Business leaders are reeling from the impact of COVID with cybercrime the biggest fear, according to a new report by Beazley.
The specialist insurer today published its latest report ‘Spotlight on technology risk’ which revealed that a range of technology risks top executives’ risk radar on both sides of the Atlantic since the pandemic hit.
The report, the latest in Beazley’s Risk & Resilience series, examines how the COVID-19 pandemic is the biggest catalyst of operational and strategic change in a generation, forcing businesses to adapt their technology infrastructure to new ways of operating.
Not only has this led to greater threat of disruption by competitors, but it has also opened the door to cyber criminals who have moved fast to exploit staff, processes and networks that were suddenly exposed beyond the corporate firewall.
Against this backdrop, the technology group of risks were ranked much higher than any other category of risk by the executives surveyed.
Paul Bantick, global head of cyber and technology at Beazley said: “Technology risk ranking as highly as it does even during a pandemic is very telling. Strong awareness of the risk is encouraging. However, technology is an area where the threat vector evolves constantly, and businesses need to continue updating risk management processes and work with partners that can support them in identifying and mitigating tech-based risk.
“In these uncertain times, customers want three things: a deep understanding of risk by sector and size, specialist risk advisory services as part of their policy and comprehensive, straightforward coverage. Making communication and collaboration between insurer, broker and customer more important than ever.”
Cyber risks, which include IT-based threats affecting national infrastructure through to individual customer data, data leak or employee error, are the highest ranked within the technology risk category. They are of particular concern in the US where 38% of leaders ranked cyber risk top vs 29% in the UK. Furthermore, in the US 55% of businesses feel very prepared to anticipate and respond to cyber risk vs just 34% in the UK.
Overall, the sectors which feel most exposed to cyber threats include energy and utilities, with 40% of businesses ranking this their top risk, followed by retail and technology media and telecoms (TMT), both with 38% of companies ranking this risk top.
Raf Sanchez, international breach services manager at Beazley, explained: “Although many organisations have invested heavily in technology to protect their systems and data, the cyber-attack landscape is constantly shifting. Cyber criminals are increasingly well-funded and innovative, making constant vigilance by organisations a necessity.
“We are striving to help organisations of all sizes and sectors address the many impacts of a cyber-attack on their operations by supplementing traditional risk transfer with a suite of cyber risk management services and post-event incident response. This research gives us useful insights into how leaders view technology risks, and their perceived resilience to them. The variances in attitude between sector and territory are notable.”
Disruption risk, or the failure to innovate and keep pace with new developments, customer demand or market shifts was ranked second in the technology category, with 30% of business leaders identifying it as their key risk.
Beazley said disruption ranks this highly because UK respondents are particularly concerned by the threat that it poses – with 32% ranking it top vs just 28% in the US. In terms of the ability to anticipate and respond to disruption risk, well under half (41%) of businesses overall reported they felt well prepared.
Intellectual property (IP) risks, the failure to recognise and protect the value of assets such as technological know-how, trademarks, patents or other intangible assets came bottom in the technology risk ranking with only 11% of business leaders overall ranking this a primary concern.
Given that intangible assets are the predominant source of economic value for many businesses, accounting for 75% of business value globally, the low-risk ranking assigned to IP is a potential blind spot that may require more forceful remediation, particularly given that only 40% of businesses report they feel well prepared to manage it.
“In these uncertain times, customers want three things: a deep understanding of risk by sector and size, specialist risk advisory services as part of their policy and comprehensive, straightforward coverage. Making communication and collaboration between insurer, broker and customer more important than ever,” said Bantick.