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​Partnerships and investment key to fighting cyber crimes

Published on: 21-Aug-2017

IRFRC_01.JPG 

As seen above is the director of Nanyang Business School’s Insurance Risk and Finance Research Centre, Dr Shaun Wang.

 

This year, the WannaCry ransomware attack and the so-called Petya or Not Petya malware that hit thousands of computers across the world and damaged the business operations of companies exposed the vulnerabilities of the global internet system.

In June, Dr Shaun Wang, director of Nanyang Business School’s Insurance Risk and Finance Research Centre, addressed the problem at a conference held by the centre. He spoke about optimising investment in cyber security and partnership between the public and private sectors.

In its cyber readiness report in February, specialist insurer Hiscox said cyber crimes cost the global economy more than US$450 billion last year. The report – which surveyed 3,000 companies in the United States, Britain and Germany – said more than two billion personal records were stolen. About 100 million Americans’ medical records were lost as a result.  

On June 27 this year, the Petya malware swept the Ukraine, hitting computer systems in Europe before moving to the United States, and infecting Asia and South America. It caused financial and operational damage to international companies such as delivery firm FedEx, shipping giant A.P. Moller-Masersk and law firm DLA Piper.
 
At the conference, Dr Wang said the business school’s joint cyber risk management project with the Monetary Authority of Singapore sought to develop risk management and insurance solutions by combining technological and business approaches.
 
To that end, the project – launched last May and has companies such as SCOR, Aon, MSIG, Lloyd’s and TransRe as its partners – aims to build databases and benchmarks to aid the design of cyber insurance products, and make policy recommendations to the government.
 
The project entails collecting data on the incidents of attacks, identifying emerging trends of cyber breaches and cost-effective defensive measures, researching market demand and supply for cyber insurance, quantifying the online risks, and producing the commercial solutions.
 
Globally, the market for cyber insurance is poised to surge, as cyber insurance premium reached $2.5 billion in 2015, compared with non-life insurance premium of $2 trillion. Notably, the global cyber security budget grew markedly to $75 billion that year.
 
Dr Wang argued that companies in the private sector needed to take collective action under the project’s Singapore Framework to combat cyber risks, without which the volume of such threats is hard to address.
 
“No firm has the resources to deal with the number of threats themselves,” he said.
 
Increasing their collective investment in cyber insurance would help to reduce the number of threats. “It’s about the network effect. Whether a firm invests in cyber liability insurance products will affect its clients,” said Dr Wang.
 
Indeed, the framework creates value by reducing duplication in compliance cost, the sharing of cyber breach intelligence, enhancing corporate governance and
private-sector coordination.

“If a firm has pre-arranged crisis management, if there is a data breach, the loss is much reduced,” Dr Wang said.

The project also aims to foster innovation in the cyber insurance market by increasing companies’ awareness, offering defensive and post-attack measures to reduce their vulnerability and curbing the impact of cyber crimes, as well as facilitating collective action to nullify threats.

To increase demand for cyber insurance, the project aimed to enforce a baseline safety standard similar to those that govern the use of motor vehicles and building fire safety, said Dr Wang.

For its part, the insurance industry needed to do more to educate consumers and provide cost-effective business solutions and effective distribution channels, he said.

Digital and key infrastructure operators also had a role to play in upholding a high standard of cyber security for their corporate customers, Dr Wang added.

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