Zurich research shows cyber claims pose ‘systemic risk’

Cyber-risk management professionals must look beyond their internal information technology safeguards to interconnected risks that could build up and create a global shock on a similar scale to the 2008 financial crisis, cautions recently published research from Zurich Insurance Group.

The reliance on information technology has created a complex web of interconnected risks, notes a statement from the Swiss insurance group.

Findings – detailed in the Zurich Cyber Risk Report, created in collaboration with the international think tank Atlantic Council and issued earlier this week – shows organizations must improve their response to cyber risks to avoid a potential global shock.

“While our society’s reliance on the Internet grows exponentially, our control of it only grows linearly, limited by outdated government procedures and ineffective governance,” notes the report.

“Yet modern cyber risk management does not give much thought to ‘distant digital perfection,’ the aggregations of cyber risk, which lie sometimes far outside an organization’s own server and firewalls.”

The report identifies seven interconnected risks, namely internal IT enterprise, counterparties and partners, outsourced and contract, supply chain, disruptive technologies, upstream infrastructure, and external shocks.