You Are Overconfident in Your Level of Cyber Preparedness

The vast majority of executives believe their organizations are following cyber resilience best practices. But more than half haven’t even completed a cyber risk assessment.
By: | November 29, 2018 • 4 min read

The first full-scale DDoS attack occurred in 2000, impacting numerous popular sites including Yahoo, Amazon, Dell, eBay and CNN and wreaking havoc to the tune of $ 1.2 billion. Coming up on two decades later, major DDoS attacks and all other stripes of cyber attack are so commonplace that they’re barely a blip on the news radar.

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The percentage of businesses reporting they have been the victim of a cyber attack has doubled since 2015. According to the 2018 Travelers Risk Index, cyber risk is the No. 2 concern across all business sizes and industries, and 52 percent of business leaders consider it inevitable that their organization will fall victim to a cyber-attack. In the technology, banking and professional services sectors, cyber risk is the No. 1 business concern.

But the Risk Index data — culled from a June 2018 Hart Research survey of more than 1,200 business leaders representing a range of industries and company sizes — revealed a significant disconnect between executives’ beliefs about their companies’ cyber risk preparedness, and the actual steps being taken to ensure cyber resilience.

Ninety-one percent of respondents stated they were confident that their organizations had implemented best practices to avoid or mitigate a cyber event.

That figure isn’t easily reconciled with the fact that 55 percent reported their companies had not completed a cyber risk assessment, and 62 percent had no written business continuity plan. Further, 63 percent had not assessed the cyber security of vendors with access to their data.

Tim Francis, enterprise cyber lead, Travelers

Said Tim Francis, enterprise cyber lead for Travelers: “When you read into some of the things that they have done — or more importantly have not done — I have to scratch my head a little and say, ‘Have they really done all that they could be doing? Do they really fully understand [the risk]?’ ”

Many businesses aren’t adequately planning for their recovery from a cyber event either. Cyber insurance was “born” in 1997, and yet half of the 2018 survey respondents indicated they do not purchase cyber policies, and 23 percent reported they were not familiar with their cyber insurance options.

Misunderstandings about cyber coverage still abound. In focus groups conducted for the Risk Index, said Francis, many executives directly responsible for purchasing insurance for their organizations were unaware that there was coverage available or had misperceptions about the type of cyber events it would cover. In some cases, they thought they were covered even though they had not bought cyber insurance. “All of these things are dangerous for businesses in this day and age,” said Francis.

Small businesses suffer the majority of cyber attacks. In a 2017 report, Champlain College researchers concluded that 60 percent of small businesses fail within six months of a cyber attack. So it’s all the more troubling that 74 percent of Risk Index small business respondents said they did not purchase cyber insurance.

“A disconnect has always been a part of the results,” said Francis, who’s worked on the Risk Index project since its launch in 2013.

“And if I’m reading between the lines, there’s a little bit of ‘Well, but it’s really not going to happen to me.’ ”

“When you read into some of the things that they have done — or more importantly have not done — I have to scratch my head a little and say, ‘Have they really done all that they could be doing? Do they really fully understand [the risk]?’ ” — Tim Francis, enterprise cyber lead, Travelers

While respondents may have seemed overly confident about their cyber-attack readiness, most admitted that it’s a challenge to keep up with the threat. Three quarters of respondents agreed it is difficult to keep up with the evolving cyber landscape, information and digital developments.

Compared to last year’s survey, the three biggest cyber concerns remain the same: security breach, system glitch and unauthorized access to bank accounts.

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Three other cyber-related concerns — cyber extortion, remote hacking of operational software systems and having inadequate resources to recover from a cyber event — jumped up five percentage points from last year’s survey.

One additional disconnect in the survey data stands out. Only 36 percent of survey respondents are concerned about business email compromise (BEC) scams, specifically someone deceiving their employees into transferring funds. And yet FBI data shows a 2,370 percent increase in losses from such scams in just a two-year period.

Some people still hold a firm belief that none of their employees would ever fall for such a ruse because they’re still thinking about the old-school scam email from a Nigerian “Prince,” said Francis. But that, of course, isn’t the reality of how sophisticated these scams have become.

As risk managers review their cyber exposures and consider whether their organizations are adequately protected, it’s important that they remember “they don’t have to figure out a brave new world on their own — there are resources available to them,” said Francis.

“Talk to your brokers, talk to your agents, talk to your carriers and see what your options are.” &

Michelle Kerr is associate editor of Risk & Insurance. She 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.

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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.

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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]