Ahead of its appearance at a parliamentary inquiry into the cyber security readiness of small and medium businesses on Tuesday, the Council of Small Business Organisations Australia urged the government to restore funding for an axed cyber security training program.
Small businesses are significantly exposed to artificial intelligence risks on two fronts, the council said in a submission to the inquiry.
Firstly, they are becoming more vulnerable to scams; 81 per cent of businesses believe cyber criminals are becoming more sophisticated due to AI.
And secondly, small businesses were prone to unsafe use of AI; 32 per cent admitting to sharing sensitive business or customer information with generative AI tools.
Because they lack the expertise of larger firms, small businesses are particularly vulnerable to falling victim to the rapidly-developing technology, making education and training all the more important.
The council's chief executive Skye Cappuccio called for specific, plain-language guidance on safe AI adoption as a matter of urgency.
According to the Australian Competition and Consumer Commission, Australians lost nearly $260 million to scams in the first nine months of 2025.
Small businesses are also facing increasing costs.
The average cost of a cyber incident rose 14 per cent to $56,600 in 2024/25, the Australian Signals Directorate said in a report.
Business Chamber Queensland, which will also appear before the inquiry on Tuesday, echoed the warnings about rising AI risks.
"Our members report that AI-enabled scams are the fastest-growing threats facing small businesses," the chamber said in a submission.
Ms Cappuccio urged the government to replace the Cyber Wardens program, which provided free online cyber security training to small businesses and was run by COSBOA, but ceased operating after funding was not extended in the latest federal budget.
"COSBOA urges the committee to recommend renewed, ongoing investment in small business-specific training and guidance along these lines," she said in a submission.
"More broadly, government guidance for small business is not yet sufficiently tailored by sector, business size or digital maturity, which limits its accessibility for the least-prepared businesses identified above."
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