Airmic 2013: Cyber top concern for Airmic delegates

Airmic delegates identified cyber crime and data privacy as the most concerning risk facing their business, according to a survey conducted by ACE at Airmic’s annual conference last week.

Some 54% of risk managers and brokers participating in the survey ranked cyber risk ahead of D&O (25%) and political violence and terrorism (17%). Environmental risk was rated a distant fourth place with only 4% of attendees citing this as a top risk for their business.

The majority of survey participants (59%) said that cyber risk was “very high” on their risk agenda and three quarters believed employees pose a bigger data breach threat than cyber criminals. However, despite the importance risk managers attach to cyber risk, the overwhelming majority (85%) said that new regulations forcing them to inform clients about a data breach would be the primary driver of growth in cyber liability insurance.

ACE head of client management Jeff Carr said: “These findings present an interesting contrast with our research in Europe where risk managers and CFOs are most concerned about terrorism and political violence, followed by environmental risk. This difference in views may reflect the greater political and economic stability of the UK relative to Europe and other parts of the world and also our comparatively strong record in terms of environmental risk management.”

The firm’s cyber and technology underwriter Ian Ainslie added: “Cyber is climbing up the risk agenda and these results show there is real concern now, even before any legislation is introduced, about the strength of reputational risk posed by the threat of data breach. These results confirm our view that when legislation does come into place, demand for cover will increase.”

D&O was also an area of concern identified by risk managers.

Only just over half (52%) of risk mangers felt that executives were aware of their exposures when expanding business overseas and almost three quarters felt directors and officers are more likely to be sued today than two years ago. Despite these concerns, the majority (54%) felt that the risk was not sufficient to deter non executives from taking up board positions.

Political violence and terrorism, although third in the overall ranking of emerging risks is a risk area where perceptions are changing fast. Three quarters of survey participants are more concerned about political violence and civil unrest than they were two years ago and just under half (46%) are more concerned about terrorism.

Environmental risk, which attracted the lowest ranking of the four risks discussed, seems to be an area where there remains a worrying lack of understanding.

Although just over half of delegates (54%) are more concerned about environmental risk than they were two years ago, survey participants were divided 50/50 on whether their company takes the risk “seriously enough”.