Can Cyber Regulations Work?

Can government regulations keep up with changing technologies to control cyber risk?
By: and | September 15, 2013 • 4 min read

Point: The Right Cyber Regulation Can Work

Governmental attempts to create cyber security regulations have been a failure thus far, but that doesn’t mean that doing nothing is the proper approach.

Anne Freedman, Senior Editor, Risk & Insurance

Anne Freedman, Senior Editor, Risk & Insurance®

Businesses are more vulnerable than ever to cyber attacks. And it’s clear that effective protection from cyberrisk takes more than individual effort. Attacks by hackers, nation-states and criminal organizations are growing in frequency and sophistication.

But as we can see from the ongoing controversy over the National Security Agency’s data mining efforts, this is an issue that will provoke opposition, even as technology firms and businesses support the effort.

Nevertheless, federal cyber security legislation is necessary to provide a framework that deals with the realities of cyber crime and data breaches.

Enlightened regulation can help mitigate the risk and protect businesses, customers, owners and investors against the impact of catastrophic loss.

There must be public/private sector information sharing and collaboration that protects against cyberrisk without raising privacy fears and civil liberties issues.

Gathering and communicating data at the federal level on viruses, malware and botnets (programs that communicate with other programs to execute malicious software) would be welcomed by all Internet users, commercial and individual.

In addition, it is only the federal government that has the ability to coordinate with other countries to create harmonious cyber crime laws and to cooperate with other countries in cyber investigations.

Instead of trying to pass a massive bill that invades personal and business privacy and mandates specific cyber security practices, regulatory efforts should focus on creating incentives — and offering assistance and guidance — for companies to take the internal steps necessary to protect their organizations.

Such protective steps must work in conjunction with new and developing insurance policies that substantially reduce the financial risk of cyber attacks. Those policies also play a key role in compelling companies to increase their cyber security efforts.

There is no doubt that no matter what steps are taken, cyber criminals will continue to develop new methods of attack. Organizations will continue to be vulnerable to cyberrisk. Only government can create the overarching framework and global collaboration that can lead to better cyber security.

Counterpoint: Cyber Regulation is Next to Impossible

Government regulations on the reporting of cyberrisk in the private sector cannot succeed. It’s not that the government shouldn’t be attempting to protect taxpayers and investors from this risk, because it should. It is right-minded to do so.


Dan Reynolds, Editor-in-Chief, Risk & Insurance®

Cyber regulation at the national level and the international level is well-intended. But the execution of it is a near-impossible task.

Look at the history of warfare. We have moved from troops standing in line shooting at each other, to cells of hackers operating in cities and towns across the globe.

So how can governments create an international agreement, even if they wanted to? We live in a world where cyber crime is no longer just the province of teenage underground anarchists, or even domestic or foreign organized crime groups. Some governments house hacker cells — affiliated with their own military in some cases — that are carrying out attacks on U.S.-based businesses.

To implement international laws, governments would have to be able to assure the countries that they are negotiating with that they can regulate Internet usage in their own countries. But we know they can’t do that. Some countries don’t even have cyber crime laws on the books yet.

Cyberrisk is a serious issue, but cyber regulation is not the answer. Regulation is deadly slow and not prone to evolve in real-time. It would be handily outpaced by the changing landscape of cyber space and cyber crime, leaving companies strangled by the outdated and ineffective burden of irrelevant mandates.

The worst part of all is that cyber regulation puts the emphasis on compliance rather than the real goal: countering the threat.

The good news is that industry does not have its head in the sand. There are a plethora of organizations working to develop standards and best practices related to cyber security. The International Organization for Standardization (ISO) alone has published more than 200 standards for information security. ISO and more than a dozen other international organizations are actively involved in developing and refining a framework of cyber security agreements and standards. These standards-setting bodies are equipped to respond more swiftly than regulators to keep pace with changes.

Government can help protect citizens and businesses from cyberrisk. But that can best be accomplished by partnering with industry and cooperating with the many organizations that are already working to make cyber space a safer place for citizens and for commerce.


Editor’s note: The opinions stated in the Zurich Point of Action are provided for informational purposes only and are solely those of Zurich in North America.
The Zurich Point of Action opinions are not legal advice and Zurich assumes no liability concerning the information above. The Point and Counterpoint opinions are those of Risk & Insurance® and are completely independent of Zurich.

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.


But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.


Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &


Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]