Seven cyber risks that threaten systemic shock | Canadian Insurance

Seven cyber risks that threaten systemic shock

Organizations must improve response to cyber risk: Zurich report

Organizations must improve their response to cyber risks to avoid a global shock similar to the 2008 financial crisis, states a new report from Zurich.

The Zurich Cyber Risk Report found that 2013 was the worst year for data breaches thus far, with 740 million data files potentially viewed or stolen worldwide. “But governments and forward-looking organizations need to take a holistic view and look beyond these issues to broader risks, including the increasing danger of global shocks initiated and amplified by the interconnected nature of the internet,” the report states.

Read: Big data holds risks, opportunities: CIP Symposium 

Cyber-risk management professionals must move away from examining individual cyber risks, and instead examine aggregations of risk, such as outsourcing and contractual agreements, supply chain, upstream infrastructure, and external shocks, according to the report.

Such interconnected risks are compounded when a company outsources the management of its servers, information technology and cyber security to focus on its core activities. Little information may be known about the third party’s information security or business continuity safeguards and it may also in turn outsource activities to other companies, says Zurich.

The report calls for organizations to incorporate the best ideas from financial governance such as creating a G20+20 Cyber Stability Board to enhance cyber risk management and identifying and improving the governance of G-SIIOs (Global Significantly Important Internet Organizations).

Read: Why your clients need standalone coverage for cyber breaches

“The internet is the most complex system humanity has ever devised. Although it has been incredibly resilient for the past few decades, the risk is that the complexity which has made cyberspace relatively risk-free can – and likely will – backfire,” said Axel Lehmann, Group chief risk officer and regional chairman Europe at Zurich Insurance Group, in a press release.

“Organizations are unknowingly exposed to risks outside their organization, having outsourced, interconnected or exposed themselves to an increasingly complex and unknowable web of networks.

“Few people truly understand their own computers or the internet, or the cloud to which they connect, just as few truly understood the financial system as a whole or the parts to which they are most directly exposed.”

The report identifies the following seven interconnected risks:














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