Many RMs Clueless About E-Exposures

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

However, a whopping 48 percent don't know whether existing coverages can meet their needs, "meaning they are still looking, or haven't seen these policies yet," according to John Ryan, senior vice president for RM Access, a Boston-based commercial insurance brokerage formed by Fidelity Investments to target the large-account market.

Mr. Ryan, citing figures from the Computer Security Institute and the Federal Bureau of Investigation, noted that while virus attacks far and away generate the highest frequency of computer system security breaches–cited by 94 percent of the 400 data security practitioners surveyed last year–the most costly losses come from theft of proprietary information.

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

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

"You can bet that managing e-risk exposures will be one of the biggest jobs for risk managers from now on," said Mr. Ryan, who released the RM Access survey results this week in New Orleans during the Risk and Insurance Management Society's annual conference.