Cyber Threats

Cyber Challenges Still Evolving

A lack of available data hamstrings cyber-risk underwriting, no matter what the exposure.
By: | May 26, 2015 • 4 min read

Some chief information security officers fail to see the value of standalone cyber-risk coverage, while some brokers give the impression that traditional policies cover many of the same risks.

These factors have contributed to surprisingly low recent take-up on standalone cyber coverage, according to Charles Cowan, counsel to law firm Drinker Biddle & Reath’s insurance transactional and regulatory team.

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Cowan and Andrea Best, a partner with Drinker Biddle, addressed four emerging areas of cyber-related risk on May 19 in the Old Lloyd’s Library, built in 1928 and now in the basement at Lime Street. That very day, Lloyd’s announced its move into cyber coverage in Poland.

In the heavily wood-paneled atmosphere of the past, the speakers addressed four potential horsemen of the digital apocalypse.

Cyber-risk itself, drones, autonomous vehicles, and ride/car share all fall under the cyber umbrella and share a primary reliance on data that is largely not yet available, given the newness of the risks. The lack of data means that none of these risks is yet properly understood.

Cyber

“First and foremost in cyber risk,” said Cowan, “is the need for data. Not a lot of reliable data exists about incidents and where future potential attacks might be, or of what size.”

Cowan added that little litigation has yet taken place to clarify the validity of exclusions. The wording of the standard war exclusion “requires a hostile act by a foreign Government,” he said, “without naming names.” The Sony hack, reportedly by the Government of North Korea, came to mind.

Following another hack that exposed some 80 million customer and employee records at Anthem Health Insurance, the company notified and conducted its correspondence with its customers on paper, Cowan said. (Target experienced further opportunist email hacking after advising its customers by email that the personal data of up to 70 million customers, including credit card numbers, had been stolen in late 2013.)

“For larger breaches, costs can be astronomical,” Cowan said, citing a three-year-old U.S. report that valued the average stolen record at about $180. Cowan, who had left Lloyd’s three weeks earlier, is now working with the Department of Homeland Security on garnering more timely information.

Drones

About 80 percent of commercial unmanned aerial systems, or drones, are used in agriculture. The U.S. economy might expect to earn $82 billion from the use and knock-on effects of drones by 2025, and the FAA is due to issue a set of standards in this as-yet largely unregulated area.

Liability issues abound: criminal activity, matters of privacy and trespass, nuisance and general danger, air traffic problems, misdirected payloads, and of course hacking. “Any system is hackable,” Cowan said.

Autonomous Vehicles

The Institute of Electrical and Electronics Engineers forecasts that as many as 75 percent of all vehicles, some with removable steering wheels, are expected to be autonomous by 2030, Best said. Legislation in the U.S. is being enacted at the state level (five states plus Washington, D.C.), or has failed (12 states), or is not being considered at all.

Autonomous vehicles will require sensors for vehicle-to-vehicle communication, “but we’ll also have to have sensors on buildings, bridges, traffic lights and other objects we’ll have to navigate around,” Best said.

“The ultimate question, if this technology really takes off, and is so safe, is how much of an automobile insurance coverage market will there be left?” — Andrea Best, partner, Drinker Biddle & Reath

It is not yet clear who will need coverage. Manufacturers of the vehicles? Of component parts? Of the sensors? One known unknown is whether driver premiums for autonomous vehicles will fall, due to the lowered risk, or increase for traditional hands-on drivers.

“The ultimate question, if this technology really takes off, and is so safe, is how much of an automobile insurance coverage market will there be left?” Best asked.

Coverage challenges include the reliability and vulnerability of the technology, the adaptability of the driving public, and the hackability of the autonomous systems.

“These are probably just interim challenges,” Best said. “Given the level of investment, and how much of a push there is for (autonomous vehicles), these issues will fall away.”

Ride/Car Sharing

The former will be familiar from transportation network companies such as Uber, which arrange one-time shared rides on short notice, and others that arrange transportation for a fee using online technology platforms.

