Cyber risks are rising in Australian companies as technology changes rapidly, according to Kevin Kalinich, Aon’s Global Practice Leader for Cyber & Network Security Risks.

He says cloud computing advances and new forms of social media will continue to create threats, and businesses must respond.

“This is a dynamic… area and that is going to continue to be the trend,” he told insuranceNEWS.com.au after addressing a symposium hosted by Aon and law firm DLA Piper. “We have to get our heads around the process of identifying the exposures.”

Chicago-based Mr Kalinich says awareness is greater in the US and countries such as Japan and South Korea, where high-profile data privacy breaches have led to extensive losses.

In Australia new privacy laws took effect in March that bring greater scrutiny and corporate penalties of $1.7 million, but the country does not have the type of mandatory breach reporting laws that have prompted US class actions.

He says Aon’s focus in Australia also includes developing cover for large mining and construction companies that use sophisticated technology at work sites, where cyber breaches could cause catastrophic property damage and injury.

Cover has so far been lacking and there are capacity issues in the market.

“We are in the process of developing those programs and they are becoming available.”

Mr Kalinich says most cyber-related data breaches lead to losses below $1 million and only 5% would exceed $20 million, but companies should be aware of the potential for major costs.

“People have to start thinking of it in terms of comparing it with other catastrophe modelling. Then you know it is only a matter of time before it’s going to happen.”

He told the symposium risk strategies should be examined across a company and businesses should not assume existing liability policies will ensure coverage. “The IT security people are extremely important, but it is not just an IT security issue.”