Cybercrime and data privacy are cited by UK company risk managers as the most concerning issue facing their business, according to research performed by insurer ACE at the recent annual conference held by Airmic, the UK association for risk and insurance managers.
Some 54% of risk managers and brokers participating in the survey ranked cyber risk ahead of directors’ and officers’ liability 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.
“These findings present an interesting contrast with our research in Europe where risk managers and chief financial officers [CFOs] are most concerned about terrorism and political violence, followed by environmental risk,” said Jeff Carr, head of client management, ACE. “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.”
Fifty-nine per cent of survey participants said that cyber risk was ‘very high’ on their risk agenda and three in four believed employees pose a bigger data breach threat than cyber criminals. However, despite the importance risk managers attach to cyber risk, 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.
Ian Ainslie, ACE’s cyber and technology underwriter, commented: “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 liability was also an area of concern identified by risk managers, with 52% of risk mangers agreeing 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, 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, said ACE. Three in four survey participants were more concerned about political violence and civil unrest than they were two years ago and 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’. While 54% of survey participants were more concerned about environmental risk than in 2011, survey participants were equally divided on whether their company takes the risk seriously enough.