6 Shadow IT Risks for Tech Companies
I was a financial analyst with Household Finance Corp. after graduating from college.
R&I: How did you come to work in risk management?
I was an accountant for a long time in the construction industry. Once I became a financial manager, that role started to take on some risk management responsibilities and sort of became a dual role. Then the opportunity came up to move to Skanska and do it full time, so that’s what I did.
R&I: What is the risk management community doing right?
We’re taking a much more holistic view of risk instead of staying in silos, so it’s not just about insurance, it’s not just about financial risk, or any one thing. It’s about looking at the business holistically.
R&I: What could the risk management community be doing a better job of?
We could be doing a way better job of sharing data around both leading and lagging indicators of what’s driving risk decisions. We all have enough data to get an individual picture of how our businesses are doing, but we’re not sharing very well within the industry.
R&I: What was the best location and year for the RIMS conference and why?
I’ve never been to RIMS. I’ve always gone to IRMI. I would say San Diego has been the best location for that conference because of the great weather, which makes for a nice place for people to relax and get together. IRMI is usually in early November, and that time of year, not every location is nice. But in San Diego it’s almost always a nice day, and that makes people want to go out and meet each other.
R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?
As a New York contractor, the biggest change has been the exposures in New York and emphasis on our industry there. It seems that now in construction there’s everywhere else, and then there’s New York; it’s become a separate entity.
Another change has been the sharing of risk between us and the insurance industry. When I came into the industry, we were leaving most of the risk with the insurer, and now we’re taking on much more of it ourselves and sharing it with carriers.
R&I: What emerging commercial risk most concerns you?
Labor risk is huge. The subcontractor community is stretched very thin both in terms of labor and the number of projects that are out there. I know everyone wants to talk about cyber risk, but talent shortage is a more critical risk for our business right now. Everything else will fall apart if we don’t fix that problem first.
R&I: How much business do you do direct versus going through a broker?
We do everything through a broker.
R&I: Is the contingent commission controversy overblown?
Yes. Even if a broker bundles up a bunch of policies, they still have to sell you what you need and the policy still has to do what it has to do. If bundling together a good policy over multiple clients gives them the ability to make a few extra dollars on it, I don’t have a problem with that. It just has to be transparent. Transparency is what it comes down to.
R&I: Are you optimistic about the U.S. economy or pessimistic and why?
I’m cautiously optimistic. I think better days are ahead if we don’t overthink or overregulate ourselves.
R&I: Who is your mentor and why?
I couldn’t identify one person, but I do have a few folks that I rely on. I’m a strong believer that you need a variety of points of view.
R&I: What have you accomplished that you are proudest of?
From a personal perspective, it’s raising four kids that so far — knock on wood — seem to be solid citizens.
R&I: What is your favorite book or movie?
I love science fiction and fantasy movies. I have not seen the new Star Trek yet, but that’s on my list.
R&I: What’s the best restaurant you’ve ever eaten at?
There are way too many in New York to choose just one.
R&I: What is the most unusual/interesting place you have ever visited?
Prague, in the Czech Republic. I was there for business and extended the trip. I’ve been to quite a few cities in Europe, and there’s usually some area that’s historic, and in Prague that area is much larger. It’s full of shops and restaurants and interesting sights.
R&I: What about this work do you find the most fulfilling or rewarding?
Helping my folks on a day-to-day basis get through whatever roadblocks they encounter. I like to use my own expertise to help them move their day along and solve whatever problem is bogging them down.
R&I: What do your friends and family think you do?
As hard as I try, it’s tough for them to understand. Saying that I buy insurance isn’t really descriptive of what I do because it happens only occasionally. My son is a civil engineer, so he understands parts of it. I’m really working hard with my three daughters to get them interested in the construction business, because there are so many things you can do.
“The sky is not falling” when it comes to cyber security, but the threat is a growing challenge for companies.
“I am not a cyber apocalyptic kind of guy,” said Gen. Michael Hayden, former head of the Central Intelligence Agency and National Security Agency, who currently is a principal at the Chertoff Group, a security consultancy.
“There are lots of things to worry about in the cyber domain and you don’t have to be apocalyptic to be concerned,” said Hayden prior to his presentation at a Global Risk Forum sponsored by Lockton on Sunday afternoon on the geopolitical threats facing the United States.
“We have only begun to consider the threat as it currently exists in the cyber domain.”
Hayden said cyber risk is equal to the threat times your vulnerability to the threat, times the consequences of a successful attack.
At present, companies are focusing on the vulnerability aspect, and responding by building “high walls and deep moats” to keep attackers out, he said. If you do that successfully, it will prevent 80 percent of the attackers.
“It’s all about making yourself a tougher target than the next like target,” he said.
But that still leaves 20 percent vulnerability, so companies need to focus on the consequences: It’s about response, resiliency and recovery, he said.
The range of attackers is vast, including nations that have used cyber attacks to disrupt Sony (the North Koreans angry about a movie), the Sands Casino (Iranians angry about the owner’s comments about their country), and U.S. banks (Iranians seeking to disrupt iconic U.S. institutions after the Stuxnet attack on their nuclear program), he said.
“You don’t have to offend anybody to be a target,” he said. “It may be enough to be iconic.”
The world order that has existed for the past 75 years “is melting away” and the world is less stable.
And no matter how much private companies do, it may not be enough.
“The big questions in cyber now are law and policy,” Hayden said. “We have not yet decided as a people what we want or will allow our government to do to keep us safe in the cyber domain.”
The U.S. government defends the country’s land, sea and air, but when it comes to cyber, defenses have been mostly left to private enterprises, he said.
“I don’t know that we have quite decided the balance between the government’s role and the private sector’s role,” he said.
As for the government’s role in the geopolitical challenges facing it, Hayden said he has seen times that were more dangerous, but never more complicated.
The world order that has existed for the past 75 years “is melting away” and the world is less stable, he said.
Nations such as North Korea, Iran, Russia and Pakistan are “ambitious, brittle and nuclear.” The Islamic world is in a clash between secular and religious governance, and China, which he said is “competitive and occasionally confrontational” is facing its own demographic and economic challenges.
“It’s going to be a tough century,” Hayden said.