Digital risk: a strategic challenge and a growth opportunity for insurers

The insurance sector has always based its business model on the collection and exploitation of data – well in advance of many other industries – and now relies heavily on the computerised storage, use and control of data for its liabilities and, with the emergence of sophisticated financial techniques, for its assets. Actuaries, statisticians, financial managers and IT developers have always invested extensively in data processing and in mitigating the associated risks, so that for a long time the insurance industry was at the forefront in these fields. With the rapid unfolding of the digital age, however, data is now used intensively in all segments of the economy. That said, the transition to a digital world poses specific and major risks for insurers: firstly from a strategic point of view, in that it could lead to profound changes in their traditional business models; secondly, from the point of view of operational security, as Solvency II has placed them under heightened pressure to ensure their long-term business continuity, making insurance one of the most sensitive sectors in terms of cyber risk, alongside banking and defence. Given the scale of the challenges, the insurance industry has equipped itself with both the means and the skills to tackle these operational risks. The need to control their own exposure to cyber threats will prove an advantage for insurers, allowing them to play a key role in helping society deal with these risks. The digital transition has already raised the question of how to protect against this new danger, leading to the emergence of the very first cyber insurance policies. At the same time, it poses the challenge of how to provide cover for large or strategic organisations, a highly technical area that opens up opportunities for new, dedicated cyber protection ecosystems.