Cyber risks here to stay, joint IBM/Swiss Re study shows

Cyber risks are a major cost of doing business today – and likely more so in the years ahead, companies believe according to a study Swiss Re and the technology and consulting corporation IBM conducted early this year. Ultimately the findings point to the integral role insurance has to play in any overall risk management solution.

In a joint IBM/Swiss Re survey of 800 company CIOs in January, 60% of respondents said they expected the relative importance of the "risk inherent in digital interconnectedness" to increase within the next ten years. Also, most believed that a major incident could significantly harm their company.

What are companies doing to counteract this risk? "[They] are investing in digitisation overall. Yet even among the outperformers whose top management is heavily involved in the risk discussion, implementation of risk mitigation measures is lagging", says Maya Bundt, Head Cyber & Digital Strategy for Swiss Re. "But companies are upgrading their organisations, and collaboration across ecosystems will be stepped up", she adds in her summary of the findings.

In the area of risk mitigation, Bundt sees potential for insurance companies to help clients with risk expertise and solutions: "We think that companies believe they are insured but are not. At the same time, many seem unsure about the exact scope of their existing cover and cyber insurance. Here, the insurance industry can do a better job of helping clients understand existing products and how they interact with other insurance offerings."

According to the study, the key factor in upgrading companies are their employees. Only 27% of all companies believe that their workforce has adequate digital skills today, and only 44% expect to get there within the next ten years. "If a company cannot employ enough people with the right skills or train their current employees, those skills and services may have to be sourced from outside", says Bundt. "Most insurance carriers selling cyber products have come to the same conclusion and are adding a number of value adding services to their insurance package."

The insurance industry can play a significant role in mitigating and managing cyber risks in an economy. It starts with really understanding the insurance needs and then developing the right products. It continues with partnering on risk management. "We need to make sure that insurance is more than just a protection product", says Bundt, referring to the challenge for insurers. "Our goal is to become part of an overall risk management solution."

Read the full study following this link.


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