In Brief

On Cyber, Still a Step Behind

Citing a lack of resources and internal collaboration, most companies still don’t treat cyber as a strategic, enterprise-wide risk.
By: | December 14, 2017 • 2 min read

This summer’s wannacry ransomware attack demonstrated how far and how rapidly a cyber bug can spread. According to a recent Harvard Business Review (HBR) Analytic Services report, “the WannaCry ransomware infection caused $8 billion in economic damage in more than 100 countries.”

For its report, “Managing Cyber Risk: Understanding the Opportunity,” HBR surveyed 278 individuals from both large and small organizations.

Risk Recognized, not Quantified

Eighty-five percent of respondents said they expect the financial impact of cyber attacks to rise over the next two years, but few organizations calculated that impact. Despite 60 percent of respondents saying they’ve developed cyber risk models, only 40 percent of respondents have tried to quantify the financial impact of a breach.

While smaller organizations see themselves as less likely targets for hackers (46 compared to 65 percent of larger companies), they are beginning to build cyber security into broader risk management plans. But progress remains slow.

A disconnect exists between how organizations perceive cyber risk and their efforts to manage it. Businesses recognize cyber attacks could impede operations, damage reputations and relationships with partners and customers, tarnish prospects and investments, incur significant legal and regulatory fines and cause huge financial losses.

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Yet most organizations fail to approach the risk as they would other formidable risks. They treat cyber risk as a technology risk rather than an enterprise risk, failing to build cyber security into strategic plans.

Thirty-eight percent of respondents said internal collaboration around cyber risk was not sufficient. Only 23 percent reported adopting a formal strategic plan to address business risks from cyber attacks.

Small Companies Fall Behind

Smaller organizations could point to few efforts at institutional cyber risk management, including appointing a chief information security officer and offering company-wide cyber training.

Only 14 percent of respondents from small companies said they felt their employer was fully prepared for a cyber breach.

Why are companies falling short? The primary explanation was a lack of financial resources and dedicated staff. Fifty-six percent of smaller companies and 42 percent of larger companies said their organization lacks the assets to address cyber risks. &

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

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

As a professor of business, Jack Hampton knows firsthand the positive impact education has on risk managers as they tackle growing risks.
By: | April 9, 2018 • 4 min read

R&I: Who is your mentor and why?

Ellen Thrower, president (retired), The College of Insurance, introduced me to the importance of insurance as a component of risk management. Further, she encouraged me to explore strategic and operational risk as foundation topics shaping the role of the modern risk manager.

Chris Mandel, former president of RIMS and Risk Manager of the Year, introduced me to the emerging area of enterprise risk management. He helped me recognize the need to align hazard, strategic, operational and financial risk into a single framework. He gave me the perspective of ERM in a high-tech environment, using USAA as a model program that later won an excellence award for innovation.

Bob Morrell, founder and former CEO of Riskonnect, showed me how technology could be applied to solving serious risk management and governance problems. He created a platform that made some of my ideas practical and extended them into a highly-successful enterprise that served risk and governance management needs of major corporations.

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

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From a background in corporate finance and commercial banking, I accepted the position of provost of The College of Insurance. Recognizing my limited prior knowledge in the field, I became a student of insurance and risk management leading to authorship of books on hazard and financial risk. This led to industry consulting, as well as to the development of graduate-level courses and concentrations in MBA programs.

R&I: What was your first job?

The provost position was the first job I had in the industry, after serving as dean of the Seton Hall University School of Business and founding The Princeton Consulting Group. Earlier positions were in business development with Marine Transport Lines, consulting in commercial banking and college professorships.

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

Creating a risk management concentration in the MBA program at Saint Peter’s, co-founding the Russian Risk Management Society (RUSRISK), and writing “Fundamentals of Enterprise Risk Management” and the “AMA Handbook of Financial Risk Management.”

A few years ago, I expanded into risk management in higher education. From 2017 into 2018, Rowman and Littlefield published my four books that address risks facing colleges and universities, professors, students and parents.

Jack Hampton, Professor of Business, St. Peter’s University

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

The Godfather. I see it as a story of managing risk, even as the behavior of its leading characters create risk for others.

R&I: What is your favorite drink?

Jameson’s Irish whiskey. Mixed with a little ice, it is a serious rival for Johnny Walker Gold scotch and Jack Daniel’s Tennessee whiskey.

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

Mount Etna, Taormina, and Agrigento, Sicily. I actually supervised an MBA program in Siracusa and learned about risk from a new perspective.

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

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Army Airborne training and jumping out of an airplane. Fortunately, I never had to do it in combat even though I served in Vietnam.

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

George C. Marshall, one of the most decorated military leaders in American history, architect of the economic recovery program for Europe after World War II, and recipient of the 1953 Nobel Peace Prize. For Marshall, it was not just about winning the war. It was also about winning the peace.

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

Sharing lessons with colleagues and students by writing, publishing and teaching. A professor with a knowledge of risk management does not only share lessons. The professor is also a student when MBA candidates talk about the risks they manage every day.

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

Sensitizing for-profit, nonprofit and governmental agencies to the exposures and complexities facing their organizations. Sometimes we focus too much on strategies that sound good but do not withstand closer examination. Risk managers help organizations make better decisions.

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

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Developing executive training programs to help risk managers assume C-suite positions in organizations. Insurance may be a good place to start but so is an MBA degree. The Risk and Insurance Management Society recognizes the importance of a wide range of risk knowledge. Colleges and universities need to catch up with RIMS.

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

Cyber risk and its impact on hazard, operational and financial strategies. A terrorist can take down a building. A cyber-criminal can take down much more.

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

My family members think I’m a professor. They do not seem to be too interested in my views on risk management.




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