Cyber Risk

Intelligent Cyber Defense

Machine learning programs are taking cyber security to the next level, though they won't keep hackers at bay for long.
By: | April 9, 2018 • 5 min read

Hailed by some as a Holy Grail for cyber security protection, machine learning programs are helping businesses identify and counter cyberattacks more effectively than ever before.


From programs scanning the dark web for clues of cyberattacks to software analyzing companies’ data network flows and user behavior, risk managers, CTOs and CIOs have a growing choice of tools at their disposal.

As more devices come online and more data is produced, the potential vulnerabilities hackers can exploit grow exponentially. So too grows the need for tools that help firms spot threats and strengthen their cyber networks.

“It is increasingly important to develop tools to sift through the noise, identify signals and check for anomalies to identify attack vectors that are susceptible and ‘being exploited,” said Eric Cernak, vice president, Hartford Steam Boiler. “Machine learning can really help this process.”

Leveraging powerful algorithms, programs that harness machine learning are getting better at spotting the difference between genuine threats and innocent anomalies. They can detect threats faster than before.

Eric Cernak, vice president, Hartford Steam Boiler

Ryan Griffin, senior vice president, JLT Specialty USA, pointed out that the average time to detect an event was 180 days. Now it can be done in three.

According to ethical hacker and cyber security expert Mike Peters, vice president for IT, RIMS, more than 70 percent of attacks exploited known vulnerabilities in available patches last year. Machine learning programs can process vast quantities of data while iteratively learning, promising to help uncover many of these threats with minimal human involvement, he said.

“Machine learning systems have a big role to play in conquering threats currently handled in a manual fashion.”

“Machine learning systems have a big role to play in conquering threats currently handled in a manual fashion.” – Ryan Griffin, senior vice president, JLT Specialty USA

Credit rating firm FICO launched its own cyber vulnerability assessment tool, which scans the entire web on a weekly basis, gathering data company internet footprints. It learns about the conditional attributes and vulnerabilities exhibited by companies in the lead-up to a breach. Companies using this software scan and compare their own internet footprints to assess their cyber risk level.

According to Graeme Newman, cyber leader, Barbican Insurance, the program has so far found the most at-risk company to be 24 times more likely to suffer a cyber breach than the one with the best risk rating. It also confirmed the belief that certain sectors are more vulnerable than others; budget-strapped education entities typically rated poorly while banks scored highly due to heavy investment in security infrastructure.


“Hackers have various tools available to them and are looking for certain vulnerabilities. The scanning software gives the company the same view of its internet footprint as any hacker would get,” explained Newman.

“A company that takes the findings very seriously may well look at every individual asset and negative signal with a view to fixing things and putting in new policies and procedures. That’s where the big work comes in.”

Insurance Partnerships

Insurers are also partnering with tech firms to offer similar risk assessment solutions. Allianz recently entered a heavyweight partnership with Aon, Apple and Cisco, harnessing the tech firm’s intelligent Cisco Ransomware Defense software.

Jenny Soubra, head of cyber and tech, Allianz Global Corporate & Specialty

Jenny Soubra, head of cyber and tech, Allianz Global Corporate & Specialty, claimed Cisco offers the most holistic cyber security solution in the market, and its counterintelligence measures identified the WannaCry virus a month ahead of the attack, allowing it to warn and protect its customers.

“Different levels of coverage are unlocked by different levels of software and hardware deployment,” Soubra explained, revealing that the insurer is offering users “broad terms and conditions not currently available in the marketplace,” with deductibles in some cases reduced to zero.

Over time, this kind of arrangement is likely to become more prevalent, and machine learning tools will have a big impact on cyber insurance terms and pricing — not only by reducing the risk of insureds suffering breaches but also generating invaluable data to help refine underwriting.

One key challenge: risk aggregation. These tools could help identify vulnerabilities within supply chains, allowing users to suggest security improvements to suppliers and clients.

Costs and Considerations

Uptake is limited. Asked if machine learning is being translated into meaningful risk mitigation, Griffin said, “We haven’t seen that yet on the client side. As an industry, we’re kidding ourselves that we’re going to change the behavior of complex insureds who have invested millions of dollars into an infrastructure and a security team.”


Costs, which vary significantly, may be prohibitive to smaller organizations.

“These programs can be expensive,” said Peters, noting annual prices on a per-user or per-instance basis can range from $1,000 to $20,000 and upwards. “It’s not for the faint of heart.” And while the range of machine learning tools continues to grow and improve, they do not offer a silver-bullet solution: “These platforms are only as good as the person administering them,” Peters said.

