2222222222

Risk Insider: Jack Hampton

Breaching the Electronic Levees

By: | October 24, 2016 • 3 min read
John (Jack) Hampton is a Professor of Business at St. Peter’s University and a former Executive Director of the Risk and Insurance Management Society (RIMS). His recent book deals with risk management in higher education: "Culture, Intricacies, and Obsessions in Higher Education — Why Colleges and Universities are Struggling to Deliver the Goods." His website is www.jackhampton.com.

October 21, 2016.

In what was described as a stunning breach of global Internet stability, a coordinated cyberattack struck online social networking and other systems including Twitter and PayPal.

In a distributed denial-of-service, hackers flooded servers, causing them to collapse under the overload.

Such attacks are common and we are getting used to them. This is not good.

Mounting evidence shows hackers are becoming more powerful, more sophisticated, and increasingly interested in targeting core infrastructure providers.

Yesterday Twitter, tomorrow the electricity grid and nuclear power plants.

We have been there before. The year was 2005. The event was Hurricane Katrina.

Today’s “Katrina” is not a natural disaster. Neither is it limited to the U.S. Gulf Coast. It’s a national or global cyber attack.

Here’s what we knew. Major portions of New Orleans flooded on average every three years for the prior 200 years before Katrina struck in 2005. Even heavy rain exceeded the capabilities of pumps trying to get rid of the water.

Advertisement




Since the early 1800s, the city enforced a code of burial in tombs above ground. Nobody wants flooding to uproot caskets and have them floating in the streets.

The cemeteries, called “cities of the dead,” were a major attraction. Even today you can pay $25 a person and take the whole family on a “2-Hour Cemetery & Voodoo Walking Tour” in New Orleans.

So planners in that city rationally had their eyes on tourism dollars. But what about risk management?

Rain is one thing. Levee breaches are another.

The entire city was protected either by high ground or levees built to withstand a Category 3 storm. Atlantic hurricanes had been growing in intensity.

Katrina was a Category 5 upon arrival in Louisiana. The levees failed.

Katrina should have been seen in advance. Not the exact date. Not the horror. Just the madness of how we often fail to fix the obvious until it’s too late.

Today’s “Katrina” is not a natural disaster. Neither is it limited to the U.S. Gulf Coast. It’s a national or global cyber attack.

The recent attack on Twitter and others did more than disturb our instant messaging. It gave us a glimpse of an impending electronic catastrophe.

We recall automobiles with faulty ignition switches that can kill or injure us. We replace defective smart phones that catch fire or explode, with the potential to take down commercial airliners.

Why do we ignore the fact that we are connecting our entire daily life — emails, phones, cars, appliances, hospitals, electrical networks, and pacemakers — to a single vulnerable system? We need more than electronic “levees” built to withstand a rainfall when we are facing a cyber tropical cyclone.

Does this risk management failure stem from being penny-wise and pound-foolish?

The annual U.S. spending on national defense is $600 billion. The government budget deficit is also $600 billion. Annual social security and disability benefits amount to $930 billion.

How much is too much to reasonably spend to protect us as we stand here, watching these approaching electronic storm clouds?

Spending for personal virus protection? $30 annually per computer.

Spending for business systems? Thousands to millions of dollars.

Spending to stabilize a global communication network that could allow really bad people to cause devastation and calamity? Priceless.

The Profession

Curt Gross

This director of risk management sees cyber, IP and reputation risks as evolving threats, but more formal education may make emerging risk professionals better prepared.
By: | June 1, 2018 • 4 min read

R&I: What was your first job?

My first non-professional job was working at Burger King in high school. I learned some valuable life lessons there.

R&I: How did you come to work in risk management?

After taking some accounting classes in high school, I originally thought I wanted to be an accountant. After working on a few Widgets Inc. projects in college, I figured out that wasn’t what I really wanted to do. Risk management found me. The rest is history. Looking back, I am pleased with how things worked out.

R&I: What is the risk management community doing right?

Advertisement




I think we do a nice job on post graduate education. I think the ARM and CPCU designations give credibility to the profession. Plus, formal college risk management degrees are becoming more popular these days. I know The University of Akron just launched a new risk management bachelor’s program in the fall of 2017 within the business school.

R&I: What could the risk management community be doing a better job of?

I think we could do a better job with streamlining certificates of insurance or, better yet, evaluating if they are even necessary. It just seems to me that there is a significant amount of time and expense around generating certificates. There has to be a more efficient way.

R&I: What was the best location and year for the RIMS conference and why?

Selfishly, I prefer a destination with a direct flight when possible. RIMS does a nice job of selecting various locations throughout the country. It is a big job to successfully pull off a conference of that size.

Curt Gross, Director of Risk Management, Parker Hannifin Corp.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Definitely the change in nontraditional property & casualty exposures such as intellectual property and reputational risk. Those exposures existed way back when but in different ways. As computer networks become more and more connected and news travels at a more rapid pace, it just amplifies these types of exposures. Sometimes we have to think like the perpetrator, which can be difficult to do.

R&I: What emerging commercial risk most concerns you?

I hate to sound cliché — it’s quite the buzz these days — but I would have to say cyber. It’s such a complex risk involving nontraditional players and motives. Definitely a challenging exposure to get your arms around. Unfortunately, I don’t think we’ll really know the true exposure until there is more claim development.

R&I: What insurance carrier do you have the highest opinion of?

Advertisement




Our captive insurance company. I’ve been fortunate to work for several companies with a captive, each one with a different operating objective. I view a captive as an essential tool for a successful risk management program.

R&I: Who is your mentor and why?

I can’t point to just one. I have and continue to be lucky to work for really good managers throughout my career. Each one has taken the time and interest to develop me as a professional. I certainly haven’t arrived yet and welcome feedback to continue to try to be the best I can be every day.

R&I: What have you accomplished that you are proudest of?

I would like to think I have and continue to bring meaningful value to my company. However, I would have to say my family is my proudest accomplishment.

R&I: What is your favorite book or movie?

Favorite movie is definitely “Good Will Hunting.”

R&I: What’s the best restaurant you’ve ever eaten at?

Tough question to narrow down. If my wife ran a restaurant, it would be hers. We try to have dinner as a family as much as possible. If I had to pick one restaurant though, I would say Fire Food & Drink in Cleveland, Ohio. Chef Katz is a culinary genius.

R&I: What is the most unusual/interesting place you have ever visited?

The Grand Canyon. It is just so vast. A close second is Stonehenge.

R&I: What is the riskiest activity you ever engaged in?

Advertisement




A few, actually. Up until a few years ago, I owned a sport bike (motorcycle). Of course, I wore the proper gear, took a safety course and read a motorcycle safety book. Also, I have taken a few laps in a NASCAR [race car] around Daytona International Speedway at 180 mph. Most recently, trying to ride my daughter’s skateboard.

R&I: If the world has a modern hero, who is it and why?

The Dalai Lama. A world full of compassion, tolerance and patience and free of discrimination, racism and violence, while perhaps idealistic, sounds like a wonderful place to me.

R&I: What about this work do you find the most fulfilling or rewarding?

I really enjoy the company I work for and my role, because I get the opportunity to work with various functions. For example, while mostly finance, I get to interact with legal, human resources, employee health and safety, to name a few.

R&I: What do your friends and family think you do?

I asked my son. He said, “Risk management and insurance.” (He’s had the benefit of bring-your-kid-to-work day.)

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]