Risk Insider: Jack Hampton

Help Wanted: Cyber Security Neurologist

By: | January 10, 2017 • 2 min read
John (Jack) Hampton is a Professor of Business at St. Peter’s University and a former Executive Director of the Risk and Insurance Management Society (RIMS). His recent book deals with risk management in higher education: "Culture, Intricacies, and Obsessions in Higher Education — Why Colleges and Universities are Struggling to Deliver the Goods." His website is www.jackhampton.com.

When we think about how some companies protect their electronic assets, it brings to mind “leech therapy.” This method has been used since ancient times to treat illness and disease. Many cyber security efforts resemble it. We perform a procedure and the patient improves. We don’t know if it was our treatment or just luck. We take credit for the success either way.

Medical advancement recognized that the human body is constantly under attack by unseen aggressors. At a basic level, antibiotics kill bacteria. We prevent heart attacks by reducing cholesterol and high blood pressure. Surgeons eliminate cancer by exorcising tumors.

At more complex levels, doctors move past a single remedy.  Pharmaceutical cocktails treat HIV, and cancer and holistic medicine helps us understand the need to make lifestyle changes.

These lessons are needed in cyber risk management. Information technology specialists build firewalls and insist upon complex passwords. They work at one level but fall short in the face of constantly mutating electronic pathogens.

To start, we need agreement on cyber security goals. The risk manager seeks to avoid damage to assets, interruption to operations and liability lawsuits. The underwriter wants to identify and insure named perils and avoid all-risk policies that cannot identify black swans. The CFO wants insurance to protect big losses but balks at incurring high costs without assurance that massive cyber damage will be reimbursed by the coverage.

These individual viewpoints can be reconciled by a “cyber security neurologist,” an individual with the knowledge and training to protect the total cyber body.

A neurological disorder is an abnormality in the brain, spinal cord or nervous system. Damage includes paralysis, seizures, confusion and pain.

A cyber neurological disorder can affect the (1) “brain” (computers, servers, and knowledge of work force), (2) electronic “central nervous system” (business disruption and liability) and (3) “peripheral nervous system” (liability exposures with customers, suppliers, partners and regulators).

There are many medical neurological disorders, some relatively common, but many quite rare. They may be treated by different specialists using preventative measures, lifestyle changes, physiotherapy, pain management and surgery.

Cyber neurological disorders are often treated differently. Organizations build firewalls without changing practices, processes and cultural lifestyles that leave doorways open. If this is your perspective, the next step is likely to be pain management.

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What if we treat cyber risk like a peanut disorder, a type of hypersensitivity provoked by an allergen? A medical study just turned treatment on its head. Previously, doctors diagnosed the allergy and told us to keep totally away from any food with even a trace of peanut content. Teenage and adult peanut intolerance soared with this guidance.

A new study shows allergen immunotherapy or desensitization dramatically increases tolerance. Small doses of peanut butter starting with infants greatly reduces the likelihood of the disorder later on.

Cyber immunotherapy could treat the whole system. We can sensitize authorized users and correct behaviors that are careless or unmindful. We can separate data that needs the highest security from routine information available all over the internet. We can recognize that cyber risk is not a disease that needs an IT brain surgeon when the real problem is we are not protecting the entire electronic neurological system.

In conclusion, you may ask, “Why does everyone pick on poor leech therapy?” To comply with the Equal Time Rule, you are directed to Mehdi, a self-described Leech Therapist in Australia. He points out bloodletting “is still thriving today.”

Sony Pictures, Yahoo and the Democratic National Committee are victims of recent cyber attacks. Maybe they needed more than electronic “bloodletting.”

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Resilience in Face of Cyber

New cyber model platforms will help insurers better manage aggregation risk within their books of business.
By: | April 26, 2017 • 3 min read

As insurers become increasingly concerned about the aggregation of cyber risk exposures in their portfolios, new tools are being developed to help them better assess and manage those exposures.

