Last Updated on 22/08/2025 by Damin Murdock
In today’s digital landscape, many organisations rely on third-party cloud platforms, leading to a critical question: Are we responsible for data breaches that occur there? Under Australian law, the answer is yes. Organisations remain fundamentally responsible for data breaches, even when they occur on platforms managed by third parties.
At Leo Lawyers, we help businesses understand and navigate their data security obligations in this era of cloud reliance. This article clarifies your primary responsibilities regarding data breaches on third-party platforms, outlines key legal obligations, and highlights essential considerations for managing these risks.
Primary Responsibility for Data Security in the Cloud
A data breach occurs when there is unauthorised access, disclosure, or loss of data, especially in circumstances where such unauthorised access is likely. Importantly, your organisation maintains the primary responsibility for data security even when using third-party services. This principle mirrors how entities are responsible for the security of their own internal systems. Delegation of data hosting does not equate to a delegation of legal accountability.
Key Legal Obligations in the Event of a Data Breach
Australian law imposes specific and stringent obligations on organisations in the event of a data breach, irrespective of where it originated.
Prevention and Response
Organisations must take all reasonable steps to prevent or reduce harm resulting from data breaches, whether these steps are taken internally or by their third-party providers. Immediate action is required upon suspecting or becoming aware of a data breach. This includes a clear requirement to “take all reasonable steps to contain the data breach”.
Notification Requirements
Under the Data Availability and Transparency Act 2022 (Cth) and the Privacy Act 1988, organisations must notify affected parties and relevant authorities of eligible data breaches. When multiple entities are involved in a suspected or actual breach, there must be clear and timely communication between all parties. These notifications must be made within specified timeframes and contain sufficient detail about the breach, its impact, and steps being taken.
Contractual Considerations
Your data sharing agreements with third-party cloud providers are crucial for defining specific responsibilities regarding data breaches. These agreements should clearly outline how data will be handled when the agreement ends and, critically, establish clear protocols for breach notification and response between your organisation and the third-party provider.
Essential Considerations for Managing Cloud Data Breach Risks
To effectively manage your organisation’s data breach risks when using third-party cloud platforms, proactive measures are vital.
- Risk Management
Conduct regular security audits and vulnerability assessments of both your internal systems and your cloud service providers. Obtain written assurances from third parties regarding their data handling practices, security measures, and incident response capabilities.
- Documentation Requirements
Maintain detailed records of all security incidents and your responses to them. Document every step taken to address and mitigate breaches, from initial detection to notification and resolution.
- Limitations and Exceptions
Be aware that certain exceptions exist regarding notification requirements, particularly when multiple entities are involved or when it’s clear no serious harm is likely to occur. Specific arrangements can also be made through data sharing agreements to modify certain responsibilities, provided they comply with overarching legal obligations.
Conclusion
While relying on third-party cloud platforms offers numerous operational advantages, it does not absolve your organisation of its fundamental responsibility for data security. Under Australian law, you remain accountable for data breaches, even those occurring within a third-party environment. Proactive risk management, clear contractual agreements with providers, and meticulous adherence to notification requirements are essential for safeguarding your client data and protecting your organisation from significant legal penalties.
At Leo Lawyers, we provide expert legal advice on data security, privacy compliance, and incident response for organizations using cloud services. Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
