Why cyber security is important for businesses in Australia

This guide explains why cyber security is important for businesses in Australia, written for small business owners, managers and leaders who want to understand the real risks and what to do about them.

• ASD’s Australian Cyber Security Centre received more than 84,700 cybercrime reports in FY2024–25, averaging one report every six minutes.
• The average self-reported cost per business cybercrime report was $80,850. For small businesses, the average was $56,600.
• In the OAIC’s 2023 privacy survey, 47% of Australians said they would stop using a service if their data was involved in a breach. This makes cyber security a direct risk to customer trust and revenue. Small and medium-sized businesses should not assume they are too small to be targeted.
• This article covers the threat landscape, financial and legal consequences, and practical cyber security tips you can act on now.

Why cyber security matters right now for Australian businesses

Cyber security is no longer only an IT issue. It affects business continuity, financial performance, privacy obligations and customer trust. Any organisation that relies on email, cloud platforms, payment systems or customer data should treat cyber risk as a management responsibility rather than leaving it entirely to an internal technician or external IT provider.

The latest figures show the scale of the issue. In FY2024–25, ASD’s Australian Cyber Security Centre received more than 84,700 cybercrime reports, averaging one every six minutes. Small businesses reported an average self-reported cost of $56,600 per report, while the average for medium-sized businesses was $97,200.

Major data breaches affecting Optus, Medibank and Latitude Financial showed how extensively a cyber incident can affect customers, operations and reputation. The practical lesson for Australian businesses is to limit the personal information they retain, control who can access it, monitor critical systems and prepare an incident response plan before a breach occurs.

The threat landscape facing Australian businesses

Cyber security is critical for Australian businesses because the threat landscape is continually changing and the financial impact of reported cybercrime is rising. Email, cloud services, online payments and connected business systems create opportunities for cyber criminals when accounts, devices and software are not properly secured.

Phishing and business email compromise are major threats for Australian companies. In FY2023–24, more than 1,400 BEC reports involving financial loss were made to ReportCyber. Total self-reported losses were almost $84 million, and the average confirmed loss exceeded $55,000. Common tactics include compromised email accounts, convincing fake invoices and fraudulent requests to change supplier bank details.

Common cyber threats also include ransomware, identity theft, supply chain attacks and insider threats. Cyber criminals increasingly use automated tools to scan for vulnerabilities, so even regional or small firms with unpatched systems may be scanned or targeted. Common attack paths include compromised Microsoft 365 business accounts, exploitation of outdated software and malware delivered through legitimate-looking emails.

Remote and hybrid work can increase cyber risk when employees access business systems through unsecured home networks, unmanaged personal devices or poorly configured cloud services. Businesses should apply the same access controls, multi-factor authentication and device security requirements regardless of where employees work.

Business impacts of cyber incidents and data breaches

A serious cyber incident can become a business continuity problem. Staff may lose access to email and files, point-of-sale systems may stop working, and payments to suppliers or employees may be delayed. Small businesses with limited cash reserves and few alternative systems can be particularly affected by several days of disruption.

The direct financial costs can include incident response, forensic analysis, legal advice, customer notification, identity protection and higher insurance costs. In FY2024–25, small businesses reported an average self-reported cybercrime cost of $56,600 per report. Latitude Financial’s 2023 annual report recorded $68.3 million in pre-tax costs and provisions relating to its March cyber attack. These figures show why cyber security should be managed as a financial and operational risk, not only as an IT expense.

Cyber incidents can cause operational downtime and financial losses across many sectors. Healthcare clinics may need to use paper records, retailers may lose payment processing, professional services firms may miss deadlines, and construction companies may lose access to design files or supplier systems. The operational impact varies by industry and by how prepared the business is to continue working.

