An Inevitable Threat

Cyber: The New CAT

Cyber risk is a foundation-level exposure that should be viewed similar to a company’s property, liability or workers’ comp risks.
By: | April 7, 2014 • 6 min read

Superstorm Sandy. The Joplin tornado. The Japanese earthquake and tsunami. California wildfires. 9/11. Catastrophes come in many forms. It is universally understood that despite our best efforts, disaster can strike due to forces beyond our control. Cyber threats are equally dangerous and diverse — and just as unstoppable.

Yet even as catastrophe risk management matures and scores of executives join the catastrophe conversation, the dragon known as cyber risk still sits in the middle of the board room, quietly smoldering.

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In every industry and at every company size, cyber risk is a foundation-level exposure that every business must confront — one that must be viewed with the same gravity as a company’s property, liability or workers’ comp risks.

As recent as a decade ago, that might have been an overstatement. But not now. Technology and business are fundamentally linked. Computers and the Internet are the primary platform for communicating with customers and vendors, managing profits and expenses, paying employees, operating the machines that produce goods and provide services, and making sure that the end product gets into customers’ hands on schedule. Mobile technology and the Internet of Things are opening new channels, making technology a physical extension of ourselves, both personally and commercially.

“The entire economy is so reliant, in ways that we don’t even see, on technology and the storage, transmission and usage of data, both personal and for analytical purposes, that it’s fundamental to almost every sector,” said Oliver Brew, vice president for professional, privacy, and technology liability at LIU Liberty International Underwriters, the specialty line division of Liberty Mutual in New York.

Video: Computer security expert Mikko Hyppönen explains how he tracked down the creators of the first PC virus, which hit the net 25 years ago, and how to stop the new viruses of today.

That reliance is only going to grow. A January report by Forrester Research described software assets as more critical to business success than financial assets over the next 20 years.

“If you take a look at the public companies’ 10-Ks and publicly disclosed statements, what are they emphasizing that’s going to differentiate them from their competitors, increase sales, decrease costs and maximize efficiency? They focus on the use of technology and the use of information assets,” said Kevin Kalinich, global practice leader for cyber and network risk at Aon Risk Solutions.

With increased technology comes increased opportunity for attack. However, that reality didn’t get a lot of traction in the C-suite until the recent Target breach splashed it across world headlines. Even now, there are still some resting easy, confident that their IT teams have everything under control. Others assume cyber attacks are a threat largely confined to industries such as retail, health care and financial services — sectors with the most data to lose.

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Small businesses, in particular, downplay the risk, said Jesse Bessler, an account executive at Lacher & Associates, of Souderton, Pa. “I think it’s that they just don’t understand the risk, and they think that [a cyber policy] is an add-on item they don’t need.”

Increased Sophistication

Security experts, however, are trying to break through the wall of denial. Cyber attacks, they argue, are akin to massive storms or similar to the focused destruction of a tornado — something you can prepare for, but not something you can prevent. Despite firewalls and antivirus programs, experts say, cyber punches will eventually land inside every company.

To grasp the magnitude of the threat, it’s important to recognize that the driving forces behind cyber crime are vast, varied and as uncontrollable as any atmospheric or geologic force. The threat is now ubiquitous, and experts agree that while making an effort to reduce the risk of a breach is important, it is no longer possible to completely prevent cyber attacks.

Kurtis Suhs Ironshore

Kurtis Suhs
Vice President
Ironshore

“It’s like two identical cars in a mall parking lot,” explained Kurtis Suhs, vice president and national technology and privacy product manager for Ironshore. “If one’s locked and one’s unlocked, the bad guy’s going to go to the unlocked car. But if the bad guy really wants to get into the locked car, he will — it’ll just take longer.”

And yet, organizations keep brushing off the threat. That may be because “cyber risk” has become synonymous with data theft. If an entity does not have a significant aggregation of customer financial data, executives assume they won’t be targeted. The reality is that the true exposure is no longer just about credit card or Social Security data. Hackers have expanded their target list, adopted a more patient approach and found deep-pocketed sponsors, whether private-sector or state-sponsored, security experts said.