One of those tools, a comprehensive cyber risk modeling application for the insurance and reinsurance markets, was announced on April 24 by AIR Worldwide.

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Last year at RIMS, AIR announced the release of the industry’s first open source deterministic cyber risk scenario, subsequently releasing a series of scenarios throughout the year, and offering the service to insurers on a consulting basis.

Its latest release, ARC– Analytics of Risk from Cyber — continues that work by offering the modeling platform for license to insurance clients for internal use rather than on a consulting basis. ARC is separate from AIR’s Touchstone platform, allowing for more flexibility in the rapidly changing cyber environment.

ARC allows insurers to get a better picture of their exposures across an entire book of business, with the help of a comprehensive industry exposure database that combines data from multiple public and commercial sources.

Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

The recent attacks on Dyn and Amazon Web Services (AWS) provide perfect examples of how the ARC platform can be used to enhance the industry’s resilience, said Scott Stransky, assistant vice president and principal scientist for AIR Worldwide.

Stransky noted that insurers don’t necessarily have visibility into which of their insureds use Dyn, Amazon Web Services, Rackspace, or other common internet services providers.

In the Dyn and AWS events, there was little insured loss because the downtime fell largely just under policy waiting periods.

But,” said Stransky, “it got our clients thinking, well it happened for a few hours – could it happen for longer? And what does that do to us if it does? … This is really where our model can be very helpful.”

The purpose of having this model is to make the world more resilient … that’s really the goal.” Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

AIR has run the Dyn incident through its model, with the parameters of a single day of downtime impacting the Fortune 1000. Then it did the same with the AWS event.

When we run Fortune 1000 for Dyn for one day, we get a half a billion dollars of loss,” said Stransky. “Taking it one step further – we’ve run the same exercise for AWS for one day, through the Fortune 1000 only, and the losses are about $3 billion.”

So once you expand it out to millions of businesses, the losses would be much higher,” he added.

The ARC platform allows insurers to assess cyber exposures including “silent cyber,” across the spectrum of business, be it D&O, E&O, general liability or property. There are 18 scenarios that can be modeled, with the capability to adjust variables broadly for a better handle on events of varying severity and scope.

Looking ahead, AIR is taking a closer look at what Stransky calls “silent silent cyber,” the complex indirect and difficult to assess or insure potential impacts of any given cyber event.

Stransky cites the 2014 hack of the National Weather Service website as an example. For several days after the hack, no satellite weather imagery was available to be fed into weather models.

Imagine there was a hurricane happening during the time there was no weather service imagery,” he said. “[So] the models wouldn’t have been as accurate; people wouldn’t have had as much advance warning; they wouldn’t have evacuated as quickly or boarded up their homes.”

It’s possible that the losses would be significantly higher in such a scenario, but there would be no way to quantify how much of it could be attributed to the cyber attack and how much was strictly the result of the hurricane itself.

It’s very, very indirect,” said Stransky, citing the recent hack of the Dallas tornado sirens as another example. Not only did the situation jam up the 911 system, potentially exacerbating any number of crisis events, but such a false alarm could lead to increased losses in the future.

The next time if there’s a real tornado, people make think, ‘Oh, its just some hack,’ ” he said. “So if there’s a real tornado, who knows what’s going to happen.”

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Modeling for “silent silent cyber” remains elusive. But platforms like ARC are a step in the right direction for ensuring the continued health and strength of the insurance industry in the face of the ever-changing specter of cyber exposure.

Because we have this model, insurers are now able to manage the risks better, to be more resilient against cyber attacks, to really understand their portfolios,” said Stransky. “So when it does happen, they’ll be able to respond, they’ll be able to pay out the claims properly, they’ll be prepared.

The purpose of having this model is to make the world more resilient … that’s really the goal.”

Additional stories from RIMS 2017:

Blockchain Pros and Cons

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

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.

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.

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