Given the frequency of data breach notifications over the past two years, it shouldn’t come as much of a surprise to see Cyber Security near the top of the list of risks facing the insurance industry.
In their latest “Banana Skin” report, the Centre for the Study of Financial Innovation (CSFI) and PwC surveyed over 800 insurance practitioners and observers from more than 50 countries. For this first time, cyber security entered the top 5 global list, alongside regulatory compliance, the global economic downturn and interest rate concerns.
Regulation and compliance, naturally, tops the list across all insurance sectors but the rise of cyber security as an issue was noteworthy. According to Andrew Hilton, Director of the CFSI: “The most striking new theme to emerge from this year’s survey is the high level of anxiety about cyber risk. Specifically software failure and data security breaches”.
Cyber security is ranked as the number one concern in the US, UK and Africa and number two in the Far East Pacific Region. It also ranks number one amongst non-life insurers and second amongst reinsurers.
“The chief concern is the security of the ever growing volumes of data that insurers hold in cloud-based storage systems. For many, major breaches are inevitable; the question is how much damage they will cause,” Andrew Hilton.
One respondent (Director of Risk Management) put it succinctly: “Insurers are prime targets to be victimised given the richness of data we hold. Credit card information, medical information and other underwriting information. It’s not a matter of if, but when it will happen”.
Defending against cyber-attack is becoming increasingly difficult because of the sheer volume of attempts. Even if you detect and defend against 99.9% of attacks, the few that get through can cause serious disruption to the business. One CFO states: “We repel more than 20 serious attacks every day. Half of these we suspect are state-sponsored attacks.”
Overall, the impression across the industry is that the quality of risk management has improved. However, the level of concern over risk is at the highest level since the survey began in 2007.
More generally, there is a perception that the quality of management, and risk management in particular, has improved in the insurance industry since 2013, said the CSFI’s Mr Hilton.
About the Banana Skin Report
The CSFI’s Insurance Banana Skins survey, in association with PwC, is conducted every two years and was conducted in March and April of 2015. 34% of respondents were from the non-life insurance sector, 27% from the life sector, 6% were reinsurers and 5% brokers. The remaining 28% were classified as observers.
The security and stability of banking transactions are an essential lynch pin of the global financial services industry. Few industry sectors face greater risk of cyber-attack, or are subject to stricter regulations, than banking and finance.
Financial services require bullet-proof data security, supported by real-time transaction updates and guaranteed availability. However, many organisations don’t realise the inherent frailty of the high-speed data networks that form the essential backbone of the financial services technology infrastructure.
Senetas high-speed encryption technology is used to provide critical data secuity without impacting on network performance for bank, trading houses and financial institutions across the globe.