Business Horror Stories


Running a business can be a wonderful rewarding experience, but sometimes things can go horribly wrong.


We never believe it can happen to us, that the “What if” will become a terrifying reality. Yet it happens more often that you think. 1 in 5 Australian businesses are the victims of a cyber attack and the number of attacks continues to rise.

One such ‘horror story’ is from a law firm with 8 staff and a turnover of $2M.

The firm was going about their daily business when suddenly they found that their servers and all their client records had been locked by Ransomware software.

This ransomware was demanding a payment of $55,000 to regain access to their information once more.

Ransomware has been steadily growing since 2013.* Many times these attacks come in the form of Trojans sneakily disguised as an email attachment or download file.  Some prominent versions like Cryptowall have procured up to $15 million.

Attacks of this kind can cost your business more than the ransom; many victims also incur the additional costs of business interruption and productivity loss, network and security counter measures, legal fees and cost for other IT measures.

Unluckily, in this case, the hackers never released the files after the ransom was paid and the business also had to bear the cost of restoring and rebuilding the network as well as the loss of productivity.  The one shining light was that they were covered by a cyber liability policy which covered them for $155,000 of ransom and associated costs.

 Find out more about Cyber Insurance here.


Threats are also just as real in the physical world. Any professional who gives advice or recommendations in their line of work could be sued by their client. This includes everyday professions such as a graphic design, IT professionals, accountants, health professionals and marketers.

The risk of a claim being made against you isn’t always determined by your skill or level of professionalism. There is always the risk of an unhappy client making a claim against or suing you.

In the case of a Marketing and Digital Design Agency based in Queensland, it was a simple website update that caused them to come unstuck.

The agency was engaged by a major mining company to provide marketing and digital design services. Whilst updating their own website with their most recent work on their portfolio, an Accounts Executive inadvertently stated that their former client had been deregistered and was no longer trading.

This mistaken information was picked up by the local newspaper which then ran a story in their paper, whilst the former client had not been deregistered and was still trading.

Things escalated when the mining company issued a claim for damages of $1.5M against the agency for defamation and alleged that their reputation had been marred as a result of the incorrect information being published on the website.

The agency and their former client were unable to reach a settlement as the agency was adamant that the mistake had made no material impact on the former client. The claim then escalated in a hearing in the Supreme Court of Queensland and a judgement was handed down in favour of the former client. The agency had to pay their former client the amount of $1.2M plus $140,000 in defence costs.

Find out more about Professional Indemnity here.


These incidents don’t always come from outside, you can also face these threats from within your organisation. As stringent as your hiring process can be, you can never be one hundred percent certain on your employees within your organisation.

A restaurant in Adelaide learnt this the hard way when a group of 4 employees and their friends stole alcohol and stock from the Restaurant totalling over $255,000.

This stolen alcohol and stock were then on-sold to unsuspecting purchasers who were not aware that the goods were stolen, and the employees pocketed the proceeds.

The restaurant finally discovered the missing stock whilst undertaking a stocktake. They then conducted a further investigation, interviewing employees and reviewing the surveillance camera footage where they discovered the scam.

After a full investigation was conducted it was determined that $250,000 worth of stock and alcohol was stolen in total.

A loss like this can have a serious toll on a small  business, even shutting them down for good. A management liability insurance policy can be the only saviour for a business in cases like these. In this case, the restaurant was covered and the crime section of their policy covered them.

Business Insurance cover options such as Management Liability and Cyber Liability are little known but have the potential to save a business from a very real threat. To find out more about Management Liability visit here.

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