Sophisticated hackers are conducting long-term surveillance and probing for weaknesses they can exploit for financial gain, said David Remnitz, global and Americas leader of Ernst & Young’s forensic technology and discovery services business. “The end result here is the theft of highly valuable, internal information for significant financial gain,” he said.

While that could mean outright theft of trade secrets or confidential M&A data, it could also mean corporate sabotage, as in corrupting a decade of research and development results or putting competitors out of business. Imagine a market where most of the players used one primary vendor as a source for a key ingredient. An organization could contract with a lesser-used source for that ingredient, then disrupt the operations of the primary vendor via a denial-of-service attack or other type of malware, leaving the rest of the market scrambling for suppliers.

The potential for lost business and liability claims could be devastating for the affected companies. Even those with solid business continuity plans in place could still take heavy hits from the reputational fallout.

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“A large company might be able to absorb that risk. A small company can’t,” said Elissa Doroff, a vice president and senior advisory specialist in Marsh’s network security and privacy practice in New York.

To date, breaches have largely been limited to individual companies, but the potential for larger events looms. One concern centers on cloud companies, which could host data for hundreds of businesses. A data breach or network interruption, or the physical destruction of a cloud-service data center could wreak larger havoc on the economy.

“That’s a potentially catastrophic loss,” said Doroff.

The sky’s the limit at this point. Criminals are capable of disrupting a multinational corporation, a transportation or logistics network, a health care system, an entire industry or even an entire region, creating havoc and leading to economic losses in the millions or billions — in many situations even putting lives at risk.

Keep in mind that those with ill intent don’t even need to have an IT background — the proliferation of hackers-for-hire means that anyone intent on doing damage can do so if their pockets are deep enough.

That said, it probably wouldn’t take a well-funded ring of genius-level hackers and a sophisticated attack plan to paralyze the average organization. Three years ago, the U.S. subsidiary of Shionogi, a Japanese pharmaceutical firm, suffered a devastating cyber attack that deleted the contents of 88 computer servers, crippling the company’s operations for several days, disabling its email, BlackBerry servers, order-tracking system, and financial management software. The attacker? A former mid-level employee, working from a public
Wi-Fi network at a nearby McDonalds, calmly sipping coffee while bringing Shionogi to its knees.

An Enterprise Approach

Even organizations that have never been affected by a catastrophe generally do not question the need for CAT planning. At the very least, most probably have a written evacuation plan in place and enough insurance to cover the potential physical damage of a storm. The smartest also address the whole picture from a supply chain and business continuity standpoint, and may have even considered questions about how to manage any reputational damage related to interruption of service to customers.

PwC’s report, Cyber Crisis Management: A Bold Approach to a Bold and Shadowy Nemesis, offers a new philosophy and approach to incidence response. This graphic shows the key elements of a structured cyber crisis response.

PwC’s report, Cyber Crisis Management: A Bold Approach to a Bold and Shadowy Nemesis, offers a new philosophy and approach to incidence response. This graphic shows the key elements of a structured cyber crisis response.

Cyber exposure should be approached in much the same way. It starts with engineering out the risk to whatever extent possible. If your roof is old, for instance, replacing it may be a way to ensure the building is more likely to stay intact if it’s battered by a storm. The cyber equivalent might be replacing old servers or upgrading any existing automated intrusion detection system. Security experts stress, however, that cyber risk is not an IT exposure, it’s an enterprisewide exposure. Therefore vulnerabilities need to be identified across an entire organization, with policies and procedures modified accordingly.

A comprehensive, enterprisewide disaster plan can also go a long way toward helping companies minimize the damage sustained in the event of a cyber attack. For every function of an organization, management needs to ask hard questions about how a cyber attack could disrupt that function, and what kind of back-up plan each department would need. Do you have a way to contact customers and suppliers if your email goes down? Do you have a crisis communication plan for alerting the public about how you’re handling the situation? Are your records backed up and accessible through a secure third-party?

