Cyber at forefront of risk managers’ minds

Cyber and IT-related threats have emerged as one of the top concerns for risk managers, according to the latest annual Airmic survey. And, as the study found, cyber is also the area where risk managers most want to see the insurance industry step up and extend its offering. Cyber-risk was ranked among the top three concerns by 39% of respondents, second only to reputational concerns at 41%. However, when they were asked the likely position in three years' time, cyber moved to the top spot, cited by 43% of respondents. Furthermore, another IT-related risk – loss or theft of personal data – is currently the third most pressing concern, chosen by 33%. As such, it is clear cyber-related exposures are now the biggest concern for the UK’s risk managers. Many risk managers believe that their ability to respond to cyber-risk is falling short. Just 33% are confident that the main cyber-risks have been identified and quantified, while only 22% strongly agree that their board has sufficient knowledge and understanding of the exposure. When it comes to third-party cyber-risks, the picture is darker still, with only 15% strongly agreeing that these are being managed within their organisations. Asked where they would like to see insurers develop services in response to data breaches, respondents showed an overwhelming preference for support with responding to the data loss, with 58% preferring this option. The focus is also on securing data breaches in the case of interruptions to business, with 48% calling on insurers to do more in this area. Transferring risk through insurance is favoured for a number of risks whose origins sit outside the direct control of the company, and which are therefore harder to mitigate directly. Natural catastrophe (68%) and terrorist attack (63%) belong in this category. Cyber-events, both those causing business interruption (49%) and loss of data (45%), are also singled out for transfer to the insurance industry. Business interruption more generally was cited as a top-three risk by 18% of respondents. A majority (57%) want the insurance sector to focus its product development efforts on covering this area, the survey found. The threat of competitors using new technology and business models to gain market share is another rapidly emerging concern, chosen by 21%, with 30% expecting it to feature in three years' time. The level of trust in broker models and practices is still disappointing, but has improved over the last three years. In 2015, 7% of members strongly agreed that they had trust in the transparency of their broker's business model – this is now reported at 21%. Trust in broker placement advice, particularly when recommending their own services, is at a positive 71% of those strongly and slightly agreeing. Risk managers show the most trust in brokers’ confidentiality, where only 8% express a strong lack of trust. Even here, just 40% strongly agreed that they trusted brokers to maintain confidentiality. This is low given the centrality of this issue in assuring strong business relations. Airmic’s technical director and deputy CEO, Julia Graham, said the findings underlined the message that insurers and their buyers need to adapt to the fast-changing business environment. “Intangible risks dominate the concerns of our members, and are much less well accommodated by the insurance industry than tangible risks. This is something that underwriters and insureds need to develop further as a matter of urgency,” she said. The survey... CLICK HEADLINE TO READ MORE

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