Mr. Mai, AGCS recently launched an insurance product that offers companies protection against cyber risks. Why?
Hartmut Mai: Digital technology has pervaded all aspects of modern society and has become an indispensable part of our daily lives. The work and business world, in particular, depends on IT systems and the Internet being fully operational. This is an area in which we need adequate concepts to protect data, software and systems. Ensuring security in this huge field is one of the biggest challenges of our time.
What does the term "cyber risks" actually mean?
Anything that can bring an IT system to a standstill or cause permanent damage. The causes can usually be found within the company, for example as a result of employee misconduct. Then, there is the growing number of criminal offences, which is certainly a more sensitive matter. What is more, there is often a tendency to forget things like the consequential losses for the companies affected, such as business interruption, loss of reputation or claims for administrative fines.
How big are these risks? What sort of financial damage can they inflict?
IT and cyber risks are still underestimated. The damage to the German economy, for example, is already thought to total at least 50 billion euros a year. In the worst-case scenario, the company itself can be hit with financial losses running into the millions and damage to its image. Imagine what would happen if the data for a new prototype were to go missing, or even if an e-commerce platform were left paralyzed. This is the stuff of nightmares for any company.
In the US, there is already a fairly large market for cyber insurance. Why do you think Europe is still lagging behind?
There simply hasn't been the same awareness of cyber risks in Europe than in the US in the past, and this also has to do with the regulatory environment. But companies are starting to become more and more aware of the economic situation and business interruptions as potential sources of risk. With the number of companies affected constantly on the rise and these cases becoming increasingly controversial, cyber risks are now capturing more public attention – also in Europe.
And what can you as an insurer do to help?
Although there have been various policies focusing on certain aspects of cyber risks for a few years now, none of them covered the full spectrum of IT risks. This is why we are now offering Allianz Cyber Protect: giving customers comprehensive liability, property, legal and image protection against online threats. Within the context of cyber risks, Allianz Cyber Protect is a key component of holistic risk management. This is highlighted, in particular, by the interaction between our underwriters and loss control engineers at Allianz Risk Consulting, who collaborate on the risk evaluation process.But as I said, the most important thing is to change the way the issue is perceived.
And how is the perception of these risks changing?
Every time a server failure, hacker attack or lost hard drive is reported, together with the hefty damage these incidents cause, the public becomes more aware of the threat posed by cyber risks. Online media are also putting more pressure on companies. News spreads like wildfire on the Internet - making the speed of reaction a critical factor. As an insurer, our role is, first of all, to provide companies with even better advice on IT risks in the future and, second, to help drive the further development of solutions to protect them.
