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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

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]