It’s been an eventful year in cybersecurity. As we head into the final quarter, here’s what’s actually affecting Australian SMBs - not the hype, but the reality.

Trend 1: AI-Enhanced Phishing Is Real

Earlier this year, the ASD warned about AI-powered phishing. They weren’t wrong.

What we’re seeing:

Phishing emails that would have been obvious spam a few years ago are now well-written, personalised, and convincing. Voice phishing (vishing) using AI-generated voices is becoming more common.

The impact:

Traditional training advice (“look for spelling mistakes”) is increasingly useless. Businesses need to shift from “detect the phishing” to “verify the request through other channels.”

What’s working:

• Strong MFA (especially phishing-resistant options)
• Verification processes for high-risk requests
• Updated awareness training focused on verification
• Advanced email filtering using AI to fight AI

The businesses getting hit: Those relying solely on employee vigilance without technical controls or verification processes.

Trend 2: Insurance Requirements Continue Tightening

Cyber insurance has become harder to obtain and maintain.

What’s changed:

Insurers now routinely require:

• MFA everywhere (not just “where practical”)
• EDR (not just antivirus)
• Backup testing evidence
• Written incident response plans

The impact:

Businesses without these controls are either paying significantly higher premiums, facing coverage exclusions, or being declined entirely.

What to do:

If your renewal is coming up, start preparing now. The controls insurers want are the same controls you should have anyway. AI consultants Sydney and similar firms are increasingly helping businesses meet insurance requirements - it’s become a common engagement type.

Trend 3: Supply Chain Attacks Haven’t Gone Away

We’ve seen several significant supply chain incidents this year affecting Australian businesses.

The pattern:

Attackers compromise a supplier (software vendor, managed service provider, business partner). That compromise spreads to the supplier’s customers.

Recent examples:

• Managed service provider compromises affecting multiple client businesses
• Software updates containing malicious payloads
• SaaS platform breaches exposing customer data

The lesson:

Your security extends beyond your organisation. Supplier security assessment isn’t optional anymore.

Trend 4: Ransomware Evolution

Ransomware remains the top threat, but tactics continue evolving.

What’s different in 2026:

Double and triple extortion: Encryption plus data theft plus threats to customers or partners. Pressure from multiple angles.

Faster dwell time: Attackers are moving from initial access to ransomware deployment faster. Less time to detect before impact.

Targeting backups: More sophisticated attacks specifically target backup infrastructure. Immutable or offline backups are essential.

Living off the land: Using legitimate admin tools rather than obvious malware. Harder to detect.

What’s working:

• Tested, isolated backups
• EDR with behavioural detection
• Privilege management (limiting lateral movement)
• Faster incident detection and response

Trend 5: Cloud Security Gaps

As more business moves to cloud, cloud misconfiguration incidents continue rising.

Common problems:

• Storage made accidentally public
• Overly permissive IAM roles
• Inadequate logging and monitoring
• Cloud resources not covered by security controls

The lesson:

Cloud doesn’t mean secure by default. It means different responsibilities. CSPM (Cloud Security Posture Management) is becoming standard for businesses with significant cloud footprint.

Trend 6: Regulatory Pressure Increasing

Australian privacy and security regulation continues to evolve.

What’s happening:

• Privacy Act amendments increasing penalties
• Critical infrastructure legislation expanding in scope
• More enforcement action from regulators
• Mandatory incident notification requirements

The impact:

Compliance isn’t optional. Businesses need to understand their obligations and demonstrate adherence.

Trend 7: AI Security Tools Maturing

AI in security tools has moved from marketing to genuine value.

What’s working:

• Better phishing detection
• More accurate threat detection with fewer false positives
• Improved alert prioritisation
• Natural language security investigation

What’s still hype:

• Fully autonomous security (still needs humans)
• AI replacing security expertise entirely
• Magical protection without configuration

The businesses benefiting are those using AI-enhanced tools properly configured, not expecting AI to solve everything automatically.

Trend 8: Skills Shortage Continues

Finding security talent remains difficult.

The reality:

Good security people are expensive and in demand. Most SMBs can’t hire dedicated security staff.

What’s working:

• Managed security services (outsourcing to specialists)
• Security-focused IT providers
• Automation to reduce human requirements
• Training existing IT staff in security fundamentals

If you can’t hire security staff, you need security partners. AI consultants Melbourne and similar firms help fill this gap.

Trend 9: Essential Eight Becoming Standard

The Essential Eight is now the expected baseline for Australian businesses.

What’s changed:

• Insurance increasingly references Essential Eight
• Client questionnaires ask about it
• Government contracts require it
• ACSC updated guidance this year

The reality:

If you’re not working toward Essential Eight compliance, you’re falling behind market expectations. Level One should be the minimum target.

Trend 10: Identity Is the New Perimeter

With remote work and cloud services, network perimeter security matters less. Identity security matters more.

The shift:

Traditional security focused on network boundaries. Modern security focuses on identity verification and access control.

What this means:

• MFA is non-negotiable
• Zero trust principles are practical, not theoretical
• Conditional access (risk-based authentication) is standard
• Privileged access management is essential

If you’re still thinking primarily about firewalls and network security, your mental model needs updating.

What This Means for SMBs

The good news:

The fundamentals still work. Businesses implementing Essential Eight controls, using modern tools properly, and maintaining good security practices are doing well.

The challenge:

Threats continue evolving. Keeping up requires ongoing attention, not set-and-forget security.

The opportunity:

Better tools are more accessible than ever. Managed services make enterprise-grade security available to SMBs. Cloud platforms include security features that would have required significant investment previously.

Priorities for Q4

If I were advising an SMB on priorities for the rest of 2026:

1. Prepare for insurance renewal Start 90 days out. Identify gaps. Address them.

2. Review Essential Eight posture Conduct a self-assessment. Address the biggest gaps.

3. Update phishing training AI-enhanced attacks need updated awareness approaches.

4. Verify backup recovery Actually test restoring from backup. Don’t assume it works.

5. Review supplier access Know who has access to your systems. Assess their security.

Looking Ahead to 2027

Predictions for next year:

More regulatory enforcement: Regulators are signalling increased action. Compliance matters more.

Continued AI evolution: Both attack and defence will become more AI-driven.

Insurance requirements stabilising: The bar is high, but becoming clearer and more consistent.

Essential Eight maturity levels: Expect more pressure for Level Two compliance, not just Level One.

Cloud-native security: As cloud adoption continues, cloud security will be the primary focus for many businesses.

Final Thought

2026 has reinforced what we already knew: security requires ongoing attention.

The businesses doing well are those treating security as a continuous practice, not a project. They’re implementing fundamentals consistently. They’re staying current with evolving threats. They’re building security into how they operate.

Working with specialists like Team400 can help navigate the changing landscape. But the core message remains simple: the fundamentals work, you just need to keep applying them.

Three months left in the year. Use them to strengthen your posture for 2027.