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Insurance Executive

Six Questions for Grace Ries

Risk & Insurance® caught up with FM Global's Grace Ries to discuss the insurer's latest cyber products and its approach to helping clients manage their cyber exposures.
By: | February 7, 2017 • 3 min read

In July 2016, FM Global announced that Grace Ries, assistant vice president and manager of cyber risk insurance products, would lead a dedicated unit to develop an underwriting approach and coverage capabilities to meet clients’ needs for first-party cyber solutions. We caught up with her to ask her about the initiative and FM Global’s approach to the market.

R&I: Grace, part of your background is providing risk management support to the chemicals industry. What lessons learned will you be bringing forward as you underwrite this pressing issue of cyber risk?

Ries: My background is in chemical engineering and material science engineering. Many clients in the chemical sector have global exposures, and in my mind that is similar to cyber. Cyber is a global risk. Our clients’ data can be anywhere in the world. The solutions we provide for cyber need to be applicable globally. Both cyber and chemical risks also are high hazards. High hazards require a specialized risk management and underwriting approach, which is how we are approaching cyber.

R&I: How does FM Global plan to bring its engineering expertise to bear in managing cyber?

Ries:  We are treating cyber the same way that we approach any other risk. We always start with the science and research to determine what kind of standards, tools and methodologies are needed to help our clients address their risk at a location level and at a corporate level. We expect to offer some new cyber products and services in 2017. I am working closely with Mel [Carmelina] Borsellino, FM Global’s vice president and manager of cyber hazards, on this.

R&I: With so much insurance product now out there targeted at cyber, how is FM Global going to be able to differentiate its product?

Ries: Three things come to mind. First, FM Global is a specialty company. We focus on commercial and industrial property only. Cyber policies are usually driven by third-party liability. We focus solely on first-party exposure.

Our current FM Global cyber offerings address five areas: malware, denial of service, off premises data services, resultant damage and we provide a cyber optimal recovery endorsement. There’s more to come in 2017.

Second is that cyber is offered as part of our all-risk FM Global Advantage policy, in contrast to the marketplace, where cyber policies are usually a stand-alone offering. Also, FM Global has been providing coverage for cyber for more than 10 years.

And third, our insurance product is linked to our loss prevention engineering expertise. We look for ways to help clients access, quantify and improve their risk and to help them stay resilient.

R&I: Can you give us an idea of the traits you are looking for as you seek candidates to build your underwriting team?

Ries: To keep up with this rapidly evolving risk, you’ve got to have some fun! The people that we’re looking for on the FM Global cyber underwriting team are people who share the belief that the majority of loss is preventable and are focused on enhancing FM Global’s leadership in the industry.

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We also are looking for people who are visionary, forward thinking and client-focused because, as a mutual insurance company, we are owned by our policyholders. And lastly, they’ve got to be passionate about always seeking ways to better protect the value our clients create and keep them resilient.

R&I: Can you tell us what some of your products will address specifically?

Ries: Our current FM Global cyber offerings address five areas: malware, denial of service, off premises data services, resultant damage and we provide a cyber optimal recovery endorsement. There’s more to come in 2017.

R&I: What’s the most challenging aspect of this new assignment, the one that keeps you up at night?

Ries: I work with a talented and dedicated team and believe our organization has the right people in place to address cyber. So, I sleep well at night and so should our clients. &

Dan Reynolds is editor-in-chief of Risk & Insurance. 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.

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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.

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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.”

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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.

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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]