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The latter includes peer-to-peer car rentals organized by program administrators (such as RelayRides and Getaround) for short periods of time.

“Both services present new insurance coverage challenges,” Best said.

Ride-sharing is typically excluded from personal auto policies, creating coverage gaps. NAIC has issued a white paper to help state insurance regulators, and legislation is pending in more than 35 states. Similar coverage gaps exist in the car-sharing realm.

As if these four risks were not enough to digest, on the subject of emerging risks, in Best’s words, “we could have covered any number of topics and be here for hours.”

Roger Crombie is a United Kingdom-based columnist for Risk & Insurance®. He can be reached at [email protected]

Risk Management

The Profession

Maila Aganon is the personification of the American dream. The vice president of treasury and risk for Caesars Entertainment Corp. immigrated from the Philippines and worked her way to the top.
By: | October 12, 2017 • 4 min read


R&I: What was your first job?

I actually had three first jobs at the same time at the age of 16. I worked as a cashier in a fast-food restaurant, a bank teller and a debt collector for an immigration law firm.

R&I: Who is your mentor and why?

I have a few. The first one would be the first risk manager I reported to. He taught me the technical part of the job, risk financing, captives and insurance. I am also privileged to be mentored by Lori Goltermann (CEO of U.S. Retail for Aon Risk Solutions).  From her I learned to be resilient and optimize life/work balance. Then of course I also have a circle of ladies at work who I lean in to!

R&I: How did you come to work in this industry?

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I was once a bank teller and had a client who was an insurance agent. He would come in every day to make deposits. One day, he offered me a job. He said, “How would you like to have your own desk, your own phone and your own computer?” And I said, “When do I start?” I worked for this personal lines insurance company for six years.

R&I: Did you take to it immediately?

Yes, I did sales, claims and insurance accounting. I left for a couple years and that is when AAA came calling, which was my first introduction to risk management. I didn’t know there was such a thing as commercial insurance. They called me and the pitch was “how would you like to run a captive insurance company?”

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

It is not so much the job but I say that I am the true product of the American Dream. I came to the U.S. when I was 16. I worked three jobs because I didn’t want to go to high school (She’d already graduated high school in the Philippines.) I spoke very little English, and due to hard work, grit and a great smile I’m now here working with all of you!

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

In movies, it is a toss-up between Gone with the Wind and Big Daddy.

R&I: What is your favorite drink?

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I like anything sweet. If you liquify a dessert that’s my perfect drink.

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

This is easy because I just got back from Barcelona on a side trip. I visited the Montserrat Monastery, which is a thousand-year old monastery. It was raining and foggy. I hiked for three hours and I didn’t see a single soul. It was a very peaceful place.

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

This is going back to working at a fast food chain when I was young. I worked in a very undesirable location in San Francisco. At 16 I used to negotiate with gang members so they wouldn’t rob me during my shift. I had to give them chicken so they wouldn’t rob me.

Maila Aganon, VP, Treasury and Risk, Caesars Entertainment Corp.

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

I can’t say me. They have to be my kids Kyle and Hailey. They can make me laugh and cry within a half-minute of each other. Kyle is 10, a perfect Mama’s boy. Hailey is seven going on 18.

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

I think the most fulfilling part is how you build relationships with people and then after a while they become your friends.

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

Risk managers do a great job of networking. They are number one. Which is not a surprise because the pillar of our work is building a relationship with underwriters, clients and brokers.

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

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I am experiencing that right now; talent.  We need to a better job in attracting and retaining talent. Nobody knows about what we do. You tell someone ‘I’m as risk manager’ and they give you a blank look. What does that mean?

We’re great marketers and we should use this skill set in attracting talent. We should engage our universities, our communities, even our yoga groups and talk to them about the exciting world of risk. It is an exciting career because there is nothing like it.

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

It would have to be the increasing cyber risk and the interdependency of systems.

R&I: What does your family think you do? 

I took my seven year old daughter once to an insurance event that had live music, dancing and drinks. She thinks that whenever I go to an insurance meeting, I’m heading to a party.




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