Cyber risk revolves around how companies use tech

Cyber risk revolves around how companies use tech | Insurance Business

Cyber risk revolves around how companies use tech

It has been 50-years since Neil Armstrong and Edwin “Buzz” Aldrin became the first men to walk on the moon. They blasted off in Apollo 11 on July 16, 1969, and, four days later, they became two of the biggest names in modern history. The achievement was made possible with the help of NASA’s technology, which was state-of-the-art at the time, but here’s the scary thing … the computers NASA used to guide humans across 356,000km of space from the Earth to the Moon and back again fall short in comparison to the tiny smartphones we carry around in our pockets today.

As technology evolves, so too do the risks surrounding it. Robert Parisi, US cyber product leader at Marsh, commented: “I’ve been involved with cyber insurance technically since 1999 when we rolled out one of the first products at AIG. At that point in time, there was no cloud, blockchain or some of the other artificial intelligence tools we have today. While these things create a lot of buzz in our industry, I think cyber risk is more fundamentally about technology and how companies are using technology.

“That technology is constantly changing. Just look at smartphones. They’re immensely powerful technology tools that vastly eclipse the technology they had when they sent Apollo 11 to the moon. And I can almost guarantee that in three years’ time, our phones will look quaint and will have been overtaken by the next new technology craze. We’re seeing technology creep into everything that we do, and we have to recognize that it changes our risk profile.”

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Every year, global insurer Allianz releases a Global Risk Barometer, which ranks top concerns among businesses around the world. In 2018, the top three risks in the US were cyber #1, business interruption #2 and natural catastrophes #3. Many of those who raised the issue of business interruption said they were most worried about interruption from a cyber incident, which Parisi pointed out is basically technology risk. Traditional commercial risks like fire and adverse weather remain, but now businesses face greater exposures in their supply chains due to unplanned technology issues.

Oftentimes, when people think of cyber risk, their minds immediately turn to crime. They think of the big Equifax-style headlines, huge data breaches and social engineering attacks. According to Parisi, cybercrime exploits haven’t changed as dramatically as the way companies are losing money or being impacted. He attributes this to the way that companies are doing business differently via technology.

“I don’t think there’s any huge change in terms of what’s causing harm; I think it’s more a function of companies – by the increased use of technology – exposing themselves to more of that harm,” he told Insurance Business. “We just do business differently and, as we continue to do business differently, that exposes us to a host of other things that may or may not have gotten worse in and of themselves, but we’re now more vulnerable to them.”