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Cyber Talent

A 1.8 Million Worker Shortage Looms for Cyber Security. Here’s How to Build a Resilient Workforce

With every sector facing a widening cyber security skills gap, businesses must adopt proactive recruitment strategies, nurture homegrown talent and foster greater diversity in the workforce.
By: | August 30, 2018 • 5 min read

In an increasingly digital economy, the supply of talent for cyber roles is no longer meeting demand. Last year, a workforce study projected a shortfall of 1.8 million cyber security workers by 2022, an increase of 20 percent on the 1.5 million shortfall it projected in 2015.

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“With automation and digital transformation changing business models, every sector is becoming a technology sector and will be affected by the cyber skills shortage,” said Tracey Malcolm, Willis Towers Watson’s Future of Work leader.

A cyber security shortfall has a range of implications for businesses, from increased vulnerability to cyber attacks to losing ground to competitors with sophisticated digital capabilities.

“New AI-supported processes, cloud-based databases hosted by third parties and the Internet of Things make it critical to have the right talent and processes in place to effectively mitigate risk and execute the demands of the business,” said RIMS board member Patrick Sterling, senior director, legendary people and risk management, Texas Roadhouse, describing AI as a “game-changer” for his business.

“Technological disruption is here and is not going away. With the speed of change, the last thing you want is a competitive advantage or money-saving technology sitting in the hopper waiting a long time for resources.”

The Need for More Women in Cyber

One of the biggest drivers of the skills gap is the under-representation of women in cyber security.

North America has the highest proportion of female cyber security talent of any global region, yet women are still hugely under-represented at just 14 percent (versus 48 percent) of the total workforce. Globally, that figure is just 11 percent.

Patrick Sterling, senior director, legendary people and risk management, Texas Roadhouse

According to the Global Information Security Workforce Study (GISWS),  many women feel undervalued and discriminated against in the profession and earn less than men at every professional level.

Globally, men are four times more likely to be in a C-level cyber security position, four times more likely to be in executive management and nine times more likely to be in a managerial position, the study found.

“Companies must take swift and considerable actions to engage, develop and retain women in the field, or the global workforce gap will continue to grow year over year,” said the International Information Security Certification Consortium, or (ISC)²

Ethnic diversity is also key. According to a review of 180 publicly traded companies by McKinsey & Co, returns on equity were 53 percent higher on average for companies ranking in the top quartile of executive-board diversity than those in the bottom quartile.

Minority representation within the cyber security profession (26 percent) is slightly higher than the overall U.S. minority workforce (21 percent), however the majority are concentrated in non-management positions. Those in leadership roles are often more qualified than their peers, (ISC)² found.

Fixing the Cyber Security gap

According to Sterling, companies now have to be “laser focused” on inclusion and diversity: “It is a war for talent right now. If you don’t have a workplace where everyone can come to work and feel comfortable being their authentic best self, then you are behind in creating a culture that supports finding and retaining the best talent.”

Unconscious bias and cultural competency training is a good place to start, though it should be done by highly qualified trainers, Sterling explained.

Employers should also evaluate recruiting, hiring and retention practices to look for unintended barriers to improving workplace diversity, he said

“Rather than diversity and inclusion feeling punitive and compliance-driven, employees should be included in the positivity of building diverse teams. Bonuses for strategic referrals and hires are just one example.”

According to (ISC)², companies should implement mentorship, leadership and training programs, executive leadership programs and company-wide recognition programs and events to promote the advancement of diverse workforces.

“In order to be competitive today, you must have a highly talented IT leader who is passionate about creating a great workplace culture and knows how to recruit and cultivate great teams,” said Sterling.

Some companies are already laying the groundwork.

“We are seeing some companies being very proactive in building relationships with the cyber community and education organizations in order to boost the talent flow coming through,” said Malcolm.

“In order to be competitive today, you must have a highly talented IT leader who is passionate about creating a great workplace culture and knows how to recruit and cultivate great teams.” — Patrick Sterling, RIMS board member and risk management executive, Texas Roadhouse

One concern, she added, is that many HR departments still underestimate future cyber security talent needs.

“If you suddenly have a cyber breach and it’s all-hands-on-deck 24/7, you expect the cyber team to be there and respond, but what if 60 percent are permanent staff and 40 percent are contingent and contract?” she said.

“Your permanent cyber talent may be accessing supportive benefits like child care, but what about your contingent cyber talent? All of the talent you rely on should have a well-defined value proposition such as access to benefits programs.”

According to Malcolm, strategic workforce planning must be done frequently, regularly and proactively.

“HR sometimes keeps the cyber team at arm’s length, because its specific skillset and cyber people are plugged into other cyber people and often will be sourcing through their own networks or the security sector. However, HR needs to jump in and get active to support alternative recruitment approaches,” she said.

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Cyber talent can be nurtured from a variety of backgrounds, including legal and law enforcement.

“It’s not all just tech engineers,” said Jason Hogg, CEO, Aon Cyber Solutions.

Compensation packages and perks for cyber professionals make retaining existing talent another key challenge. (ISC)²’s research found millennial workers are more likely to change employers than other generations, putting value in career development, training, professional certifications and association memberships.

Millennials want to be intellectually stimulated and they also want to be up-to-speed with technology, “so they need to have access to all the best and latest tools,” said Hogg.

“Home-growing talent is critical,” he said. Aon developed a cyber associate program onto which dozens of college graduates are onboarded each year, receiving mentorship and gaining practical experience.

Aon also introduced a formal mentoring and development program to nurture female cyber security talent.

“We have taken a strong stance on developing female leaders, and 42 percent of our current cyber associate class is female,” Hogg said. “You have to be systematic in how you attract, retain and develop talent, just as you do with managing risk.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.