By Ben Davis, Insurance Lead, Emerging Technologies, Digital Risks
A new year means new opportunities, new technologies and for some a completely fresh start. However, for SMEs it also means dealing with a number of new and emerging risks that threaten business operations. Below, Ben Davis, Insurance Lead, Emerging Technologies reveals the main emerging risks of 2020.
2019 has been a bad year for cybercrime. Security specialists Symantec revealed earlier in the year that over 4 billion records had been breached, with nearly 4,000 separate incidents announced. 2020 is expected to see a continuation, or even an increase in the level of attacks, with Cybercrime Magazine predicting that by 2021 attacks will cost $6 trillion annually.
One of the main issues is that as the fraudster/hacker gets smarter, there are simply not enough trained cyber security professionals to protect every business. In a world of open APIs and shareable data, this means that one weak link in the chain can bring down an entire host of businesses.
Some of the big trends of 2020 will include an increase in ransomware attacks, with businesses happy to pay out rather than fight their way through. As well as the dominance of the ‘Deep Fake’, where scammers can create fake videos purporting to show high level members of staff requesting junior colleagues into giving up financial information/valuable documents.
A 5G powered IoT
With 5G infrastructure projects well underway, 2020 is expected to be the year in which the technology becomes commercially viable. This greater level of connectivity means that IoT can meet its true potential, with a host of interconnected devices helping to power our cities and advance our day to day lives.
With this however comes a host of emerging risks and security concerns. Connected devices are a paradise for hackers who can access weaker technologies, such as a thermostat or smart-fridge to infect a wider network. We’re already seeing examples where devices such as printers have been hacked to siphon off the printer’s memory to access print jobs containing sensitive files, such as contracts, corporate data or patient information.
The IoT enables botnets which are comprised of thousands or millions of infected internet-connected devices to be used to deny access to a victim’s website. With the amount of IoT devices coming online, this means that botnets could become even more powerful and commonplace. For the insurance industry, it is important to protect our clients from denial of service attacks formed from botnets, but also protect our customer’s devices if they are used in a botnet.
Businesses will need to be sure that they have comprehensive cover that means their entire network is protected, and that any device installed in their network is verified beforehand. This can be as simple as remembering to change the manufacturer’s default password already installed on the device. Individuals looking to take devices into shared workspaces/offices will also need cover, in case it’s their device which starts a widespread data breach.
If there’s one emerging risk that will dominate 2020, it will be the development of natural disasters and the consequential damage they impose on livelihoods across the globe. Most people think that the physical and virtual worlds are separate, but in reality the virtual world is very much affected by the natural disasters of the physical world. Physical damage to technology firms can be a trigger for a cyber-based attack as their defences and resources may be compromised dealing with the physical emergency.
Calculating insurance for businesses against climate damage has largely been built on historical data. But we’re entering a new era of global heating and climate change; with extreme weather events leading to mass damage to businesses worldwide. Historically larger insurance players have made their money through protecting property, however as climate change increases, and disasters become more commonplace, this will become an increasingly complicated sector.
2020 could be the year in which the larger insurance players look to ‘balance the books’ to better protect themselves against more claims in this sector. This could mean they could either look to provide new products that are uncorrelated with property losses or reduce their exposure in this sector.
Businesses that do not respond quickly enough to the ‘greenification’ of everything will also be hit by social pressure to change potentially harmful business practices or investment. We are already seeing insurers pull out of businesses that are deemed to be harmful to the planet. 2020 will be important for companies to take a strong stand on climate change and show the world how they’re changing to address it or risk being ostracized for failing to act.