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11
Aug

Protecting Your Business in the Digital Age

More than four in 10 Australian SMEs now rely on AI for daily operations, from virtual assistants and smart inventory systems to content creation and data insights. Even major banks and insurers use it to triage claims and automate risk scoring. Whether you run a café, consultancy, or construction firm, AI is likely already part of your toolkit, often acting as an agent, not just a support tool.But AI’s rise also brings hidden risks. Cybercriminals are using the same technology to launch smarter scams. In Australia, 82.6% of recent phishing attempts involved AI, with phishing emails jumping 17.3% in six months. Generative tech is fuelling attacks that bypass traditional defences.

Most Australian Businesses Are Not Fully Prepared for AI

Despite rapid uptake, most Australian businesses feel unprepared for AI’s challenges.

Only one in four say they’re “very prepared” to implement AI—putting Australia among the least confident nations globally. It’s not just a tech gap, but a risk gap that could leave your business exposed.

The Risks Extend Beyond Technology

AI failures aren’t just system glitches – they can trigger serious legal and financial consequences.

Potential issues include:

  • Product liability: If AI causes harm or loss
  • Cybersecurity breaches: If vulnerabilities are exploited
  • Employment practices liability: If AI leads to biased decisions
  • Directors and Officers (D&O) liability: If leaders fail to oversee AI use properly

These risks are real for SMEs using AI in customer service, logistics, marketing, or analytics. Legal experts warn that scrutiny is growing over how businesses manage AI. The Office of the Australian Information Commissioner (OAIC) advises assessing privacy and data risks, especially where personal information is involved. It offers clear guidance, including on off-the-shelf AI tools.

How to Stay Ahead of the Risks

Think of AI like new machinery, so when it’s added, your risk protocols need updating too.

Here are five practical steps your SME can take:

  1. Audit system – Map where AI is used in your business
  2. Assess risks – Look beyond tech failures to legal, ethical, and reputational threats
  3. Set governance rules – Create clear policies for choosing and managing AI tools
  4. Upskill staff – Ensure your team knows how AI is used and how to flag issues
  5. Document decisions – Keep records of AI-driven actions, especially involving people

The Australian Cyber Security Centre (ACSC) also recommends conducting regular vulnerability assessments and incident response planning to manage AI risks.

What Your Insurance Needs to Reflect

Emerging tech brings new risks. But insurance doesn’t always keep up.

Standard policies may not cover AI-related incidents. For example, faulty AI advice that causes financial loss might fall outside public liability. A data breach linked to an AI vulnerability could also leave you exposed. It may be best to supplement your existing insurance arrangements with specialist cyber insurance cover.

We can review your policies to spot gaps and ensure your cyber, management liability, and professional indemnity cover aligns with your AI use. We’ll also keep you updated on changing legal and industry standards. The Insurance Council of Australia advises businesses to regularly update their insurance as their use of AI evolves, ensuring coverage keeps pace with emerging risks.

AI is reshaping how SMEs operate. Make sure your insurance evolves with it. Let’s ensure your protection is as future-ready as your business.

 

Article Supplied by OneAffiniti

Photo by Deagreez

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