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Increasingly, organizations will rely on insurance to ensure their survival after a cyber event. In a February survey by BAE Systems, nearly 30 percent of companies said they expected the cost of a cyber attack to exceed $75 million. Another 20 percent expected the cost to fall between $15 million and $75 million.

“There’s an expectation that this could have an extremely material effect on business performance, and that’s a risk they look to hedge,” said Paul Henninger, global product director for BAE Systems Applied Intelligence, a business unit of BAE Systems.

Taking a realistic approach to cyber attacks could improve underwriting of the risk, he said. Just as carriers evaluate whether clients are prepared for a CAT-5 hurricane, knowing some damage is likely, they could determine whether clients are ready for a cyber storm.

“You can’t make it go away, but you can minimize the impact on the bottom line and customers and reputation,” he said.

Complete coverage on the inevitable cyber threat:

Risk managers are waking up to the reality that the cyber risk landscape has changed. Every sector must prepare to withstand the storm.

042014_02c_hospital_thumbnailCritical Condition. The proliferation of medical devices creates a host of scary risks for the beleaguered health care industry.

042014_03c_cars_thumbnailDisabled Autos. It’s alarmingly easy for a hacker to take control of a driverless vehicle, tampering with braking systems or scrambling the GPS.

Alaska Plane CrashUnmanned Risk. The dark side of remote-controlled drones, which have already been hacked — by students.

dv738024An Electrifying Threat. There is a very real possibility hackers could devastate the nation’s power grids — for a potentially extended period of time.

Related articles:

Heading Off ‘Cybergeddon’. Experts say resistance is futile, but resilience is paramount.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

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Claims Trends

Treating Pain Without Drugs

Other pain relief therapies hold substantial promise in defeating drug dependency.
By: | February 20, 2018 • 9 min read

From high praise to a spiraling crash, opioid-based pain medications are out of favor. Once thought to be the solution to chronic pain, opioids opened the door to an even bigger and scarier addiction epidemic — one that menaces the workers’ comp industry and the population in general.

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According to the Centers for Disease Control and Prevention, since 1999, more than 183,000 people have died from narcotic painkiller addiction. An estimated 91 people die each day from opioid abuse.

“Opioids are dangerous drugs. The side effects are dangerous and severe. Their efficacy is not always what people expect,” said Marcos Iglesias, senior vice president, chief medical officer, Broadspire.

“If opioids aren’t the answer, what do we turn to?”

The time to answer that question is now. Workers’ comp professionals, physicians, insurers and employers alike are looking for that next solution to pain, one that will help curb addiction and more quickly get workers on their feet.

Medical cannabis is one candidate.

Marcos Iglesias, senior vice president, chief medical officer, Broadspire

“Marijuana is unique in that everyone comes into the conversation with a bias,” said Mark Pew, senior vice president, PRIUM, a division of Genex Services.

With opioids, he said, no one knew of the dangers at first. Marijuana, on the other hand, always provoked two very polarized views: It does a great deal of good or it’s a strong drug with bad consequences.

A 2014 study published by the Journal of the American Medical Association (JAMA) found a link between legalized medical marijuana and a decrease in opioid-related deaths. States that legalized medical marijuana saw a 25 percent decrease in deaths from opioid overdoses.

Yet, “when people make the claim that medical marijuana is the solution to the opioid epidemic, it resonates with some people because of that bias,” said Pew.

Because of ongoing controversy, not to mention its classification as a Schedule 1 narcotic by the federal government, medical marijuana isn’t lined up to be the pain-relief answer anytime soon.

Non-Drug Therapies

So how about this: Let’s treat pain with no drugs. Radical as it may sound, non-drug pain therapies hold merit.

