Risk Report: Financial Services

Beware the Human Element in Banking Cyber Risk

The financial sector is not alone in seeking to identify how employees fall for cyber phishing scams.
By: | July 30, 2018 • 6 min read

In 2016, all it took was one cleverly worded email for cyber thieves to bilk the Belgian bank Crelan out of more than $75 million.

Advertisement




The phishing scam, in which schemers fabricated a demand-for-funds email that looked like it came from the company’s CEO, was one of thousands of cyber-attacks that buffet banks every day.

Financial institutions can invest millions in cyber defenses, but it’s now known that most cyber losses are the result of human error. In the Crelan case, tens of millions in funds were erroneously transferred in response to a phony demand email, never to be seen again.

The Human Element

Efforts are now underway to address the human element of cyber risk in finance to improve company cultures and reduce the chances an employee will be fooled into transferring money to a fraudulent recipient.

“All organizations face a challenge,” said Josh Ladeau, the global head of technology E&O and cyber, Aspen Insurance.

“For the revenue-producing areas of an organization, there is typically a tug of war between ease of doing business and the thoughtful implementation of security controls; by default these concepts often run counter to each other, not just within financial institutions, and that creates natural friction when trying to culturally integrate security consciousness,” he said.

Adeola Adele, director of integrated cyber solutions and thought leadership, Willis Towers Watson

Addressing the human element of cyber risk, how cultures and individuals can be both a company’s worst cyber security weakness or its most stalwart defender, is an area of concentration for Adeola Adele, director of integrated cyber solutions and thought leadership, Willis Towers Watson (WTW).

Adele and her colleagues are leading client meetings intended to break down the walls between human resources, risk management, compliance and information security staffers, pursuing how traditional human resources strengths like training and testing can be brought into an alliance with risk management.

“I do believe that there is an appetite there for HR to become more involved in this issue,” she said.

When the insurance brokerage Willis merged with the human capital specialist Towers Watson in early 2016, one of the stated goals of company leaders was to put Towers Watson’s human resource experience to work in the field of risk management.

Adele said WTW is now using employee engagement surveys as a tool to measure cyber security weakness.

“We did a human element study a couple of years ago and one of the things that we found was organizations that lack a focus on the customer experience are more likely to suffer a breach,” she said.

Departments Put Stock in Collaborating

The “customer experience,” Adele explained, includes such things as how well companies respond to customer complaints, how they service customers, how their products speak to their customers, how they solicit customer feedback and “in the context of cyber security, that would include the measures they have in place to protect customer data,” she said.

Advertisement




Adele said WTW is also using analytical tools to assess incoming talent on how well it will be able to perform in the area of cyber security, in the context of a severe shortage in the areas of engineering and data science.

“We know that many financial institutions have not done this type of analysis,” she said. “We are helping organizations address this issue, because if they don’t hire someone with the right expertise they are potentially leaving themselves really vulnerable.”

“It is really the combination of upfront training and trying to mitigate the human error component of things, with thoughtful strategies around identification and response, because there has almost become an expectation, from a cyber perspective that things are going to happen.” — Jackie Quintal, financial institutions practice leader, Aon

Jackie Quintal, a financial institutions practice leader at Aon, said she too is seeing a trend toward putting human resources, risk management and other disciplines together to create cultural change around cyber security — not only in financial services but also across industry sectors.

“It is really the combination of upfront training and trying to mitigate the human error component of things, with thoughtful strategies around identification and response, because there has almost become an expectation, from a cyber perspective that things are going to happen,” she said.

James Burns, cyber product leader, CFC Underwriting

James Burns, the cyber product leader for London-based specialty insurer CFC Underwriting, said some of the most frequent losses his team sees are triggered by cyber phishing.

“Companies spend a lot of money on cyber defenses, which is important but might not count for much when an employee sees an email and clicks on it,” Burns said.
He said he does see much more collaboration between HR and risk management these days.

“Again, banks are not alone here,” Burns said. “We frequently see situations where the risk management folks are not talking to the IT department, because for so many years, they didn’t have to,” he said.

“There has been some progress made, but there is much more that needs to be done, certainly in the accounts that we have seen,” Burns said.

The Need for Cultural Shift

Burns’ colleague Neil Beaton, head of a new financial institutions practice at CFC Underwriting, said he believes cultural issues in banking make employees susceptible to phishing.

“One of the things for financial services in particular is that they are hierarchical organizations, and if somebody says to do something, there is a tendency to just follow orders,” he said.

“In those situations, if somebody sees a note from their superior they tend to act on it. What you need is for someone to turn around and say, ‘Am I really supposed to be doing this?’”

“When you start to have those execs in the room, that leads to broader and wider acceptance from the underwriting community to support the risk, whether it be from an underwriting standpoint or a risk mitigation standpoint.” — Michael O’Connell, financial institutions practice leader, Willis Towers Watson

Michael O’Connell, financial institutions practice leader, WTW, and former underwriter with AIG, said in his meetings with underwriters, evidence that internal discussions are underway at some companies to break down silos between HR, information security and risk management is well-received by insurers.

“When you start to have those execs in the room, that leads to broader and wider acceptance from the underwriting community to support the risk, whether it be from an underwriting standpoint or a risk mitigation standpoint,” he said.

Advertisement




Aspen’s Ladeau added some organizations are differentiating themselves from their competitors in the degree to which they are training and collaborating internally to make employees a stronger piece of cyber resiliency and security.

“Cyber security is becoming an area for competitive differentiation,” said Ladeau. “The cyber risk working groups that were traditionally defensive are now bringing in the production folks and driving corporate adherence.”

“I think there are some financial institutions that have embraced that,” he continued. “When you sit in on these underwriting calls there is a marked difference in philosophies, so it’s not a one-size-fits-all answer,” he said.

Ladeau said at least one regional bank as well as a major card brand are now referencing their embrace of cyber security in their marketing, attempting to associate it with their brand.

“Whoever can figure that out first is going to be well-positioned because the issue isn’t going away.” &

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

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

Advertisement




That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

Advertisement




Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

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