Author Archives: Emily Holbrook

About Emily Holbrook

Emily Holbrook is a former editor of the Risk Management Monitor and Risk Management magazine. You can read more of her writing at EmilyHolbrook.com.
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A Worldwide Need for a Better Cyber Insurance Market

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A new report from the European Network and Information Security Agency (ENISA) claims that Europe’s citizens and businesses could benefit from better protection for their computer systems and data if the cyber insurance market can be kick-started.

Though cyber security is an important concern for European and national policy makers, businesses and citizens, there is concern that traditional coverage offered by Europe’s insurance providers may not comprehensively address digital risk, according to the report, “Incentives and Barriers to the Cyber Insurance Market in Europe.”

ENISA has made four recommendations to address this issue:

  • Collect empirical data on cyber insurance in Europe, looking at types of risk insured, premiums paid and levels of payouts to determine future trends. The action could be taken by insurance underwriters, firms or regulatory authorities.
  • Examine incentives for firms to improve their data security as a way for them to reduce their risk and financial liability if they breach data protection regulations. Fact finding with the European Commission would be a first step to understanding this area.
  • Establish agreed frameworks to help firms put a measurable value on their information. The work could be assisted by privacy and information security advisors, underwriters and the European Commission. ENISA could also provide further support.
  • Explore the role of governments as an insurer of last resort, following other models where policy intervention is in evidence when catastrophic risk is involved. This could be investigated by EU Member State governments and the European Commission.

Meanwhile, in the U.S., the topic of cyber liability exposures and coverage was of top concern at the Casualty Actuarial Society’s Seminar on Reinsurance, held earlier this month in Boston. There, it was noted that 72% of large U.S. companies do not have cyber liability insurance, while 33% believe they don’t have significant data exposure, since they believe their internal controls are adequate (according to a study by Towers Watson).

The business of cyber insurance is growing, however. Michael L. McCarthy, a vice president of professional liability treaty reinsurance at Axis Capital, estimated the market at about 0 million in premium per year, most of it in the United States, and growing at 10 to 25% per year.

According to a release from the Casualty Actuarial Society, John Merchant, of Freedom Specialty Insurance Company, divided coverage into five broad categories:

  1. Liability coverage, which covers damages from loss or compromise of sensitive third party data, like patient medical records. It also covers liability arising from damage to a third party’s network because the insured’s network caused a data breach, such as if a virus traceable to the insured’s network infects another network. And it covers e-media issues, like libel or slander or misuse of a company’s trademark.

  2. Expense coverage, which covers the cost to notify every person whose privacy has been breached. Often that includes providing the victim services like credit monitoring, identification theft monitoring or restoration of a stolen identity.
  3. Regulatory coverage, which covers the company’s costs if the breach triggers investigation by state or federal authorities.
  4. Industry group coverage, which handles fines assessed by industry associations for data breaches. For example, Visa, MasterCard and Discover have established a Payment Card Industry-Data Security Standard. If a credit card issuer fails to adhere to the standard, it can be fined. The coverage handles the fine.
  5. First party coverage, which handles loss of revenue from network interruptions caused by a security breach, or the cost of restoring lost data.

However you divide it or analyze it, the fact remains that there is still an inadequate market for cyber insurance, both in the States and abroad. Though recent statistics have shown growth, we must remember that it is an emerging market and with that comes risks, mistakes and lessons.

Do Quiet Leaders Make Better Leaders?

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Last week at the annual Wharton Leader Conference, I was presented with an interesting theory: Quiet leaders, oftentimes, make for better leaders. This goes against what we all know as the stereotypical leader — loud, strong-willed and and an all-around extravert. But Adam Grant, associate professor of management at the Wharton School of Business, claims quiet leaders are more effective motivators.

He told of his experience working with a call center whose employee turnover rate exceeded 400% annually. The call center’s mission was to contact university alumni to solicit donations. Employees sat for eight hours a day, reading from a dry script and accepting continuous hang-ups as a part of the job (for about every 100 calls, one person would donate). As part of Grant’s consulting job with the call center, he was faced with a monumental task: Figure out how to motivate employees.

