Canadian Underwriter

Risk managers should become more involved in understanding digital risks: Lloyds

January 14, 2011   by Canadian Underwriter

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Risk managers need to better understand how digital risks might affect their organizations and what they can do to mitigate them, according to a Lloyd’s 360 Risk Insight report.
“Digital risks,” in this context, refers to the effects of natural disasters on communications systems, the actions of criminals to steal online banking information, the penetration of a nation’s computing infrastructure (cyber warfare) or online terrorist activity.
Possible threats include operational risks, financial losses, copyright infringements, regulatory fines for breach of duty, or reputational risk to the company brand.
The report elaborates on five recommendations for risk managers:

  • Establish a working group to monitor and review the exposure of their business to digital threats and keep their boards regularly informed.
  • Become more involved in IT governance and strategy, in addition to major technology transformations.
  • Ensure recommended and applicable standards are used to help manage data risks.
  • Consider risk transfer solutions, such as cyber risk insurance products, as part of the overall digital risk management strategy
  • Play a greater role in shaping the research around digital risks, helping researchers to understand the challenges in making practical decisions around digital risk.