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.

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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

For This Pharmaceutical Risk Director, Managing Risk Means Being Part of the Mission to Save Lives

Meet Eric Dobkin, director, insurance and risk management, for Merck & Co. Inc.
By: | September 28, 2018 • 5 min read

R&I: What was your first job?
My first job out of undergrad was as an actuarial trainee at Chubb.I was a math major in school, and I think the options for a math major coming out are either a teacher or an actuary, right? Anyway, I was really happy when the opportunity at Chubb presented itself. Fantastic company. I learned a lot there.

R&I: How did you come to work in risk management?
After I went back to get my MBA, I decided I wanted to work in corporate finance. When I was interviewing, one of the opportunities was with Merck. I really liked their mission, and things worked out. Given my background, they thought a good starting job would be in Merck’s risk management group. I started there, rotated through other areas within Merck finance but ultimately came back to the Insurance & Risk Management group. I guess I’m just one of those people who enjoy this type of work.

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R&I: What is risk management doing right?
I think the community is doing a good job of promoting education, sharing ideas and advancing knowledge. Opportunities like this help make us all better business partners. We can take these ideas and translate them into actionable solutions to help our companies.

R&I: What could the risk management community be doing a better job of?
I think we have made good advancements in articulating the value proposition of investing in risk management, but much more can be done. Sometimes there is such a focus on delivering immediate value, such as cost savings, that risk management does not get appropriate attention (until something happens). We need to develop better tools that can reinforce that risk management is value-creating and good for operational efficiency, customers and shareholders.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?
I’d actually say there hasn’t been as much change as I would have hoped. I think the industry speaks about innovation more often than it does it. To be fair, at Merck we do have key partners that are innovators, but some in the industry are less enthusiastic to consider new approaches. I think there is a real need to find new and relevant solutions for large, complex risks.

R&I: What emerging commercial risk most concerns you?
Cyber risk. While it’s not emerging anymore, it’s evolving, dynamic and deserves the attention it gets. Merck was an early adopter of risk transfer solutions for cyber risk, and we continue to see insurance as an important component of the overall cyber risk management framework. From my perspective, this risk, more than any other, demands continuous forward-thinking to ensure we evolve solutions.

R&I: What’s the biggest challenge you’ve faced in your career?
Sticking with the cyber theme, I’d say navigating through a cyber incident is right up there. In June 2017, Merck experienced a network cyber attack that led to a disruption of its worldwide operations, including manufacturing, research and sales. It was a very challenging environment. And managing the insurance claim that resulted has been extremely complex. But at the same time, I have learned a tremendous amount in terms of how to think about the risk, enterprise resiliency and how to manage through a cyber incident.

R&I: What advice might you give to students or other aspiring risk managers?
Have strong intellectual curiosity. Always be willing to listen and learn. Ask “why?” We deal with a lot of ambiguity in our business, and the more you seek to understand, the better you will be able to apply those learnings toward developing solutions that meet the evolving risk landscape and needs of the business.

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R&I: What role does technology play in your company’s approach to risk management?
We’re continuing to look for ways to apply technology. For example, being able to extract and leverage data that resides in our systems to evaluate risk, drive efficiencies and make things like property-value reporting easier. We’re also looking to utilize data visualization tools to help gain insights into our risks.

R&I: What are your goals for the next five to 10 years of your career?
I think, at this time, I would like to continue to learn and grow in the type of work I do and broaden my scope of responsibilities. There are many opportunities to deliver value. I want to continue to focus on becoming a stronger business partner and help enable growth.

R&I: What is your favorite book or movie?
I’d say right now Star Wars is top on my list. It has been magical re-watching and re-living the series I watched as a kid through the eyes of my children.

R&I: What is the riskiest activity you ever engaged in? When I was about 15, I went to a New York Rangers versus Philadelphia Flyers game at the Philadelphia Spectrum. I wore my Rangers jersey. I would not do that again.

Eric Dobkin, director, insurance & risk management, Merck & Co. Inc

R&I: What is it about this work you find most fulfilling or rewarding?
I am passionate about Merck’s mission of saving and improving lives. “Inventing for Life” is Merck’s tagline. It’s funny, but most people don’t associate “inventing” with medicine. But Merck has been inventing medicines and vaccines for many of the world’s most challenging diseases for a long time. It’s amazing to think the products we make can help people fight terrible diseases like cancer. Whatever little bit I can do to help advance that mission is very fulfilling and rewarding.

R&I: What do your friends and family think you do?
Ha! My kids think I make medicine. I guess they think that because I work for Merck. I suppose if even in a small way I can contribute to Merck’s mission of saving and improving lives, I am good with that. &




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