Meta-analyses collected for a U.S. National Library of Medicine study found that cognitive behavior therapy (CBT) had a positive effect on chronic pain and fatigue. Specifically, CBT was found to be a superior method to other treatments for decreasing pain intensity in fibromyalgia patients.

Iglesias, who has worked as a physician for more than 25 years, said CBT, a psycho-social therapy used to teach patients about the emotional and psychological factors influencing their pain, leaves a lasting impression on the injured.

“The methods I’ve seen work well are behavioral approaches — giving people tools and methods so they can manage their own life.”

“Marijuana is unique in that everyone comes into the conversation with a bias.” — Mark Pew, senior vice president, PRIUM

In workers’ comp, physicians using a CBT approach look at an injured worker’s life outside the office walls. Their home life, their health, their financial responsibilities and their mental ability to cope with an injury all factor into the healing process and could potentially lead to a lengthened claim if untreated.

Assessing these additional forces enables a physician to recommend therapies beyond the typical pill prescription.

Sometimes that means sending a patient to physical or occupational therapy. Sometimes yoga or acupuncture will do the trick, with both philosophies tapping into the mind-body connection  and encouraging relief. Exercise, diet and overall wellness are factored into an injured worker’s chronic pain management.

“Drug-related therapies tend to mask the pain symptoms,” said Michelle Despres, vice president, national product leader physical therapy, One Call Care Management. “Opioids are like the ‘quick fix.’ In physical therapy, we investigate pain patterns, seek to correct musculoskeletal problems and teach people about their anatomy.”

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A non-drug pain therapy, PT looks at the physical components of an injury, educating injured workers about the muscles that hurt and how to effectively use them in daily activities. The big question physical therapists ask: What triggers the pain?

“We look at outside activities that could be affecting the injured worker,” she said. “We look at strength, range and flexibility. We want to change the behavior instead of masking the pain.”

Iglesias pointed to another example of non-drug pain therapy called acceptance and commitment therapy (ACT), in which health care professionals work with an injured worker to accept their chronic pain but then commit to living their values in spite of that pain.

ACT, in essence, focuses on mindfulness and function in a person’s life.

Iglesias added he’s seen disability duration lessen because more professionals are starting to address function instead of pain.

Cost and Well-being

But pain is still a big factor in an injury, and CBT primarily focuses on pain management. It’s being used increasingly as an alternative to opioids, too. So much so, in fact, that some states are starting to draft legislation aimed at adopting  its methods.

In Ohio, for example, residents with work-related back injuries are now required by law to try remedies such as rest, physical therapy or chiropractic care before surgery or opioids are even brought into the discussion.

And Ohio isn’t alone; at least 17 states have added restrictions on opioid prescriptions, including limiting the length of time such pills can be prescribed. But not all states are turning to CBT and like methods to combat the growing epidemic.

Michelle Despres, vice president, national product leader physical therapy, One Call Care Management

“In workers’ comp, anytime we talk about change, it’s about cost containment,” said Pew. “But this has nothing to do with cost containment, premiums, closing claims, scale of benefits. It’s about personal well-being.”

Iglesias added he has seen much more acceptance of CBT and other non-drug therapies on the payers’ side, though not everyone is on board.

“Payers see opioids have not helped patients. They’re cognizant of needing to move beyond just drug medications. However, psych and behavioral factors can be a significant issue in workers’ comp. Some individual payers are afraid that a behavior approach might induce a psych claim,” he said.

“Nobody wants to pay for everything that happened to you in your life but, in essence, we do when psychosocial concerns aren’t addressed early and it delays recovery,” added Pew.

“There are payers who have started to see the value in the biopsychosocial model [looking at every aspect of a person’s life], but there’s still an obstacle with psych.”

Still, cost-wise, moving beyond opioids yields reduced pharmacy expenses — not just for opioid prescriptions but also for other prescriptions written for opioid-related side effects like nausea, vomiting, headaches, lack of sleep and so on.

