Moore's law notes that in the history of computer hardware, computing power doubles about every two years, which is why our digital lives have become equally exhilarating and exhausting in recent times. We scarcely have enough time to integrate fully into our lives the latest social media platform, music format or data management before a fresh innovation renders it all obsolete, and we are once again left to figure out how and where we fit into the world's new digital reality.

From this was born the Cyber liability insurance market, coverage that seems to serve a simple enough need: to insure against the various kinds of loss that might arise from the use of the Internet. At one point, that meant hacking, or virus infection or straight-up electronic theft of valuable information, financial data or money. But in the relatively short time that Cyber liability has been around, the environment it is meant for has changed radically and continues to do so. In fact, one might say that Cyber liability is trapped in the same predicament that any defensive measure is in during an arms race: perpetually struggling to keep up with that against which it is meant to defend.

A good example of this is a recent scandal at Bloomberg, the news media giant perhaps best known for the computer terminals it rents out for $20,000 a year. The terminals have become must-have tech for anybody on Wall Street, anybody who follows Wall Street closely (such as financial journalists) and anybody close enough to Wall Street to want to look cool and have an expensive tchotchke in their office. The terminals provide plenty of detailed markets info, as well as a messaging system that lets Wall Streeters ping each other and see who among them are online or offline at any given moment.

As it turns out, Bloomberg journalists were also monitoring the use of these terminals behind the scenes to see how users, including major Wall Street banks, were doing their business. Bloomberg got plenty of inside scoops in this fashion, leading Goldman Sachs and others to have a crisis of confidence. If Bloomberg's reporters were snooping on them, what other information were they privy to?

Bloomberg cut off reporter access to the terminal data 24 hours after the scandal erupted, but by then the damage had been done, such as it was. Many Wall Streeters don't think this will affect Bloomberg too badly—the terminals have been indispensable to many traders over the years, and in an age when we give our every personal detail to social media networks, what privacy really was invaded, anyway?

Still, the episode underscores just how much traditional media, information security and Cyber liability have been so thoroughly blown to smithereens that it is becoming increasingly difficult to sense where emerging risk will present itself. More importantly, it is becoming even more difficult to craft meaningful risk management strategies for such threats in a timely manner. Relying on insurance products to do it is a lost cause; the industry simply does not innovate on the product development front fast enough. When it comes to Cyber liability, however good the coverage is, one must wonder if it can ever be good enough. And if so, what does that “good enough” really look like in a world where the real risks that need covering haven't even been discovered yet?

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The Gamut: &quot;Bloomberg&rsquo;s Spying Scandal and Cyber Liability&quot;

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The Gamut: "Bloomberg’s Spying Scandal and Cyber Liability"