2017 RIMS

Embrace the Internet of Things

Risk managers can use IoT for data analytics and other risk mitigation needs, but connected devices also offer a multitude of exposures.
By: | April 25, 2017 • 3 min read
Topics: Cyber Risks | RIMS

The Internet of Things (IoT) is changing the risk landscape. ­

Because of that, risk managers must change how they think about and analyze risk on the horizon, said Brent Rieth, SVP, team leader of professional risk at Aon Risk Solutions.

IoT essentially makes everyday devices “smart” by connecting them to the internet. Around the home, it could include coffee machines, washing machines, lighting and garage door openers.

In business, it can used for warehouse equipment, oil rig drills and airplane engines. A rule of thumb is that if a device has an “on and off” switch, it can become part of the IoT.

“We all need to be mindful of how information security is used in each device.”- Brent Rieth, SVP, team leader of professional risk, Aon Risk Solutions

There were 10 billion devices connected to other devices in 2015. Forecasts predict 34 billion devices will be connected by 2020. To get there, business will invest about $6 trillion in IoT solutions.

Advertisement




While IoT can improve operations, especially by enabling more data analysis, it can also significantly impact governments, businesses, and the property and casualty insurance industry, Rieth said during a presentation at the RIMS 2017 conference.

“The Internet of Things is a powerful tool for business to think about,” Rieth said. “It can help you to create a synchronized environment that allows you access to information.”

Now is the time for risk managers to create a plan to leverage IoT and to mitigate existing risks, said Lora Figgat, risk manager at Avaya, Inc., who also spoke at the RIMS session.

From cyber breaches to property coverage and product liability, think about risks and enterprise risk management in a new way, she said.

“Data collection can be powerful when thinking about risks you manage,” Rieth said. “We all need to be mindful of how information security is used in each device.”

That’s because IoT can potentially create data-privacy concerns.

For example, human resource departments may issue fitness tracking devices as part of an employee wellness program. Those devices collect and store private information on employees that may lead to privacy risks for the business.

Privacy Concerns

“Information will be collected on us on a daily basis, potentially infringing on us where we no longer have privacy,” Rieth said. “You need to be mindful you are actually tracking information on people.”

Risk managers may ask, “Should we really be collecting all that data on our employees?”  he said.

Risk managers must figure out how to balance needs of company departments, so that when an idea seems great to the human resources team, it doesn’t raise red flags for the legal and compliance team at the same time.

Risk managers need to help develop IOT security best practices.

Introducing IoT to your business has consequences, Figgat said, and risk managers need be part of any conversation to ask what is the value of data and what is the criticality of the function.

There are other risks to consider. IoT product failures can also introduce new risk if there is a malfunction and raise product liability concerns.

“The most profound technologies are those that disappear,” Reith said. The IoT will become so ubiquitous, businesses may forget it is working behind the scenes gathering information.

IOT drives the need for ERM, Figgat said. “Integrated risk philosophy is no longer optional.”

Advertisement




That may include a comprehensive incident response plan, she said.

Risk managers need to help develop IOT security best practices. Discover and classify IOT devices the instant they connect to the network. Also, enforce security updates and end-of-life plans, require security standards for vendors, and recognize IoT as a long-term strategy worth investing in.

“We need to put the carrot on the end of the stick to incentivize companies to think about including security and not just invest in the lowest cost option,”Rieth said.

While IoT introduces new concerns for the risk manager, it also creates some helpful tools, including new metrics to assess their IoT risks, he said.

Now that it’s here, risk managers should always be asking how to leverage IOT to mitigate risk and how can IoT reduce the cost of risk transfer, Rieth said.

Additional stories from RIMS 2017:

Blockchain Pros and Cons

If barriers to implementation are brought down, blockchain offers potential for financial institutions.

 

Feeling Unprepared to Deal With Risks

Damage to brand and reputation ranked as the top risk concern of risk managers throughout the world.

Reviewing Medical Marijuana Claims

Liberty Mutual appears to be the first carrier to create a workflow process for evaluating medical marijuana expense reimbursement requests.

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.

RIMS Conference Held in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.

Resilience in Face of Cyber

New cyber model platforms will help insurers better manage aggregation risk within their books of business.

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

More from Risk & Insurance

More from Risk & Insurance

R&I Profile

Achieving Balance

XL Catlin’s Denise Balan stays calm and focused when faced with crisis.
By: | January 10, 2018 • 6 min read

In the high-stress scenario of kidnap or ransom, the first image that comes to mind isn’t necessarily a yoga mat — at least, not for most.

But Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin, who practices yoga every day, would swear by it.

Advertisement




“I looked at these opposing aspects of my life,” she said. “Yoga is about focus, balance, clarity of intent. In a moment of stress, how do you respond? The more clarity and calmness you maintain, the better positioned you are to provide assistance in moments of crisis.

“Nobody wants to be speaking to a frenetic person when either dealing with a dangerous situation or planning for prevention of a situation,” she added.

“There’s a poem by [Rudyard] Kipling on that,” added Balan’s colleague Ben Tucker. “What it boils down to is: If you can remain calm, you can manage through a crisis a lot better.”

