By Mark Weaver, international technology team leader at CFC

When most people think of technology companies at the forefront of AI, their minds go straight to household names – the multinationals that power platforms we rely on every day.

But the reality is far more diverse. Thousands of tech businesses, many of them small and growing fast, are quietly transforming how we live and work. Across Australia, we’re seeing start-ups use AI to streamline solar panel installations, monitor remote workforces, detect wildfires, analyse supply chains for sustainability. It’s practical, real-world innovation, and it’s happening at the grassroots.

But innovation, especially with emerging tech, doesn’t come without risk. When AI gets it wrong, the consequences can be far-reaching. Yet the pressure to adopt and adapt is mounting. AI is no longer a novelty; it’s become a baseline for modern business. Those not engaging with it risk falling behind competitors.

Understanding the risks of innovation

While global multinationals might have teams dedicated to exploring, identifying and mitigating the risks of AI, few SMEs have that luxury. These businesses are often lean, agile and focused on growth. These qualities make them ideal candidates for innovation, but also leave them exposed.

When AI is embedded into core processes, the risks can affect everything. A flawed algorithm might halve energy output in a tool; faulty outputs can lead to poor business decisions; even well-intentioned advice, if based on flawed data, can result in reputational damage.

There’s also a growing ethical dilemma for brokers and underwriters. AI’s “black box” nature makes it difficult to trace accountability when something goes wrong. Is the fault with the machine, the human user, or the vendor who built the system? Bias in training data, a lack of transparency in decision-making and the absence of human oversight can all compound over time, creating outcomes that are not only flawed but difficult to defend.

The role of affirmative cover

Insurance has a critical role helping SMEs navigate the risks of AI while enabling them to innovate with confidence.

Legal disputes, operational disruption and reputational fallout are high-stakes, high-stress situations where expert support is essential. Insurance should be that safety net. Yet too often, SMEs are left juggling multiple policies for cyber, liability and tech cover. When a claim arises, it’s unclear which policy applies – or whether any do. That ambiguity creates friction at the very moment clarity is most needed.

Affirmative cover removes that doubt. It gives SMEs the confidence that when AI-related risks arise – whether through breach of contract, negligence or novel legal challenges – they’re protected by a policy that’s clear, responsive and built for the realities of modern business.

This kind of cover doesn’t just pay out; it enables SMEs to stay focused on what they do best: innovating, growing and building a better future.

Some insurers are already leading the way. At CFC, for example, cyber, professional indemnity and public liability are packaged into a unified policy designed to respond to AI exposures without finger-pointing or gaps.

Supporting brokers and the economy

As in most fields of insurance, simplicity is key. We can’t expect every broker to be a tech specialist, and the complexity of AI exposures can make conversations with SME clients challenging.

Affirmative cover changes that. With one clear, packaged policy, brokers can confidently advise on everything from cyber and liability to AI-specific risks, without needing to untangle overlapping or conflicting policies.

And the impact goes beyond individual businesses. By simplifying protection, we can be a driving force for SMEs, empowering them to adopt emerging technologies with confidence.

In this sense, affirmative cover is about enabling progress. We’re here to help SMEs protect their business, reputation and future – to help them compete, capitalise on the AI opportunity and drive the world forwards.