Posted on: November 5, 2025
How To Balance AI’s Convenience with Risks
From job ads to client emails, AI is now a quiet co-worker in many small businesses.
Over two in three SMEs now use some kind of AI-powered app to handle tasks like scheduling, drafting emails, or sorting job applications. This saves a heap of time, including decision making, and lets staff focus on bigger jobs.
Still, putting customer or employee details into these tools opens up a whole new set of risks. They include privacy, copyright, and anti-discrimination rules. These aren’t just IT headaches; they’re legal ones.
Data Breaches: Harder to Dodge Than You Think
Data leaks aren’t rare. Last year, Aussie regulators logged a record 1,123 data breach reports. That’s almost one-quarter more than the year before. Three out of four came from outsiders hacking in, but plenty happened because someone made a mistake, sent the wrong file, or shared too much in a chatbot.
The Australian Cyber Security Centre warns that what you type into AI isn’t always private.
Anything entered can be stored, shared, or traced later. Entering customer or employee details into these tools carries a genuine privacy risk.
SMEs also face cybersecurity risks like prompt-injection attacks and model manipulation. Consider that strong data management, regular security assessments, and privacy training can reduce exposure.
The rules are clear: if personal information is accessed, disclosed, or exposed in ways that are likely to result in serious harm, businesses with annual turnover of more than 3 million must report the incident to the Office of the Australian Information Commissioner (OAIC) and notify affected individuals.
Who Owns Your AI Creations?
AI writes snappy posts, pitches, and even code.
But who owns what it creates? And what if the training data included content you don’t have rights to?
The answer isn’t always clear. The Copyright Agency says fewer than half of all SMEs know where they stand on AI-generated work. The agency has welcomed proposals for AI ‘guardrails’ to clarify ownership and reduce infringement risks.
New government guidelines are coming, so watch for more rules in 2026. Australia is moving toward mandatory guardrails for ‘high-risk’ AI, including transparency, accountability, and IP protections. As you transition, check out the Voluntary AI Safety Standard. It covers 10 AI guardrails on how to use them and the legal context.
Legal experts say business owners should keep track so they don’t get tripped up using AI content.
By the way, AI tech includes generative AI, machine learning, natural language processing, speech recognition, chatbots and computer vision, according to the federal Attorney General.
Bias Hurts More Than Just Your Brand
AI learns from old data. If the data’s biased, its outputs might be unfair, leading your SME to make biased decisions. If your software selects staff or sends marketing based on flawed info, you could end up breaking anti-discrimination law and facing public backlash.
The Human Rights Commission says businesses should check what their AI is doing and watch for bias. A big mistake can quickly make the rounds in business circles. Strong governance and staff training are now core parts of AI risk management for SMEs.
AI Runs on Cloud Power and Clouds Crash
Nearly four in five SMEs now use cloud services to run their AI tools. If those go down, so can your business. The Australian Energy Regulator flagged outages and energy woes as a growing risk.
It’s not just technical outages – when decisions rely solely on automation, errors can cascade quickly.
Researchers warn that over-automation without validation can cause decision errors and erode trust. Maintaining human oversight keeps risk manageable, particularly when your brand could be at risk.
How to Get Ahead of AI Risks
Experts recommend these simple steps to keep your AI use safe and compliant.
- Legal basics: Check privacy, copyright, and anti-discrimination rules
- Good policies: Make clear guidelines for using AI at work
- People checking output: Staff should review important AI work before acting
- Staff training: Teach everyone how to use AI safely
- Cyber safety: Audit your systems and keep software secure
- Reputational and ethical risks: Misuse or unintended consequences of AI can harm reputation, so set clear ethical guidelines and transparent communication about AI use
Before heading to direct insurers or price-comparison websites, remember that we can help you figure out what coverage you need and keep pace with tech changes. A quick check now really does save headaches down the track. We can help you map the exposure, tighten controls, and confirm your cover keeps pace with your tools.
