Allianz Commercial’s annual cyber risk outlook explores the importance of AI on the cyber and privacy risk landscape.
The fact that almost every industry is now using artificial intelligence (AI) will have a significant impact on the cyber and privacy risk landscape in future. AI relies on the collection and processing of vast amounts of data, including personal, health and biometric information, for training AI models and making predictions or recommendations.
But AI tools such as chatbots can create potential privacy, misinformation, and security risks if not properly managed. With so much data being collected and processed, there is a risk that it could fall into the wrong hands, either through hacking or other security breaches. There are also concerns around potential breaches of privacy laws, such as whether organizations have proper consent to process data through AI.
From data exfiltration to data protection
Despite a general trend for increased investment in cyber security in recent years, many data breaches, including some of the largest mass data exfiltration cyber-attacks over the past 18 months, are the result of weak cyber security within organizations and/or their supply chains.
Such incidents can lead to a large claim involving regulatory fines, notification costs and third-party litigation, in addition to extortion demands, first party costs and business interruption.
“The insurance industry must also step up its focus on the data privacy side of cyber risk and has a key role to play in offering loss prevention and mitigation advice to businesses about this increasingly important area of exposure,” says Vanessa Maxwell, Global Head of Cyber and Financial Lines, Allianz Commercial.
“The value of cyber insurance goes well beyond the payment of claims. Insurance helps companies make the business case for cyber security investment and to direct their resources towards the most effective measures.”
Data breach risks are best mitigated through good cyber hygiene, including strong access controls, database segregation, backups, patching and training. Having better oversight of any cyber weaknesses in their supply chains is an area where many companies need to improve.
“Early detection and response capabilities are also key. Around two thirds of breaches are typically reported by a third party or by the attackers themselves,” says Rishi Baviskar, Global Head of Cyber Risk Consulting, Allianz Commercial.
“Cyber breaches that are not detected and contained early can end up being 1,000 times more expensive than those that are, the difference between a €20,000 loss turning into a €20mn one.
“AI is also becoming an essential tool in the fight against cyber-attacks, as it can quickly identify a security breach and automatically isolate systems and databases, as well as having the potential to significantly reduce the cost and life cycle of a data breach claim by automating tasks, such as forensics and notifications, potentially saving companies millions of dollars.”
