Many RMs Clueless About E-Exposures

Nearly half of Fortune 500 risk managers surveyed have yet toquantify their electronic-risks and do not know whether existinginsurance coverage can adequately protect them from theseexposures.

Forty-six percent of the 45 Fortune 500 risk managers respondingto a survey by RM Access said they are planning to quantify theire-risk exposures, while 39 percent are developing an e-risk lossprevention program.

Forty-two percent said they are investigating the purchase of ane-risk insurance policy, but only 14 percent said they feel thatexisting products available for e-risk provide the coverage andlimits they want. Thirty-eight percent do not believe that existinginsurance policies do the job.

However, a whopping 48 percent don't know whether existingcoverages can meet their needs, “meaning they are still looking, orhaven't seen these policies yet,” according to John Ryan, seniorvice president for RM Access, a Boston-based commercial insurancebrokerage formed by Fidelity Investments to target thelarge-account market.

Mr. Ryan, citing figures from the Computer Security Instituteand the Federal Bureau of Investigation, noted that while virusattacks far and away generate the highest frequency of computersystem security breaches–cited by 94 percent of the 400 datasecurity practitioners surveyed last year–the most costly lossescome from theft of proprietary information.

Indeed, while data theft only accounts for about 26 percent ofincidents, the average loss for such security breaches is over $4.4million, compared to just over $120,000 for virus incidents.

Three other security threats–unauthorized insider access, denialof service and system penetration–also scored higher in terms offrequency, but do not come close to theft of proprietary data interms of the average financial loss. System penetration came insecond with an average loss cost of over $450,000.

“You can bet that managing e-risk exposures will be one of thebiggest jobs for risk managers from now on,” said Mr. Ryan, whoreleased the RM Access survey results last week in New Orleansduring the Risk and Insurance Management Society's annualconference.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, April 29, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.