“It takes a lot of time and effort to fine-tune them to fit your business needs and day-to-day processes. Increasing network traffic may be statistically interesting, but it rarely represents an attack, and systems that look for generic anomalies can often misclassify a threat. You have to know how to apply machine learning in order for it to reveal true insight,” he added.

Newman agrees that false positive or negative signals are possible, such as spotting vulnerabilities in assets that may be disconnected from key services or are of little value or importance. Barbican’s approach, he said, is to use the signals as the starting point for risk mitigation conversations.

Ryan Griffin, senior vice president, JLT Specialty USA

Machine learning is still young, and these tools will only become more accurate and effective. However, warned Griffin, “as technology evolves, so does the threat.”

Sophisticated cyber criminals will soon harness the power of machine learning to make their attacks more effective. This could make smaller firms without intelligent security systems particularly vulnerable — not only for the assets they possess but also as routes into larger organizations.

Cernak hopes machine learning programs will become easier to deploy, improving smaller companies’ access to these powerful tools. However, even the adoption of high-end software is pointless if the human principles of cyber security are not adhered to. Adequately training staff remains vital as human error is almost always present in the event of a breach.

“You have to treat machine learning like any other tool in your toolbox. You can’t become overly dependent on any one solution,” said Cernak. “It’s important to build a culture of risk awareness and prevention. Cyber security starts and ends with people, and the tools you deploy need to be complementary to that strategy.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Cyber Resilience

No, Seriously. You Need a Comprehensive Cyber Incident Response Plan Before It’s Too Late.

Awareness of cyber risk is increasing, but some companies may be neglecting to prepare adequate response plans that could save them millions. 
By: | June 1, 2018 • 7 min read

To minimize the financial and reputational damage from a cyber attack, it is absolutely critical that businesses have a cyber incident response plan.

“Sadly, not all yet do,” said David Legassick, head of life sciences, tech and cyber, CNA Hardy.


In the event of a breach, a company must be able to quickly identify and contain the problem, assess the level of impact, communicate internally and externally, recover where possible any lost data or functionality needed to resume business operations and act quickly to manage potential reputational risk.

This can only be achieved with help from the right external experts and the design and practice of a well-honed internal response.

The first step a company must take, said Legassick, is to understand its cyber exposures through asset identification, classification, risk assessment and protection measures, both technological and human.

According to Raf Sanchez, international breach response manager, Beazley, cyber-response plans should be flexible and applicable to a wide range of incidents, “not just a list of consecutive steps.”

They also should bring together key stakeholders and specify end goals.

Jason J. Hogg, CEO, Aon Cyber Solutions

With bad actors becoming increasingly sophisticated and often acting in groups, attack vectors can hit companies from multiple angles simultaneously, meaning a holistic approach is essential, agreed Jason J. Hogg, CEO, Aon Cyber Solutions.

“Collaboration is key — you have to take silos down and work in a cross-functional manner.”

This means assembling a response team including individuals from IT, legal, operations, risk management, HR, finance and the board — each of whom must be well drilled in their responsibilities in the event of a breach.

“You can’t pick your players on the day of the game,” said Hogg. “Response times are critical, so speed and timing are of the essence. You should also have a very clear communication plan to keep the CEO and board of directors informed of recommended courses of action and timing expectations.”

People on the incident response team must have sufficient technical skills and access to critical third parties to be able to make decisions and move to contain incidents fast. Knowledge of the company’s data and network topology is also key, said Legassick.

“Perhaps most important of all,” he added, “is to capture in detail how, when, where and why an incident occurred so there is a feedback loop that ensures each threat makes the cyber defense stronger.”

Cyber insurance can play a key role by providing a range of experts such as forensic analysts to help manage a cyber breach quickly and effectively (as well as PR and legal help). However, the learning process should begin before a breach occurs.

Practice Makes Perfect

“Any incident response plan is only as strong as the practice that goes into it,” explained Mike Peters, vice president, IT, RIMS — who also conducts stress testing through his firm Sentinel Cyber Defense Advisors.


Unless companies have an ethical hacker or certified information security officer on board who can conduct sophisticated simulated attacks, Peters recommended they hire third-party experts to test their networks for weaknesses, remediate these issues and retest again for vulnerabilities that haven’t been patched or have newly appeared.

“You need to plan for every type of threat that’s out there,” he added.

