation has remained elevated despite years of restrictive monetary policy.

For businesses, another increase could mean persistently higher borrowing costs for loans, credit lines, mortgages, and other financings while potentially slowing consumer demand and business investment as the Fed attempts to bring inflation under control.

Now, just want to make sure that we are clear. Mortgage rates have very little to do with this because mortgage rates are determined by the treasury market and treasury market yields. The treasury marketing is looking ahead at what inflation is going to be, and banks are going to be pricing their mortgages and their rates they're going to charge based on future inflation rates. So, you know, but that has a big impact on the housing and real estate market. But that has little to do with the Fed's decision.

The Fed's decision to raise overall banks' borrowing rates means that they're gonna be charging their customers more, particularly business customers, when we go to them for financing. Right now, the prime rate across the country is about 7.25%. I think you can see that increasing to 7.5% by the end of the year. It makes borrowing costs more significant.

Now, will that stop you from financing that project or that property that you wanna build? That depends on the ROI that you are earning from that transaction. If you can still justify the higher rates of interest, then by all means, you should be going to it. But higher rates of interest increase your cost, and it is definitely something that you need to be paying close attention to.

If you are a business that is borrowing, you want to avoid fixed rate mortgages or loans, excuse me, because your your fixed rate itself, I do think that interest rates are gonna be at the top of their limit for the next couple of years. My prediction is that interest rates will likely come down a little bit, not as much as you think, but a little bit, but you still don't want to fix yourself into a rate that is you know on the on the upper end. So, I would go for variable-rate loans. They're a little bit more risky, but I think the risk is on your side.

Relatively high historical interest rates, anywhere between six to eight percent; my opinion is that's gonna be the norm of the next few years. I do think that, you know, inflation is gonna persist at three to four percent, and I do think that interest rates are gonna correspond a little bit higher than that, and we just have to make our plans around that.

So, expect another interest rate hike from the Fed by the end of the year. That would not surprise me at all.

Finally, in our AI news of the week, artificial intelligence is becoming surprisingly common in employee performance reviews. A survey from Highwire of 1,034 U.S. corporate employees found that 78% of managers had used AI during the previous year to draft, edit, summarize, or otherwise help prepare employee feedback or performance reviews. Yet only 16% of non-managerial employees said they were told that AI influenced their review, raising questions about transparency.

Results are mixed; 54% of employees said feedback has become more specific and actionable, but 34% said it has become more generic, and 32% found it less useful. The research also shows employees using AI themselves. Nearly one-quarter use it to rehearse difficult workplace conversations. Highwire argues that AI is filling a coaching gap because only 44% of workers said managers help them practice high-stake conversations, although 85% consider that such practice is important.

The takeaway for employers is that AI can improve efficiency and preparation, but human judgment, context, and transparency remain critical when evaluating employees.

My take on this: Good for AI. Bring AI into your business, lean into it, and use it, particularly for employee performance reviews. And let me tell you the reason why. We are all – most of us – are terrible at employee performance reviews. We fall behind, we don't do them consistently enough. We're not really good, or at least all of our managers aren’t really good … well, I'm not really good at writing up like a good narrative that's both professional but also gives good advice and good feedback.

I truly believe that we as people need help and guidance in doing better performance reviews and keeping up to date on performance reviews, as well. And, so, because of that, I think AI can perform a really, really good role. Good if AI wants to remind us when the next performance review is done and even draft a performance review based on notes from meetings, based on prior activity, based on looking at an employee's activity, looking at transcripts of conversations and phone calls. That's great. Let AI create that performance review, at least draft it up, and then of course we need to read through it and make sure it makes sense and it's logical and make some edits.

But I think using these AI tools can not only save us a lot of time, I think they can keep us on schedule so that we're giving more regular feedback to our employees, and I do think that AI can help us write a more professional, balanced review, which sometimes we're not as good as doing as we would like to be.

So yeah, managers are using AI to write performance reviews. I'm glad to hear that. Maybe you agree or disagree, but I think it is a good thing as long as managers are using it as a tool and not a substitute for them doing those performance reviews.

My name is Gene Marks, and you have been watching or listening to this week's episode of the Paychex Thrive Week and Review. Remember, number one, if you need a year-end payroll compliance checklist, go to go.paychex.com/yechecklist and you'll be happy with what you get. Number two, please follow us on YouTube and your favorite podcast platform. And number three, if you need some help or advice or tips on running your business, get our Paychex Thrive newsletter. Go to paychex.com/thrive and you can download it there.

Again, my name is Gene Marks. Thanks again for watching and listening. We'll be back to you next week with some more news that impacts your small business and mine. Take care.

My name is Gene Marks, and you've been watching or listening to the Paychex Thrive Week in Review podcast. A few things to take away. First of all, if you are in need of HR or payroll help in your business, consider Paychex. Go to paychex.com/meetpaychex. That's P-A-Y-C-H-E-X.com forward slash M-E-E-T-P-A-Y-C-H-E-X. Please follow this podcast on your podcast platform or on YouTube if you are enjoying the content so you stay up to date on our latest episodes.

And if you need help or advice or tips in running your business, get our Paychex Thrive newsletter. Go to paychex.com/thrive and sign up for it there.

Hope you found this information helpful. I'll be back with you next week with more news that impacts your small business and mine. My name is Gene Marks. Thanks so much for watching or listening. Take care.

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