Managing the digital risk frontier

Several speakers at the half day seminar stressed that if companies are to get to grips with the growing digital threats facing all businesses – not just companies with online operations – then their boards need to be aware of the cyber threats facing their companies and ensure actions are being taken to manage these risks.

Over 200 senior executives from the Californian insurance industry and local technology and other businesses gathered at the Palace Hotel in San Francisco to listen to experts from technology giants such as Intel, Hewlett Packard and Cisco systems, as well as cyber specialists from US Government and the insurance industry, debate how to tackle the growing and complex digital threat facing business.

As the Chairman of Lloyd’s, Lord Levene, declared in his opening speech at the conference, there is a new “wild frontier” of risk for businesses in California and elsewhere to manage – a digital frontier. He went on to explain that the insurance industry has a key role to play in helping businesses manage digital risk by providing new cyber insurance products. And he suggested with suitable risk mitigation strategies in place, businesses will be able to continue to harness the power of this new digital frontier without being overly exposed to the associated risks.

Tackling digital risks is not just an issue for businesses. In her keynote speech, Jenny Menna, Director at the National Cyber Security Division, said that cyber security is one of the top priorities for the US Department of Homeland Security. And indeed the US Government’s view is that America’s prosperity in the 21st century will depend on cyber security and the Government taking it as seriously as physical security. The magnitude of the digital challenge facing Government and business was outlined in Ms Menna’s address, not least by her highlighting that cyber crime is now a one trillion dollar-a-year business.

Of course one of the first steps in managing digital risk is to be aware of the nature of cyber threats and to understand the vulnerabilities of organisations to these threats. Helping business understand digital risk better was one of the key aims of the new Lloyd’s 360 Risk Insight Report, Managing Digital Risks: Trends, issues and implications for business, launched at the conference.

The report, produced in co-operation with HP Labs, highlights the wide range, and fast-changing, types of cyber attacks and attackers that business needs to be aware of. The report also examines how new technological trends, from social networking to cloud computing, can actually increase companies’ potential vulnerabilities to attack. Prith Banerjee, Vice-President of Research for Hewlett Packard, outlined these trends in his presentation of the key findings from the report.

As Malcolm Harkins, Chief Information Security Officer of Intel, said at the conference, we are facing a “perfect storm” and every organisation should plan for some form of compromise of their digital systems under any computing model. He suggests that to tackle this digital problem companies will have to develop their digital analytic capability to monitor and understand the threat better. He also thinks that the dynamic nature of the cyber ecosystem requires a more fluid approach from companies, as well as more granular cyber security models.

The conference concluded with a panel discussion on the more practical actions and steps companies can take to manage digital risk and in particular the role insurance might play. The consensus from the panel was that insurance has an important role to play in helping business manage digital risk and, as cyber threats continue to grow and evolve, this is only likely to increase.

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