Hogg agreed that bringing third parties in to conduct tests brings “fresh thinking, best practice and cross-pollination of learnings from testing plans across a multitude of industries and enterprises.”

“Collaboration is key — you have to take silos down and work in a cross-functional manner.” — Jason J. Hogg, CEO, Aon Cyber Solutions

Legassick added that companies should test their plans at least annually, updating procedures whenever there is a significant change in business activity, technology or location.

“As companies expand, cyber security is not always front of mind, but new operations and territories all expose a company to new risks.”

For smaller companies that might not have the resources or the expertise to develop an internal cyber response plan from whole cloth, some carriers offer their own cyber risk resources online.

Evan Fenaroli, an underwriting product manager with the Philadelphia Insurance Companies (PHLY), said his company hosts an eRiskHub, which gives PHLY clients a place to start looking for cyber event response answers.

That includes access to a pool of attorneys who can guide company executives in creating a plan.

“It’s something at the highest level that needs to be a priority,” Fenaroli said. For those just getting started, Fenaroli provided a checklist for consideration:

  • Purchase cyber insurance, read the policy and understand its notice requirements.
  • Work with an attorney to develop a cyber event response plan that you can customize to your business.
  • Identify stakeholders within the company who will own the plan and its execution.
  • Find outside forensics experts that the company can call in an emergency.
  • Identify a public relations expert who can be called in the case of an event that could be leaked to the press or otherwise become newsworthy.

“When all of these things fall into place, the outcome is far better in that there isn’t a panic,” said Fenaroli, who, like others, recommends the plan be tested at least annually.

Cyber’s Physical Threat

With the digital and physical worlds converging due to the rise of the Internet of Things, Hogg reminded companies: “You can’t just test in the virtual world — testing physical end-point security is critical too.”


How that testing is communicated to underwriters should also be a key focus, said Rich DePiero, head of cyber, North America, Swiss Re Corporate Solutions.

Don’t just report on what went well; it’s far more believable for an underwriter to hear what didn’t go well, he said.

“If I hear a client say it is perfect and then I look at some of the results of the responses to breaches last year, there is a disconnect. Help us understand what you learned and what you worked out. You want things to fail during these incident response tests, because that is how we learn,” he explained.

“Bringing in these outside firms, detailing what they learned and defining roles and responsibilities in the event of an incident is really the best practice, and we are seeing more and more companies do that.”

Support from the Board

Good cyber protection is built around a combination of process, technology, learning and people. While not every cyber incident needs to be reported to the boardroom, senior management has a key role in creating a culture of planning and risk awareness.

David Legassick, head of life sciences, tech and cyber, CNA Hardy

“Cyber is a boardroom risk. If it is not taken seriously at boardroom level, you are more than likely to suffer a network breach,” Legassick said.

However, getting board buy-in or buy-in from the C-suite is not always easy.

“C-suite executives often put off testing crisis plans as they get in the way of the day job. The irony here is obvious given how disruptive an incident can be,” said Sanchez.

“The C-suite must demonstrate its support for incident response planning and that it expects staff at all levels of the organization to play their part in recovering from serious incidents.”

“What these people need from the board is support,” said Jill Salmon, New York-based vice president, head of cyber/tech/MPL, Berkshire Hathaway Specialty Insurance.

“I don’t know that the information security folks are looking for direction from the board as much as they are looking for support from a resources standpoint and a visibility standpoint.

“They’ve got to be aware of what they need and they need to have the money to be able to build it up to that level,” she said.

Without that support, according to Legassick, failure to empower and encourage the IT team to manage cyber threats holistically through integration with the rest of the organization, particularly risk managers, becomes a common mistake.

He also warned that “blame culture” can prevent staff from escalating problems to management in a timely manner.

Collaboration and Communication

Given that cyber incident response truly is a team effort, it is therefore essential that a culture of collaboration, preparation and practice is embedded from the top down.


One of the biggest tripping points for companies — and an area that has done the most damage from a reputational perspective — is in how quickly and effectively the company communicates to the public in the aftermath of a cyber event.

Salmon said of all the cyber incident response plans she has seen, the companies that have impressed her most are those that have written mock press releases and rehearsed how they are going to respond to the media in the aftermath of an event.

“We have seen so many companies trip up in that regard,” she said. “There have been examples of companies taking too long and then not explaining why it took them so long. It’s like any other crisis — the way that you are communicating it to the public is really important.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected] Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]