Neil Sands
New Zealand’s reliance on cloud-based services has created a “protection gap” that leaves both individuals and businesses exposed to catastrophic consequences from cyber-attacks, TLANZ’s Technology & Law Committee has warned Parliament.
In an open letter to lawmakers, the committee says cyber and data breaches are a matter of when, not if – with implications for consumer protection, competition, productivity and national security.
The letter, which coincides with Cyber Smart Week, says a limited number of cloud providers dominate the market, giving customers no choice but to use them.
It said this dominance allowed the providers to sign up customers on a “take-it-or-leave it” basis, forcing users to accept terms which restrict the providers’ liability if data is lost or stolen.
In addition, it said cyber insurance was often unavailable or prohibitively expensive, meaning users cannot mitigate the risk of cyber-attacks.
“New Zealanders are currently exposed to catastrophic and unrecoverable risks of harm caused by cyber incidents. Parliament has the opportunity and responsibility to close the protection gap now, before systemic vulnerabilities become crises,” said the letter, signed by Technology & Law Committee convenor Lloyd Gallagher.
The committee called on MPs to work on reforms that ensure fair risk allocation, effective redress and stronger incentives for prevention.
“Over-reliance on concentrated cloud and digital infrastructures creates centralised vulnerabilities with far-reaching cascading consequences when targeted by cyber-attacks. Businesses cannot function without cloud services, yet face effectively uninsurable and unrecoverable risks arising from providers’ platforms and systems.”
The reforms recommended by the committee include imposing cybersecurity and incident-response obligations on providers of essential digital infrastructure and allowing the National Cyber Security Centre to investigate systemic cyber risk.
It also called for a compensation scheme to cover losses for small businesses and individuals, as well as outlining the case for changes to the Fair Trading Act to address the “asymmetrical” power imbalance between cloud providers and their customers.
The committee, whose members are all specialists in technology and the law, said MP should work with the insurance industry on supporting the development of affordable cyber cover.
Prime Minister Christopher Luxon’s office acknowledged the letter and said it had been forwarded to Science, Innovation and Technology Minister Shane Reti for consideration.
- Read the letter in full here.
The National Cyber Security Centre estimates that more than 4.3 million New Zealand account details have been exposed online and that Kiwis lost $1.6 billion to online threats in 2024.
For Cyber Smart Week, it has launched a free online tool at How Exposed Am I? Own Your Online allowing users to securely find out if details of their email accounts have been leaked online.
“The latest statistics highlight the increasing prevalence of cyber-crime and the urgent need for proactive measures,” the NCSC’s Director of Mission Enablement Mike Jagusch said.
“Even the simplest cyber security actions like two-factor authentication and long, unique passwords can significantly reduce exposure and risk of an attack. Two-factor authentication alone can help stop 99% of automated online attacks and long, unique passwords can take billions of years to crack.”
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