“Opioids have addictive qualities,” said Despres. “It’s easy for us as a society to want to see something diagnostic tied to a drug-based solution. But with alternatives, we lose nothing and chances are we can mitigate chronic pain. We know there are no long-term bad effects to physical therapy.

“The cost to get people off of opioids is huge. Just getting them back to their daily routine, the back-end cost of detox from opioids is enough to at least consider other non-drug pain relief methods as the first treatment option.”

Changing Mindsets

Effective change comes once the employers and their workers understand the benefits of non-drug pain therapies.

Untill now, “in between the payer and the treatment is the patient who has often created this passive mindset that someone else will take care of them,” said Pew.

This mindset isn’t going to help in the long run. Education is key for both employees and employers to work toward pain management.

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“One appointment isn’t going to solve the problem,” said Despres. “We have to break the cycle. Time is the biggest downfall; we have to get people moving versus letting someone sit at home. For chronic pain, we provide the education [to the injured worker] on what’s happening inside when they do activities and how to not only manage their symptoms but also correct musculoskeletal imbalances.

“Workers’ comp, as a practice, needs to embrace the idea of being seen quickly and early and getting the injured worker in the mindset of having a role to play,” she added.

For employers, Pew said those who are engaged in their workers’ well-being see more positive outcomes when injuries occur. Investing in wellness programs enables workers to address those outside factors — like psych and diet and exercise routines — before any injury.

“[Wellness programs are] a way of trying to show there is more than a drug or a procedure; employers and physicians can work to teach that concept before an injury even occurs,” said Iglesias.

“There’s a fear that we’re taking something away. There’s a belief that opioids are the best pain modality. Could we develop more programs to teach about opioids to an employer’s population before an injury?”

His answer is a resounding yes.

Public perception plays a big role in the move away from opioids. Workers’ comp professionals, health care workers and legislators see and understand the negative effects of opioids; however, the public isn’t as convinced.

Mark Pew, senior vice president, PRIUM

The New England Journal of Medicine released a study in January entitled, “The Public and the Opioid-Abuse Epidemic.” In it, researchers examined several national polls conducted in 2016 and 2017 regarding how the public believes opioid addiction should be addressed. They found that a significant number (28 percent) don’t actually see it as a national emergency.

Fifty-three percent did say it was a major problem, though only 38 percent of respondents said it affected their home communities.

“An important finding from our review is that at a time when [we] are seeking a substantial increase in government funding for opioid-addiction treatment programs … polls show a large share of the public uncertain about the long-term effectiveness of treatment,” the authors wrote.

They speculate this uncertainty might lead to less funding for alternative treatments to opioids and less funding for people recovering from addiction.

“Sometimes we don’t know everything,” said Despres, “but we should still open up and embrace what could be. If [non-drug therapies] don’t work, you haven’t lost anything. If it does help, you’re better off.”

That’s why engaging employers and their employees is imperative.

“If we see an employer with a pattern of the same injuries, we can offer many possible solutions from ergonomic improvements to classes for body mechanics training.”

A Balancing Act

But one size doesn’t fit all when it comes to pain relief, and while non-drug pain therapies do help, Pew said that doing away with drugs altogether would be unwise.

“Every person is an individual and needs customized — individualized — treatment plans. Every individual is different. How they deal with pain is different, what their support system is like is different — that’s why treating pain is so difficult.

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“Exercise, a better diet, yoga and other non-pharmaceutical treatments are effective, but often underutilized components to a successful pain management protocol. But trying to come up with a one-size-fits-all is counter to common sense,” he added.

In a 2017 study released by JAMA, researchers examined patients admitted to the emergency room for pain-related causes. They monitored the cause of their pain and what medicine brought them relief.

Acetaminophen and ibuprofen were found to be more effective than opioids. Combined, they had as much of an effect on pain as opioids.

Iglesias added, “We do need to move beyond opioids. Other pharmaceuticals do have a role to play, but we need to embrace other modalities of treating pain.” &

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]