How cybercrime is forcing SMEs to rethink risk, resilience, and responsibility
A New Reality for Small Businesses
October marks Cyber Security Awareness Month, a reminder for businesses worldwide that cyber resilience is no longer optional. For Australian small and medium enterprises (SMEs), the urgency has never been greater.
BizCover, Australia’s leading online business insurance service, has revealed that cyber insurance uptake among small businesses has surged 50% in the past year, and an astonishing 85% over the past three years. This sharp rise underscores a shift in mindset: cybercrime is no longer viewed as a distant risk, but as a present and persistent threat.
“Good habits and clear SOPs protect a business more than depending on technology alone.”
– John Beaver, Founder, Desky
The Australian Signals Directorate’s (ASD) Cyber Threat Report 2023–24 paints a stark picture. More than 87,000 cybercrime reports were filed last year – that’s one every six minutes. For small businesses, the average cost per incident sits at $49,600, a crippling figure for many SMEs operating with limited reserves.
“The only way to play it safe is to confirm all details before paying. The sad part is, I’m a savvy tech junkie, and it still got me.”
– Micko, Owner, Primal Recovery
“These figures should act as a wake-up call,” says Akshaye Kalkura, Virtual CIO at BizCover. “The fallout from a cyberattack can have serious consequences for a small business. Without Cyber Liability cover, they are exposed to operational disruption, legal fees, data recovery costs, reputational damage, and loss of income.”
“It was a wake-up call about how vulnerable we are when it comes to even the simplest transactions.”
– Daniel Vasilevski, Owner, Pro Electrical
Busting the ‘Too Small to Target’ Myth
One of the most dangerous misconceptions among small business owners is the belief that cybercriminals only target large corporations. The reality, experts say, is quite the opposite.
“One of the most common reasons that business owners don’t take out Cyber Liability cover is because they believe they’re ‘too small’ to be a target. This couldn’t be further from the truth.”
– Akshaye Kalkura, Virtual CIO, BizCover
“Small businesses are often targeted because they don’t have the same strong cybersecurity measures in place as larger organisations,” Kalkura explains. “Email compromise, fake invoices and simple human error all contribute to SMEs becoming the victims of cyberattacks.”
This false sense of security has kept many SMEs underinsured or uninsured. But the recent surge in policy uptake shows that the tide is turning, as more business owners realise that being small does not mean being invisible.
The Human Side of Cybercrime: Case Studies
Behind every statistic is a story – and for SMEs, the impact of a cyberattack can be deeply personal.
Desky: A Costly Lesson in Phishing
For John Beaver, founder of Desky, a national online retailer, the danger became real when an employee clicked on what appeared to be a routine supplier email. It turned out to be a phishing scam, leading to a fraudulent invoice of $4,700 being paid before the bank could intervene.
But the financial loss wasn’t the biggest blow.
“The bigger impact was on staff confidence,” Beaver recalls. “Employees lost trust in email until we introduced phishing training and a two-step invoice approval process. Good habits and clear SOPs protect a business more than depending on technology alone.”
Primal Recovery: The Man-in-the-Middle Scam
In Melbourne, Micko, owner of Primal Recovery, lost $10,000 to a “man-in-the-middle” scam. Hackers intercepted his invoices in Xero, altering the bank details to redirect payments.
“The only way to play it safe is to confirm all details before paying,” Micko admits. “The sad part is, I’m quite a savvy tech junkie, and it still got me.”
Pro Electrical: A Narrow Escape
In Sydney, Daniel Vasilevski, owner of Pro Electrical, narrowly avoided a costly mistake when a trusted supplier’s invoice was spoofed in June 2025. While no money was lost, the hours of disruption and stress left a lasting impression.
“It was a wake-up call about how vulnerable we are when it comes to even the simplest transactions,” he says. “We used to assume if it looked like an invoice, it was legitimate. Now we have a two-step verification process for every transaction.”
These cases highlight that cyber incidents are not isolated anomalies – they are everyday risks for SMEs across industries.
What Cyber Insurance Really Covers
Unlike traditional business insurance, Cyber Liability insurance is specifically designed to protect against digital risks. A typical policy may cover:
- Financial Losses – from ransomware, phishing, or invoice scams.
- Business Interruption Costs – if systems are taken offline.
- Legal Expenses – arising from privacy breaches or regulatory investigations.
- Forensic Investigation – to trace how the breach occurred.
- Customer Notification Costs – if sensitive data is compromised.
- Reputational Damage Mitigation – including PR support and crisis management.
“Cyber insurance is not just about reimbursing costs,” says Kalkura. “It’s about helping businesses recover – financially, operationally, and reputationally – so they can continue serving their customers.”
The Regulatory Pressures
Cyber risk for SMEs is not just financial – it’s also regulatory. With the introduction of tougher privacy laws and data breach reporting requirements in Australia, businesses that mishandle customer data face not only hefty fines but also public scrutiny.
Regulators are increasingly unforgiving of lapses, even among small businesses. This has created a dual pressure: SMEs must not only defend themselves from cybercriminals but also demonstrate compliance with evolving legal standards.
This environment has made cyber insurance a compliance enabler, helping SMEs navigate investigations and manage penalties.
Why Uptake is Rising Now
The sharp increase in SME cyber insurance adoption can be attributed to several converging factors:
- Escalating Cybercrime – More frequent and costly attacks.
- Rising Awareness – Cyber Security Awareness Month and government reporting have spotlighted the issue.
- Peer Influence – SME case studies circulating in the media act as cautionary tales.
- Regulatory Pressure – Privacy laws and penalties are driving adoption.
- Cost Benefits – Bundled policies save SMEs money compared to multiple standalone tools.
Kalkura notes: “With greater understanding of the threat landscape comes more focus on cybersecurity measures, including insurance. Businesses aren’t willing to take chances when it comes to protecting customer data. They know what’s at stake.”
Looking Ahead: The Future of SME Cyber Resilience
Experts predict that cyber insurance will become as commonplace as public liability or workers’ compensation. The market is evolving rapidly, with insurers tailoring policies to SME realities – recognising that these businesses often lack dedicated IT teams and require cost-effective, simple solutions.
But insurance is only one piece of the puzzle. As the SME stories show, training, processes, and culture are equally critical. Cyber resilience is about combining good habits with good coverage.
“Cyber insurance doesn’t replace cybersecurity,” Kalkura emphasises. “It complements it. The most effective approach for SMEs is a layered strategy: strong security practices, employee awareness, and insurance as a safety net.”
Conclusion: No Business Too Small to Protect
The message from BizCover’s latest findings is clear: small businesses can no longer assume they are too small to matter to cybercriminals.
With incidents rising, costs mounting, and regulations tightening, cyber insurance has moved from optional to essential. And while no policy can prevent an attack, it can mean the difference between a temporary disruption and permanent closure.
For SME owners, the real question is no longer “Do I need cyber insurance?” but “How quickly can I get covered?”