12 June 2012

Insurance Insight: Insurance industry struggles to respond to new technological threats

Leading organisations across Europe are failing to integrate cyber threats fully into their risk management strategies, despite mounting concerns about cyber risk. According to research, risk managers are considerably more concerned about the perceived threat of cyber risks to their organisations.

In a survey by Marsh and Chubb Insurance, 69 per cent of the delegates questioned said that their concern about cyber risk had increased over the previous 12 months. Although the perceived threat of cyber risk is on the rise, the research suggests that awareness and understanding of cyber risk among the insurance and risk management community remains low.

Fredrik Motzfeldt, CMT practice leader for EMEA at Marsh, commented: "Risk managers are right to be concerned about cyber risk.

"These threats will become considerably more acute for organisations as a result of our growing dependence on technology and web-based solutions such as cloud computing. Despite these concerns, risk managers continue to have a minority stake in the management of cyber risk.

"Cyber risks pose too great a risk to the continued success of organisations to be misunderstood. Closer alignment to the risk management function is a vital first step to countering this threat and ensuring that a risk-based approach to IT investments is adopted."

Only 21 per cent of respondents to the survey stated that their organisation has purchased cyber insurance cover, and just 11 per cent felt confident that their current cyber insurance provision meets organisational needs, raising questions about the insurance industry's ability to respond to cyber threats.

Richard Lambert, European technology insurance manager at Chubb Insurance, added: "Changing technology and the increased value of data are presenting new risks to business.

"The fact that only a minority of those surveyed felt that the cyber insurance available in the marketplace today is meeting their needs is a clear call for continued dialogue between the business, legal and insurance communities."

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