Tucker, who works side by side with Balan as head of U.S. terrorism and political violence, XL Catlin, has seen how yoga influences his colleague.

“The way Denise interacts with stakeholders in this process — she is very professional and calm in the approach she takes.”

Yin and Yang

Sometimes seemingly opposite or contrary forces may actually be complementary and interconnected. In Balan’s life, yoga and K&R have become her yin and yang.

She entered the insurance world after earning a juris doctor degree and practicing law for a few years. The switch came, she said, when Balan realized she wasn’t enjoying her time as a commercial litigator.

Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

In her new role, she was able to use her legal background to manage litigation at AIG, where her transition from law to insurance took place. She started her insurance career in the environmental sector.

In a chance meeting in 2007, Balan met with crisis management underwriters who told her about kidnap and ransom products.

She was hooked.

Because of her background in yoga, Balan liked the crisis management side of the job. Being able to bring the calmness and clearness of intent she practiced during yoga into assisting clients in planning for crisis management piqued her interest.

She then joined XL Catlin in July 2013, where she built the K&R team.

As she became more immersed in her field, Balan began to notice something: The principles she learned in yoga were the same principles ex-military and ex-law enforcement practiced when called to a K&R-related crisis.

She said, “They have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.”

“K&R responders have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Many understand yoga to be, in itself, one type of meditation, but yoga actually encompasses a group of physical, mental and spiritual practices. Each is a discipline. Some forms of yoga focus on movement and breathing, others focus on posture and technique. Some yoga is meant to relax the mind and create a sense of calmness; other yoga types make participants sweat.

After having her second child and working full-time, Balan wanted to find something physical and relaxing for herself; a friend suggested yoga. During her first lesson, Balan said she was enamored with it.

“I felt like I’d done it all my life.”

She dove into the philosophy of yoga, adopting the practice into her daily routine. Every morning, whether Balan is in her Long Island home or on a business trip, she pulls out her yoga mat to practice.

“I always travel with my mat,” she said. “Daily practice is the simplest form of connection to routine to maintain my balance — physically and mentally.”

Advertisement




She said the strangest place she has ever practiced was in Lisbon. She was on a very narrow balcony with a bird feeder swarming with sparrows overhead.

After years of studying and practicing, Balan is considered a yogi — someone who is highly proficient in yoga. She attends annual retreats with her yoga group, where she is able to rejuvenate, ready to tackle any K&R event when she returns.

In 2016, Balan visited Tuscany, Italy, where she learned the practice of yoga nidra, a very deep form of meditation. It’s described as the “going-to-sleep stage” — a type of yoga that brings participants to a state of consciousness between waking and sleeping.

“It awakens a different part of your brain,” Balan commented. “Orally describing it doesn’t quite do it justice. One has to practice Nidra to fully understand the effect it has on your being.”

Keeping a level head during a crisis is key in their line of business, Tucker said. He can attest to the benefit of having a yogi on board.

“I’ve seen her run table-top exercises where there is this group of people in a room and they run an exercise, a simulation of a kidnap incident. Denise is very committed to what we’re doing,” said Tucker.

“She brings that energy. She doesn’t get flustered by much.”

Building a K&R Program

When Balan joined XL Catlin, she was tasked with creating the K&R team.

Balan during a retreat in Sicily, Italy, 2017

She spent time researching and analyzing what clients would want in their K&R coverage. What stuck out most to Balan was the fact that, in these situations, the decision to purchase kidnap and ransom cover is rarely made because of desire for reimbursement of money.

“I asked why people buy this type of coverage. The answer was for the security responders,” she said.

“These are the people who sit with the family. They’re similar to psychologists or priests,” Balan further explained. “Corporations can afford to pay ransom. They buy [K&R] because it gives them access to these trained and dedicated professionals who not only provide negotiation advice, but actually sit with a victim’s family, engaging deep levels of emotional investment.”

“I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Balan described these responders as people having total clarity of purpose, setting their intentions to resolve a crisis — a practice at the very heart of yoga. She knew XL Catlin’s new kidnap program would put stock in their responders.

“I’ve worked closely with the responders to better understand what they can do for our clientele. These are the people who run into danger — warrior hearts married to dedication to our clients’ best interests.”

But K&R is more than fast-paced crisis and quick thinking; Balan also spent a good deal of time writing the K&R form and getting the company’s resources in order. This was a huge task to tackle when creating the program from the ground up.

Advertisement




“A lot of my day-to-day is speaking with brokers and finding ways to enhance our product,” she said.

After a few months, she was able to hire the company’s first K&R underwriter. From there, the program has grown. It’s left her feeling professionally rewarded.

“People don’t often get that opportunity to build something up from scratch,” she said. “It’s been an amazing experience — rewarding and fun.”

“She brings groups of people together,” said Tucker. “She’s created a positive environment.”

Balan’s yogi nature extends beyond the office walls, too. Her pride and joy, she said, are her kids. And while it may seem like two large parts of her life are opposite in nature, Balan’s achieved balance through her passions.

“[Yoga] has given me the ability to see beyond only one aspect of any situation” she said. “I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” &

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