Reputation, customer trust and long-term relationships

Data breaches can damage customer trust, particularly when a business communicates slowly or cannot clearly explain what information was affected. In the OAIC’s 2023 privacy survey, 47% of Australians said they would stop using a service if their data was involved in a breach. For an accounting firm, professional practice or online retailer that depends on referrals and repeat customers, that loss of confidence can have a lasting commercial effect.

The reputational damage extends beyond direct customers. Business clients and government agencies increasingly ask about your security posture before signing contracts. Investors, lenders and insurers may view repeated incidents as signs of poor governance. If you can’t explain how you protect data, you may lose tenders or face higher premiums.

Clear security practices can also support customer trust and contract opportunities. Businesses should be able to explain how they protect personal and financial information, manage third-party access and respond when an incident occurs. Clear policies and a well-managed response can help reassure customers, business partners and prospective clients.

Legal, regulatory and insurance expectations in Australia

In Australia, cyber security is tied closely to compliance, governance and insurance obligations. Many Australian businesses must comply with privacy and data protection requirements, and the stakes for getting it wrong are rising.

The Privacy Act 1988 generally covers Australian Government agencies, private sector organisations with annual turnover of more than $3 million and certain other organisations. Covered entities must take reasonable steps to protect the personal information they hold. Under the Notifiable Data Breaches scheme, they must notify affected individuals and the OAIC when a breach is likely to result in serious harm. For a body corporate, the maximum penalty for a serious or repeated interference with privacy is generally the greater of $50 million or three times the benefit obtained. If the value of that benefit cannot be determined, the maximum may be based on 30% of adjusted turnover during the relevant period.

Sector-specific rules add further requirements. APRA’s CPS 234 applies to information security at APRA-regulated entities, while CPS 230 covers operational risk, business continuity and service provider risk. The Security of Critical Infrastructure Act also imposes obligations on responsible entities for certain critical infrastructure assets. Some government contracts and procurement processes require businesses to demonstrate appropriate security controls. Boards and directors should therefore consider cyber risk as part of their broader governance and risk oversight responsibilities.

Cyber insurance applications may ask about controls such as multi-factor authentication, backups, incident response planning and security testing. The answers can affect whether cover is offered, how much it costs and how a later claim is assessed. Requirements vary between insurers and policies, so businesses should review the policy wording and obtain independent insurance or legal advice where needed.

Why small and medium-sized Australian businesses are attractive targets

Small business owners should not assume cyber criminals only focus on larger corporations. ASD reported that the majority of business cybercrime reports in FY2023–24 came from small businesses. Many small firms hold customer identity records, payroll information, tax file numbers and payment details but have fewer internal resources to manage cyber security. Business size is not a reliable defence.

Many small and medium-sized businesses have limited internal security resources, depend heavily on an external IT provider and continue using ageing hardware or unsupported software. At the same time, they may hold valuable sensitive information, including identity documents, payroll records, tax file numbers and payment details. Older or expired identity documents can still expose customers and employees to fraud.

Third-party access can also create risk across a supply chain. Latitude initially reported that stolen employee credentials were used to access information held by service providers. A subcontractor, software provider or professional practice with access to a larger organisation’s systems can become an entry point if accounts, permissions and monitoring are poorly managed.

Medium-sized businesses can occupy a difficult position. They may operate complex systems and hold substantial amounts of customer and employee data without having the dedicated security teams found in larger organisations. Recovery costs and operational disruption can also place greater pressure on their available cash and staff.

Key cyber security measures every Australian business should prioritise

No business can eliminate every cyber risk, but a focused set of measures can significantly reduce the likelihood and impact of cyber attacks.

The Australian Cyber Security Centre’s Essential Eight provides a recognised baseline for making business systems harder to compromise. It covers application control, patching applications, configuring Microsoft Office macros, user application hardening, restricting administrative privileges, patching operating systems, multi-factor authentication and regular backups. Businesses should assess all eight controls against their systems and risk profile rather than treating only four as sufficient.

