Introduction

Insider threats pose a significant risk to Australian businesses, ranging from inadvertent mistakes by trusted employees to deliberate acts of sabotage, theft, insider trading, and corporate espionage. As the business landscape becomes more digital and interconnected, the potential for insiders to exploit their access has increased, making it crucial for organisations to understand, detect, and mitigate these threats effectively.

It is essential to recognise that insider threats are not simply a cyber or technical issue—they are fundamentally a people problem. Employees are at the heart of every organisation, and their actions, motivations, and well-being play a critical role in security. This means that Human Resources (HR) must be actively involved in insider threat mitigation, working in partnership with IT and security teams not just to enforce compliance, but to foster a healthy and supportive workplace culture. By nurturing an environment where employees feel valued, supported, and heard, organisations can reduce the risk of both trusted and malicious insider incidents.

Understanding Insider Threats

Insider threats can be broadly categorised into two types: trusted (accidental or negligent) and malicious (intentional harm). Trusted insiders may unintentionally compromise security through careless actions, while malicious insiders deliberately exploit their access for personal gain or to harm the organisation.

Statistics: The Australian Context

• According to the Australian Cyber Security Centre (ACSC), 34% of reported cyber incidents in 2023 involved an insider element.
• The Ponemon Institute’s 2022 Cost of Insider Threats Global Report found that the average cost of an insider-related incident in Australia was approximately $7.9 million.
• ASIC (Australian Securities and Investments Commission) reported a steady rise in insider trading investigations, with 54 matters under investigation in the 2023-2024 financial year.
• A 2022 survey by the Office of the Australian Information Commissioner (OAIC) highlighted that over 40% of businesses experienced data breaches where an insider was involved.

The Risks: Insider Trading and Corporate Espionage

Insider Trading: This involves the misuse of confidential or non-public information for financial gain, often by employees or executives with privileged access. Insider trading undermines market integrity and can result in severe legal and reputational consequences for both individuals and organisations.

Corporate Espionage: This refers to the theft of trade secrets, intellectual property, or sensitive business information by insiders, often for the benefit of competitors or foreign entities. Corporate espionage can cripple a business’s competitive edge and result in substantial financial losses.

Key Strategies to Mitigate Insider Threats

1. Comprehensive Background Screening
2. Conduct thorough pre-employment background checks to identify potential risk factors, such as criminal history or financial distress, which may increase the likelihood of malicious behaviour.
3. Implement Least Privilege Access
4. Grant employees only the access necessary for their roles. Regularly review and update access permissions to minimise exposure.
5. Continuous Monitoring and Behavioural Analytics
6. Utilise monitoring tools and behavioural analytics to detect unusual activities, such as large data downloads, access to sensitive files outside normal hours, or attempts to bypass security controls.
7. Robust Insider Threat Training
8. Educate employees about the dangers of insider threats, including insider trading and espionage. Regular training can raise awareness and encourage staff to report suspicious activities.
9. Strong Whistleblower Protections
10. Establish confidential reporting channels and protect whistleblowers from retaliation. Encouraging staff to report concerns can help detect threats early.
11. Data Loss Prevention (DLP) Solutions
12. Deploy DLP technologies to monitor, detect, and prevent unauthorised transfer of sensitive information.
13. Regular Audits and Compliance Checks
14. Conduct periodic audits to ensure compliance with relevant regulations, such as the Corporations Act 2001 for insider trading and the Security of Critical Infrastructure Act for sensitive sectors.
15. Incident Response Planning
16. Develop and routinely test incident response plans that specifically address insider threats, ensuring swift detection, containment, and remediation.
17. Positive Workplace Culture and HR Engagement
18. Work to create a workplace where respect, transparency, and well-being are prioritised. HR should lead initiatives to support mental health, foster open communication, and address grievances promptly. A supportive culture can help identify early warning signs of distress or disgruntlement, reducing the risk of trusted insiders turning malicious and deterring potential bad actors.

Case Study: Lessons from Recent Incidents

In 2022, an employee at a major Australian financial institution was arrested for allegedly leaking sensitive customer information to external parties for personal gain. The breach was detected through abnormal access patterns flagged by the company’s monitoring system, highlighting the importance of proactive surveillance and swift response.

However, it’s also critical to note that addressing the root causes of insider threats—such as employee dissatisfaction, lack of engagement, or workplace stress—can often be just as impactful as technical controls. This is where HR’s role in maintaining a healthy organisational culture becomes indispensable.

Legal and Regulatory Framework

Australian businesses are governed by strict laws and regulations regarding insider trading and corporate espionage. ASIC actively investigates insider trading violations, and penalties can include substantial fines and imprisonment. The Crimes Act 1914 also covers offences related to corporate espionage, with severe penalties for convicted individuals.

Conclusion

Mitigating insider threats requires a multi-layered approach that combines technology, policy, and—most importantly—people. By involving HR in security discussions, investing in prevention strategies, ongoing employee education, and cultivating a culture of trust and openness, Australian businesses can significantly reduce the risk posed by both trusted and malicious insiders. Staying informed about evolving threats and regulatory requirements is essential to safeguard your organisation’s assets, reputation, and competitive standing.

At Sidelines Consulting and Advisory we have experience in Trusted and Malicious Insider Threats and have partnered with the Australian Institute of Insider Threats to deliver training and workshops to small, medium and large businesses in Queensland to help organisations mitigate insider threats. For more information, please send us an email.