Can Cyber Regulations Work?

Can government regulations keep up with changing technologies to control cyber risk?
By: and | September 15, 2013 • 4 min read

Point: The Right Cyber Regulation Can Work

Governmental attempts to create cyber security regulations have been a failure thus far, but that doesn’t mean that doing nothing is the proper approach.

Anne Freedman, Senior Editor, Risk & Insurance

Anne Freedman, Senior Editor, Risk & Insurance®

Businesses are more vulnerable than ever to cyber attacks. And it’s clear that effective protection from cyberrisk takes more than individual effort. Attacks by hackers, nation-states and criminal organizations are growing in frequency and sophistication.

But as we can see from the ongoing controversy over the National Security Agency’s data mining efforts, this is an issue that will provoke opposition, even as technology firms and businesses support the effort.

Nevertheless, federal cyber security legislation is necessary to provide a framework that deals with the realities of cyber crime and data breaches.

Enlightened regulation can help mitigate the risk and protect businesses, customers, owners and investors against the impact of catastrophic loss.

There must be public/private sector information sharing and collaboration that protects against cyberrisk without raising privacy fears and civil liberties issues.

Gathering and communicating data at the federal level on viruses, malware and botnets (programs that communicate with other programs to execute malicious software) would be welcomed by all Internet users, commercial and individual.

In addition, it is only the federal government that has the ability to coordinate with other countries to create harmonious cyber crime laws and to cooperate with other countries in cyber investigations.

Instead of trying to pass a massive bill that invades personal and business privacy and mandates specific cyber security practices, regulatory efforts should focus on creating incentives — and offering assistance and guidance — for companies to take the internal steps necessary to protect their organizations.

Such protective steps must work in conjunction with new and developing insurance policies that substantially reduce the financial risk of cyber attacks. Those policies also play a key role in compelling companies to increase their cyber security efforts.

There is no doubt that no matter what steps are taken, cyber criminals will continue to develop new methods of attack. Organizations will continue to be vulnerable to cyberrisk. Only government can create the overarching framework and global collaboration that can lead to better cyber security.

Counterpoint: Cyber Regulation is Next to Impossible

Government regulations on the reporting of cyberrisk in the private sector cannot succeed. It’s not that the government shouldn’t be attempting to protect taxpayers and investors from this risk, because it should. It is right-minded to do so.


Dan Reynolds, Editor-in-Chief, Risk & Insurance®

Cyber regulation at the national level and the international level is well-intended. But the execution of it is a near-impossible task.

Look at the history of warfare. We have moved from troops standing in line shooting at each other, to cells of hackers operating in cities and towns across the globe.

So how can governments create an international agreement, even if they wanted to? We live in a world where cyber crime is no longer just the province of teenage underground anarchists, or even domestic or foreign organized crime groups. Some governments house hacker cells — affiliated with their own military in some cases — that are carrying out attacks on U.S.-based businesses.

To implement international laws, governments would have to be able to assure the countries that they are negotiating with that they can regulate Internet usage in their own countries. But we know they can’t do that. Some countries don’t even have cyber crime laws on the books yet.

Cyberrisk is a serious issue, but cyber regulation is not the answer. Regulation is deadly slow and not prone to evolve in real-time. It would be handily outpaced by the changing landscape of cyber space and cyber crime, leaving companies strangled by the outdated and ineffective burden of irrelevant mandates.

The worst part of all is that cyber regulation puts the emphasis on compliance rather than the real goal: countering the threat.

The good news is that industry does not have its head in the sand. There are a plethora of organizations working to develop standards and best practices related to cyber security. The International Organization for Standardization (ISO) alone has published more than 200 standards for information security. ISO and more than a dozen other international organizations are actively involved in developing and refining a framework of cyber security agreements and standards. These standards-setting bodies are equipped to respond more swiftly than regulators to keep pace with changes.

Government can help protect citizens and businesses from cyberrisk. But that can best be accomplished by partnering with industry and cooperating with the many organizations that are already working to make cyber space a safer place for citizens and for commerce.


Editor’s note: The opinions stated in the Zurich Point of Action are provided for informational purposes only and are solely those of Zurich in North America.
The Zurich Point of Action opinions are not legal advice and Zurich assumes no liability concerning the information above. The Point and Counterpoint opinions are those of Risk & Insurance® and are completely independent of Zurich.

Anne Freedman is managing 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.


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.


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]