Australian Firms Warned of Rising AI and Cloud Cyber Risks
Synopsis
A new surge in AI and cloud adoption is leaving Australian businesses vulnerable to sophisticated cyber attacks. New research shows that 68% of local firms are struggling to secure AI as quickly as they deploy it, with "shadow AI" and "agentic" threats on the rise. With national cyber spending set to hit $7.5 billion in 2026, experts are urging a shift toward Zero Trust models and better data recovery strategies. This article explores why the current "AI rush" is creating dangerous blind spots for enterprise security.
New reports reveal there’s a dangerous gap between the frenetic pace of AI adoption and cyber safety, as Australian businesses are urged to step up their security. Even as companies are called out to use artificial intelligence and other cloud systems to keep up with the competition, experts say they are leaving their digital infrastructure open for hackers.
Key Highlights
- 68% of Australian businesses say that AI is moving faster than their ability to secure it.
- 67% of business leaders feel pressured to sign off on the emerging AI Tools even when concerned about their safety.
- Cyber expenditure in Australia is projected to be $7.5b in 2026, a 9.5% increase
- Hackers have begun using AI to automate reconnaissance and speed up phishing attacks.
- Cloud-based Double Agents (malicious AI agents) are becoming a significant threat to corporate data.
AI Adoption Outpacing Security Controls
A report published recently by security leader TrendAI finds Australian organisations moving faster than their ability to manage the risk involving artificial intelligence. This rush to AI is fueled by excitement as well as a fear of being outpaced by the competition. But this rush is causing a shadow AI problem, where employees employ unapproved tools that the company’s IT team can’t see or protect.
The innovation pressure is so high that almost one in five respondents from Australia said their security-related concerns were extreme but they were pressed to proceed with AI projects. When speed overrides security, they say, AI gets baked into critical business systems without the proper guardrails in place and makes the whole company a target for financial and data theft.
The New Threats, The Arrival of the “Double Agent” AI
One of the most worrisome new threats is what’s known as Agentic AI, tools designed to act on behalf of a user in the cloud. Researchers at Palo Alto Networks detail how these AI agents can be weaponised by attackers. The broader the default permissions for an AI agent, the bigger the undetected risk that a hacker could have it give up secret company code or private customer records stored in the cloud.
These so-called Double Agents are particularly dastardly since they operate within a trusted cloud configuration, such as Google Cloud or Vertex AI. And even if the A.I. does manage to leak sensitive data, because it’s already within the system, traditional firewalls may not stop it from doing so. Companies are now being encouraged to view AI security as a fundamental aspect of their infrastructure, not an add-on.
Cloud Security: The Weak Link In Your Supply Chain
With more Australian companies moving their data to the cloud, they’re becoming even more concerned about third-party breaches. This occurs when a smaller partner or software supplier is hacked, providing the criminal a path into a larger organisation. 62% of Australian tech leaders consider software supply chain compromise a top priority in 2026.
There is currently a push within the industry toward a Zero Trust model to counter this type of behaviour. That means no user or device is trusted by default, even if they are inside a company’s network. Identity theft and stolen credentials continue to be the most common way for hackers to gain access, so multi-factor authentication (MFA) is a non-negotiable requirement for any company using cloud storage or email.
Historic Spending to Develop Cyber Resilience
Despite the mounting threats, there is some good news: Australian businesses are finally waking up to how serious the problem is. Outlays for information security will leap almost 10% this year, with particular attention given to security software and data privacy. Instead, organisations are focusing on moving from simple blocking of attacks to enabling them to build resilience, the ability to recover quickly when (and if) a breach happens.
Industry insiders have hammered that 2026 should be the year businesses revamp backup practices. Traditional backups no longer are good enough, businesses must prove they’re able to restore their data in hours not days. As AI revolutionises the world, Australian firms aim to employ that same intelligent technology in their defence as hackers do in launching an attack on them.
FAQs
- How is AI making cyber attacks worse?
Cybercriminals are using AI to craft more convincing fake email messages and to discover software flaws far quicker than a person could.
- What is a supply chain attack?
It’s when a hacker attacks a smaller company and gains access to a larger company that uses the services of that smaller one.
- Is it wise to store your data in cloud storage?
Yes, but only if configured properly with strict permissions and identity controls.
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