While cyber crime is a hot topic in the press – this weekend’s Tesco Bank attack is just the latest scandal – one industry expert says that in the insurance world, cyber is just a buzzword.
Peter Hacker is group chief innovation officer at international broker Ed, as well as the co-founder of cyber research institute Distinction.Global in Germany.
“The number one problem I think we are confronted with if we look into this particular topic,” Hacker said, “is that it’s a topic which is not a tangible risk.”
The risks that insurers and brokers are used to dealing with are tangible, but the value propositions of corporations around the world today are heavily driven by intangibles, Hacker said while speaking at an Ed cyber academy event in London.
“[Cyber] is a buzzword, it’s nothing more than what I call intangibles, and intangibles are the reputation the company has, the brand the company has, the data the company has, the revenue streams the company has, the intellectual property the company has, the relationships with its customers in general – that’s what it really is.”
“Let me be very clear,” Hacker explained, “cyber risk is not a new risk.”
What is new is the volatility of the risk, which has “drastically developed” over the last three or four years, he said, leading to a cyber economy today worth upwards of $1trillion.
As globalisation and digitisation continue to grow exponentially, so too does the risk of cybercrime and attacks, a threat which Hacker describes as “unparalleled in nature” due to its high frequency, high severity and potentially global impact.
“The biggest challenge in the long term for us, brokers as well as insurers, is going to be – can we offer a sustainable solution? And at what price? What is our value proposition?”
The good news, according to Hacker, is that anyone who is agile or proactive in the field – whether an insurer or a broker – has a great chance to dominate the market.
“People who are static will be caught on the backfoot,” he said, “because this is not a product-driven market going forward, this is a solutions driven market.”
The relevance of the industry going forward, as far as cybersecurity and cyber-crime is concerned, is partly dependent on whether it can structure bespoke solutions, Hacker stressed.
“If we want to make money as an industry from this, then we better know what exposures we can have on the books, quantitatively and qualitatively, and we need to have responses that go beyond just general insurance,” he said.
“And we can only do that if everybody works together.”
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