Cyber-attacks represent one of the most significant threats facing international businesses today, and are increasing in severity. For the insurance industry, such risk represents a highly significant opportunity. Yet while many insurance companies, particularly in the UK, currently offer such products, others have shown reluctance given the risks involved.
In this article, Petra Wildemann in FTI Consulting’s Insurance practice takes a look at why cyber-risk products must be very carefully considered and, using the marine transportation industry as an example, the opportunities and challenges posed by cyber-security.
A New Risk Category
The proliferation of digital technologies and the expansion and complexity of our IT and data systems means that the risk to business from cyber-attacks are increasing every day. ‘Cyber-risk’, as defined by The Institute of Risk Management, is ‘the risk of financial loss, disruption or damage to the reputation of an organisation due to any sort of failure of its information technology systems.'
It was once thought that such risk was confined entirely to certain sectors, such as technology providers, defence contractors and financial services companies. However the evolution of cyber-risk means that every organisation is now under threat. It is therefore essential for these risks to be carefully measured, analysed and insured.