The development of information technology and online connectivity has changed the way businesses operate. “Big data” and intricate information technology systems are vital to today’s economy. As such, we look at risk associated with cyber technology as an example of the realm of emerging “technology risk.”
Guy Carpenter provided an overview of cyber risk in the 2013 report, Tomorrow Never Knows; Emerging Risks (1). This chapter expands on that report.
Cyber-attacks of all varieties are now top of mind for governments, utilities, individuals, medical and academic institutions and companies of all sizes. Because of increasing global interconnectedness and explosive use of mobile devices and social media, the risk of cyber-attacks and data breaches have increased exponentially. Hackers can shut down a company’s network or steal customer and employee personal and financial information.
With the high-profile cyber incident involving credit card and debit card breaches at Target Corporation and other US retailers, 2013 became known as the “Year of the Mega-Breach,” according to the Organization of American States (2).
“In 2014, cyber issues are becoming more of a concern for companies that once felt they had relatively little exposure,” according to the recent Marsh report, Benchmarking Trends: Interest in Cyber Insurance Continues to Climb (3). In fact, cyber-attacks were ranked fifth among the top five global risks in terms of likelihood in this year’s World Economic Forum’s annual Global Risks 2014 report (4).
Cyber-attacks are now seen as one of the most serious economic and national security challenges now facing governments around the world.
Some of the risks that entities face in this realm include:
- Legal liability
- Computer security breaches
- Privacy breaches
- Cyber theft
- Cyber espionage and cyber spying
- Cyber extortion
- Cyber terrorism
- Loss of revenue
- Recovery of costs
- Reputational damage
- Business continuity/supply chain disruptions
- Cyber threats to infrastructure
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1. Guy Carpenter, Tomorrow Never Knows; Emerging Risks Report, 2013
2. Organization of American States and Symantec, Latin American + Caribbean Cyber Security Trends, June 2014.
3. Marsh, Benchmarking Trends: Interest in Cyber Insurance Continues to Climb.
4. World Economic Forum, Global Risks 2014, Page 17.