He decided to bring in scholarship recipients so call center employees could see that their hard work has afforded individuals the opportunity for a higher education. First, he brought in an outspoken, enthusiastic student who was class president in high school and involved in various activities within his university. He had a prepared speech and, according to Grant, was a natural born public speaker.

Grant tracked the success rate of calls for the next four weeks and found that employees were making more calls and more donations were coming in. His plan had worked. But could it work better?

After one month, he brought in another scholarship recipient. But this one was quiet, shy and uneasy speaking to groups. What sounds like a awkward presentation that would have little to no effect on employee motivation turned out to be exactly the opposite. The impact was powerful and surprising. The number of calls made almost doubled and donations spiked to a level never before seen.

The conclusion: The introvert provided the most motivation. Grant stressed that extraverted leaders are so obsessed with being the center of attention that they very rarely inspire or motivate others, besides themselves, that is.

According to Grant, the following can help one lead more quietly:

  1. Lead by doing
  2. Outsource inspiration (Grant points to programs that John Deere, Volvo and other companies use)
  3. Embrace the other 80/20 rule (introduced by Jim Quigley, who will never speak more than 20% of the time in meetings he leads, claiming he learns not by speaking, but by listening)

Other resources on the topic:

 

Tomorrow Marks the First World Risk Day

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Tomorrow marks the very first World Risk Day, a collaboration among the world’s top risk management companies to bring awareness to the discipline and promote its purpose. “The topic is top of mind,” said Loren Padelford, executive vice president and GM for Active Risk, a supporter of World Risk Day. “There’s a need here to bring together industry experts and business leaders to talk about why risk management is valuable and how, done properly, it is a strategic advantage.

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World Risk Day is open to anyone who wants to learn how taking smarter risks can drive their business. The official website includes:

  • Virtual Summit: The centerpiece of the first annual World Risk Day, the virtual summit will bring together a unique program of global risk thought leaders who will share
  • Resource Center: Visitors can access reports and whitepapers on all aspects of risk management, from embedding a risk management culture to managing risk in government.
  • Blog: The World Risk Day blog offers commentary on the event and risk management issues in general and encourages readers to share their experiences and opinions.
  • Newsroom: Offers coverage of press releases, supporter announcements and media coverage.

Organizers have even grander plans for years ahead. “It is our goal that this becomes an annual event,” said Padleford.

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“We’d like to make it physical instead of solely virtual, eventually.

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12 Leadership Lessons from Jane Hertzmark Hudis

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Jane Hertzmark Hudis

The focus of the annual Wharton Leadership Conference is, of course, leadership. And among the prestigious speakers at the day-long event was Jane Hertzmark Hudis, the global brand president of Estée Lauder, where she is responsible for overseeing the global growth of the flagship brand in more 135 countries and territories. Having worked her way up in the company over 27 years, she knows a thing or two about leadership. And this is what she shared with us:

  1. Listen — “In order to be a good leader, you have to be a good listener.”
  2. Vision — “It’s about focus — what to do and what not to do. Leonard Lauder always says, ‘If you can’t see the future, you will never get there.
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    ‘”

  3. Team — “Your team is everything and you need to have the right balance of people. Speed [in acquiring the right team] is not of the essence.”
  4. Hire people smarter than you — “Don’t be threatened. I want people who want my job. There’s no substitute for great talent.”
  5. We, not I — “Nobody does it alone.”
  6. Global empowerment — “We empower [other countries and cultures] to give us feedback.”
  7. Communication — “There is no substitute for personal, verbal communication.”
  8. Relationships are forever — “Develop relationships that matter. Everybody comes back to you. Treat people kindly.”
  9. An object in motion, stays in motion — “Once you get a business moving, you have a really good chance of success.”
  10. Be your own entrepreneur — “At the heart of any great organization is a bunch of great entrepreneurs.”
  11. Strategy is not for a lifetime — “You need to check in on it. We do it formally once a year. You have to be flexible.”
  12. Achievement — “Going beyond where you thought you could go.”

Yesterday, I wrote about other qualities that top CEOs said make for good leaders and I will continue sharing insights from the conference next week. Stay tuned.