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2018 RIMS

Crucial Cyber Peril Defense and Coverage Considerations

One of the thorniest issues in cyber coverage may be choosing which broker should lead coverage placement.
By: | April 18, 2018 • 3 min read
Topics: Cyber Risks | RIMS

The rate at which the cyber peril expanded and the complexity of the coverage questions it raises present challenges that almost every risk manager and their carrier and broker partners are going as fast as they can to address.

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At a Monday afternoon session at the RIMS annual conference in San Antonio,  Jean Nkamdon, the risk management and compliance manager for the Washington Post, and Shiraz Saeed, the national practice leader-cyber risk for the Starr Companies, attempted to give attendees a blueprint for building a risk management bulwark to address a threat that even the most sophisticated minds in risk management and insurance find perplexing.

To begin, both Nkamdon and Saaed took pains to tell the audience the views they were expressing were their own and they were not speaking on behalf of their companies.

Launching into their discussion, they went over some of the basics of cyber risk management; quantifying the exposure, understanding the threat landscape and the importance of having a detailed knowledge of coverages, and not just your cyber coverages. It’s on that latter point, in which the cyber coverage issue gets so complicated, heads might start to spin.

Depending on the event, whether it be a theft of data, a hack that results in machinery malfunction, reputational damage or even bodily injury, risk managers who want to forestall damage for any of the above might want to first ask themselves who should place the coverage or take the lead in placing it.

“The biggest challenge is what broker are you going to use?” Saeed said. Should it be a cyber specialist, a property broker or a casualty broker? It’s not a question that’s easily answered, which is why one of Saeed and Nkamdon’s first recommendations, quantifying the exposure, is so important.

In quantifying the exposure and creating policies and practices to defend against an event, Nkamdon, who works for a prominent media company with its own share of online liability exposure, said expectations that a firewall of some other defense must not fail are not realistic.

“There is no foolproof system. You want to show the underwriter that you have been a prudent person,” Nkamdon said.

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In Nkamdon’s case, Saeed pointed out, damage to the parts of the Washington Post infrastructure that enable reporters to file their stories and editors to edit and publish them, like an attack that brings that system down for two or three days, would be far more devastating than a data breach. Which is why, for so many companies, creating systems for quicker recovery from an attack are just as much of a priority than coverage.

“If you are not resilient, it does not matter how much insurance you have,” Nkamdon said.

Which brings us to one trending point about the cyber insurance market, which although it is growing, is still in its adolescence. A market that began life as a product intended to cover notification, legal and credit monitoring costs is now being driven more by business interruption coverage, Saeed said. &

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

More from Risk & Insurance

More from Risk & Insurance

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?

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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?

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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?

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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]