In practical terms, here are the priority actions:

• Use strong, unique passwords for every account and adopt a password manager to keep track of them. Never reuse credentials across systems.
• Enable multi-factor authentication on all critical business accounts, especially email, accounting software and remote access tools.
• Keep all software and devices up to date. Enable automatic updates where possible and make software updates a scheduled priority, not an afterthought.
• Run regular data backups and keep protected copies offline or in a suitably secured cloud service. Test the restoration process regularly. Backups can reduce disruption and improve the chance of recovering from ransomware, but they do not guarantee that every system or file can be restored.

Beyond these measures, review the security settings in the tools your team uses every day. Microsoft 365 and Google Workspace include controls for account access, authentication, administration and suspicious activity that should be configured for the business. Secure Wi-Fi networks with current encryption, separate guest access from business systems and disable remote access that is no longer required.

Check the security practices of vendors and software providers before giving them access to business systems or information. Free and low-cost tools may be suitable for some tasks, but secure configuration, access management, updates and ongoing monitoring still matter.

Building a cyber-aware culture through training and education

People can be both a source of risk and an important defence. OAIC figures for January to June 2025 show that human error accounted for 37% of notified data breaches, up from 29% in the preceding six months. Cyber security training should focus on practical behaviours such as checking bank detail changes, reporting suspicious emails, managing access and handling customer information correctly.

Good cyber security training for Australian businesses doesn’t need to be complicated. Keep sessions short and regular. Run phishing simulations so employees learn to spot suspicious emails in a safe environment. Set up clear reporting channels so staff feel comfortable flagging something odd rather than ignoring it. Tailor the content for different roles: front-line staff, managers and senior leaders all face different cyber threats.

Cyber security education matters for leaders too. Business owners and directors need a basic understanding of their organisation’s risk profile so they can ask the right questions of IT providers and allocate budget where it counts. This isn’t about becoming technical. It’s about being aware enough to make informed decisions.

Training should cover safe remote work practices, secure use of personal devices, handling of customer data, social engineering tactics and incident reporting processes. The Australian Cyber Security Centre provides free guidance, alerts and learning materials that any business can adapt for its team.

Regular cyber security training can reduce avoidable mistakes and help staff respond more quickly when something appears suspicious. Include short training sessions in onboarding and team meetings, and update the content when new scams, systems or business processes are introduced.

Getting help and planning your next steps

Improving your security posture is a staged process. You don’t need to fix everything at once, and even small steps make a measurable difference.

Start with a basic risk assessment. List your critical systems and data, identify the common cyber threats most relevant to your sector, and review your current controls against ACSC guidance. That alone gives you a clearer picture of where the gaps are.

Next, develop a simple incident response plan. Record who needs to be contacted, how affected systems will be isolated, who can approve customer communications and when the business may need to contact the OAIC, ReportCyber, its insurer or other relevant parties. Tested backups and a clear incident response plan can support recovery and reduce rushed decisions during a cyber attack.

Review your contracts with IT providers. Make sure responsibilities for security, backups, monitoring and incident response are clearly defined, not assumed. Talk to your managed service provider about which services are covered and which remain the business’s responsibility.

IDCARE’s government-funded Small Business Cyber Resilience Service provides free support to eligible sole traders and businesses with 19 or fewer full-time equivalent employees, excluding the owner. The business must be registered in Australia, actively trading and have a valid ABN. Industry associations and specialist cyber security providers can also help businesses assess risks and plan improvements suited to their size and sector.

Cyber security needs regular review because systems, staff, suppliers and threats change. Set clear priorities, assign responsibility and plan improvements over the next 12 months. Treat cyber security alongside finance, compliance and business continuity, and test your incident response plan before it is needed.

About the author

ProtectCyber is a leading Australian cyber security firm dedicated to safeguarding businesses and individuals from digital threats. Our expert team, with decades of combined experience in the field, provides insights and practical advice on staying secure in an increasingly connected world. Learn more about our mission and team on our
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