Addressing emerging risks
The logistics industry continues to undergo massive change. Digitalisation, smart ports, intelligent containers and autonomously navigating vessels are poised to radically alter the entire transport and shipping industry. Companies along global supply chains must rethink how they do business – the future belongs to those with the foresight and agility to maintain pace.
It is worth bearing in mind the broader global context in which these changes are taking place: from the workplace to the political arena, from technology to the environment, societies around the world are facing unprecedented disruptive forces. The logistics and marine insurance sectors are not exempt.
In light of these developments, it is only appropriate that the upcoming IUMI 2017 Conference in Tokyo has chosen “Disruptive Times – Opportunity or Threat for Marine Insurers?” as its common theme. Scheduled for September, the event will look at pressing topics including the Internet of Things in shipping, cyber risks and big data analysis. A broad view of the marine insurance environment, evolving marine liabilities, automotive risks, marine security threats and the currently distressed shipping market will round off the agenda.
Recent events point to the role of insurers in addressing emerging risks. In 2015, and subsequently in summer of 2016, cyber-security researchers hacked into the computer system of an SUV while driving, remotely taking control of its braking and steering functions. The experiments point to the potential for cyber sabotage, for example, if carried out on a moving container vessel.
A very recent event that has made the digital risk exposure of companies and institutions alarmingly clear is the coordinated ransomware attack conducted in countries across Europe and Asia in May 2017. The malicious software named WannaCry hit Britain’s National Health Service (NHS), some of Spain’s largest companies including Telefónica, as well as computers across Russia, the Ukraine and Taiwan. Car manufacturer Renault had to stop production plants and some logistics companies struggled with difficulties. The perpetrators locked PCs and data, demanding ransom. The damage, including ransom paid, was relatively moderate given the scale of the attack, yet experts warn that this may be just the beginning.
There can be no doubt that interconnected systems, which will be the norm in shipping and logistics in very near future, are inherently vulnerable and that these vulnerabilities will be exploited. To support the industry and capture the opportunities of this new paradigm, marine insurers will have to be creative and resourceful. Forward-looking products combined with (cyber) risk management consulting services are just one example of the evolving role our industry can play.
I look forward to continuing the discussion and participating in joint efforts to face this challenge.
