Cyber risk jumps to No. 2 on Travelers Business Risk Index

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://www.propertycasualty360.com/2015/05/20/cyber-risk-jumps-to-no-2-on-travelers-business-ris

Do you remember that old Avis commercial about which company was the No. 1
car rental company? Avis used the slogan, “We’re No. 2, but we try harder.”
You might say that about cyber risk and hackers, too: Cyber risk is the
second biggest concern for U.S. businesses, according to the second annual
Travelers Business Risk Index. But hackers are trying harder to breach data
security and obtain private information, which could see the risk rise to
No. 1 soon.

“The top three concerns are indicative of the ever-evolving risks that pose
threats to American businesses,” says Michael Klein, executive vice
president and co-president of Business Insurance at Travelers. “Yet, when
it comes to managing risk, businesses are often least prepared for their
most worrisome concerns. Fortunately, many of these risks can be mitigated
and resources are available to help businesses of any size stay protected.”

Business leaders seem to be more optimistic than they were last year,
however. Fewer survey respondents reported concerns about the economy and
fewer believe the world is becoming riskier.

Cyber risks

Up from fifth place last year, cyber risks ranked as the second biggest
concern for all businesses. Malicious and criminal attacks concern
businesses the most (55%), along with human error (24%) and system glitches
(21%).

The types of malicious attacks most worrisome to businesses include the
following:

- Having computers or data systems infected with a virus (57%)
- Someone gaining access to their banking accounts or financial control
systems (51%)
- A security breach or someone hacking into their computer systems (50%)

Among leaders of large businesses, 70% rank cyber risks as their biggest
concern.

Medical cost inflation tops the list

Medical cost inflation worried more survey respondents (60%) than any of
the other risks in the 2015 Travelers Business Risk Index. Although many
business decision makers indicated concern with this issue, it was not as
important a concern as last year (60% versus 67% in 2014). Slightly more
than one-third (33%) of respondents said that medical cost inflation is
among the risks they are least prepared to manage.

Here is the way the respondents ranked other risks:

Legal liability. Legal liability-related risks continue to be another
significant source of concern for 56% of business decision makers, the
survey found. Specific concerns include the following:

- Professional mistakes, errors and omissions (42%)
- Employee lawsuits for discrimination, harassment and wrongful termination
(34%)
- Customer slips and falls and driving accidents caused by employees (33%)

Global political conflict. Among business leaders, one of the most
significant increases in concerns is related to global conflict. It’s a
concern for 32% of survey respondents, up 8% from 2014. Political unrest is
a larger concern today than it was five to 10 years ago for one-quarter of
the decision-makers surveyed, which is an increase of 4% from 2014.

Weather. Severe weather has become more frequent said 52% of the
respondents, but only 38% believe that is the case for their geographic
area, and only 32% believe that it has increased the likelihood of damage
to their business. The Northeast stood out as a notable exception: 51%
believe that severe weather is more frequent in their area. Surprisingly,
only 41% of survey respondents have a business disaster recovery plan in
place to help them get back to normal after a disaster.

Risk management. Risk management was not a strategic priority for most
survey respondents, especially among decision-makers at small businesses.
Of that group, only 11% named risk management as a strategic priority or an
important management activity, compared with 20% of medium-sized businesses
and 36% of large companies.

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