Cyber and beyond: Insurance and risk in a digitally interconnected world
For better or worse, digital technologies
are radically changing almost every aspect of our lives. As
the world becomes “smaller” — increasingly interconnected, instrumented and
intelligent — virtually every interaction is affected,
including the way people talk to each other and how they communicate
to the organizations with which they do business. Organizations interact differently
with their industries, partners, suppliers and customers. Business models are affected,
and entire industries are transforming.
At the core of digital disruption is the
ability to connect everyone to everyone and everything to
everything, exchanging data and information in vast quantities and at tremendous
speeds. This data exchange has enormous
advantages, but comes at a price: data can be lost, stolen or
tampered with, and the entry points of digital interconnectedness can be used
and misused by third parties to wreak havoc on any person
or organization that uses digital technologies for transactions.
The Insurance Services Office, an
advisory and rating organization for the property and casualty
industry, lists “cybersecurity” as the top emerging business issue today, ahead of
the Internet of Things (IoT), drones and social media. All
of these are facets of digital interconnectedness.
How can and do companies assess and
prepare for the risks of digital interconnectedness? How
do technology, employee skills and other factors influence these risks? To gain
insight into these questions, we surveyed 800 insurers
and 1,000 executives from other industries globally on
their actions and expectations about the risks of digital interconnectedness.
We found that outperforming organizations
manage risks of digital interconnectedness, using
traditional insurance and other measures. They embrace interconnectedness to
create enhanced security solutions around
prevention and mitigation, and they collaborate extensively within
and outside their own industries, adapting their business models and giving
rise to new modes of value creation.