Are the Keys to Cyber Risk Management Already in Your Pocket?

By: | November 14, 2018 • 4 min read
Chris Johnson is executive vice president at FM Global. He oversees operations outside of the Americas and AFM, a division that specializes in mid-market property insurance. In 2017, Johnson assumed legal responsibility for FM Global’s newly formed Luxembourg-headquartered subsidiary, FM Insurance Europe, S.A., which delivers coverage throughout the EU. He can be reached at [email protected]

Is there a silver bullet that risk managers can fire to thwart cyber attacks as technology becomes more sophisticated, and as hackers turn their attention to disrupting critical infrastructure and industrial controls that are tied to the Internet of Things (IoT)?

Not yet, but there is an opportunity to significantly limit the risks, simply by turning to loss prevention principles and practices used to combat traditional perils.

For years, the biggest threat from cyber attacks has been the theft of information, and while the media focuses on attacks against big data organizations with household names, every business is vulnerable.

Information security officers have focused on understanding such attacks and designing ways to beat hackers at their own game, while the expansion of IoT has created a broad and plentiful field of new opportunities and vulnerabilities for hackers to exploit.

Yet many managers believe they are either unable to or don’t have the resources to fight against such cyber attacks.

Earlier this year, the Ponemon Institute surveyed 1,100 senior IT professionals from the U.S., Europe and the Middle East/Africa region on the state of cybersecurity. Ponemon found that 82 percent of the respondents believe a data breach from an unsecured IoT device in the workplace is very likely over the next three years, and 80 percent of the respondents say such a breach would be catastrophic to their operations.

At the same time, more than half of the respondents are pessimistic about their ability to protect their organizations from cyber threats and only 36 percent of the respondents say that their senior management believes cybersecurity is a strategic priority, impacting investments in technology and staff.

At my company, FM Global, we believe the majority of loss is preventable, including loss from a cyber attack. So what is to be done? Several considerations and questions come directly from the risk manager’s property resilience toolbox.

The cyber attack risk potential is huge. Cisco estimates there will be more than 50 billion internet-connected devices worldwide by 2020, overseeing everything from production lines to HVAC systems to sophisticated state-of-the-art wireless meters helping to control water and gas lines.

Control systems are generally designed with functionality first and security second, if at all. Protection often comes in the form of inadequate bolt-on security fixes, or other solutions that are either costly or take too long to implement. The threat to industrial control systems from cyber attacks is here now, and if there are vulnerabilities left open on a system, they could be exploited.

In manufacturing facilities, many systems run just-in-time production lines, a ripe target for hackers who might find a backdoor into an older or inadequately protected industrial control system (ICS). A ransom demand may be the least of a manager’s worries given the potential for real physical damage from an ICS that has been hacked.

In some cases, the threat could come from within an organization. It doesn’t take much for an employee to fall for a phishing scam, and whether inadvertently or not, allow a threat to bypass all the security controls in place and gain access to an entire network.

At my company, FM Global, we believe the majority of loss is preventable, including loss from a cyber attack. So what is to be done? Several considerations and questions come directly from the risk manager’s property resilience toolbox.

To identify risk from traditional perils, risk managers need to understand the business. Specifically, risk managers should identify the potential exposures to the “crown jewels” of the business and how those exposures can impact areas such as business operations, customer confidence and market share.

Risk managers can then work to help prevent or minimize the risk through some sort of control; or if all else fails, transfer the risk through insurance.

The cyber attack risk potential is huge. Cisco estimates there will be more than 50 billion internet-connected devices worldwide by 2020, overseeing everything from production lines to HVAC systems to sophisticated state-of-the-art wireless meters helping to control water and gas lines.

Just as it is important to understand the fire and natural hazards your company and its locations may face, it is also important to understand the overall cyber risk to your organization, beginning with a clear understanding of the “crown jewels” and the inherent risk.

This understanding provides the foundation for the building of your defenses. Among the key questions to ask: What is your business activity? How are you generating revenue? Where are your company’s headquarters and business intelligence located? What is the inherent cyber risk in the country(ies) where you operate? Is your brand highly visible in the public eye?

Other key considerations could include:

  • Identifying how your organization detects and protects against internal threats.
  • Making sure to design, implement and monitor proper IT security controls to prevent unauthorized access into your organization.
  • Assigning someone dedicated to response and recovery preparedness.
  • Ensuring that corporate governance practices address cybersecurity.

How your organization prepares for, responds to and recovers from a cyber attack are equally important to ensure long-term viability, as well as limiting business interruption and reputation impact.

A company’s public response to a cyber attack can make a huge difference to reputation and enterprise value. Starting at the very top of the company, clear communication is vital. The risk manager can play a key role in helping prepare leadership to speak to the media, employees and all other constituents.

We recommend that businesses have the people, processes and technology in place to help prepare for and respond to cyber attacks in a timely and organized fashion.

It is important to realize that cybersecurity should be a collaborative effort between risk managers, industrial controllers and information technology specialists.

Even the most technologically savvy organizations acknowledge that cyber attacks are likely. By understanding the threats from cyber attacks, and recognizing that sound risk management principles can mitigate those threats, organizations can help to ensure that they remain resilient.

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]