Cyber and supply chains at forefront of risk management concerns

In today’s hyper-connected and technology-driven world, the complexity of supply chains and the rapid evolution of emerging technologies are reshaping risk landscapes.

That is the view of Cécile Fresneau, managing director, insurance division, QBE’s European operations, who spoke to AIRMIC Today about how the insurance sector must adapt and innovate in the face of such rapid change.

“Complex and interconnected supply chains are not new,” Fresneau said. “When one system is down, the workarounds can take weeks or months to implement,” she noted, pointing to the cascading effects of system failures.

“These case studies highlight the importance of scenario planning for when things go wrong, even if the source comes from outside of a business’s own network.”

Fresneau stressed the importance of a proactive approach, saying: “It’s not just about paying claims but also giving businesses the tools and expertise to prepare for all scenarios and get them back up and running as quickly as possible.”

Supporting innovation

Emerging technologies such as AI, quantum computing and robotics are accelerating industry transformation, and Fresneau acknowledged the double-edged nature of this progress.

“The fast-moving environment has arrived: QBE recent research shows two thirds of businesses are already using AI.”

She was referencing QBE’s latest Control Risks Report, published June 2, which also revealed an optimistic technology outlook, with 87% of respondents saying AI will have a positive impact on their business and 86% believing it will lift the wider UK economy within two years. Already, 71% of UK businesses are using AI, with an additional 24% looking into it.

She views this environment as an expansion of existing risks: “As insurers, we can help businesses understand what risk they are taking on by integrating AI into their operations.”

Fresneau underscored the need for businesses to ensure that AI systems are fair and unbiased. “What is crucial for businesses using new technologies is understanding the input and checking the output. Is it producing fair, not biased, insights you haven’t seen before?” she stated.

You can have the best systems in the world, but these will be vulnerable unless you have regular staff training.

Strengthening cyber resilience

The rise of AI-powered cyber threats and automation-enabled attacks demands a heightened focus on cybersecurity. Fresneau outlined the steps insurers must take: “It’s essential for organisations to assess and secure their entire IT ecosystem, including third-party partners.”

She highlighted the dual approach required for cyber resilience: “Strengthening cyber resilience comes down to preventing threats and responding swiftly if an attack occurs.

“You can have the best systems in the world, but these will be vulnerable unless you have regular staff training.”

That same QBE study highlighted a parallel rise in cyber risk: 85% of businesses feel cyber attacks have increased in the UK during the past 12 months and more than half (53%) have experienced at least one incident themselves in the same period.

As regulatory frameworks struggle to keep pace with technological change, insurers have a role to play in guiding clients. “Regulation on AI is slowly coming in globally,” Fresneau observed. “It needs to be well thought out, including monitoring and testing.”

The challenge, she noted, was navigating these complexities without stifling innovation. Insurers can serve as partners in this journey, ensuring businesses remain compliant while embracing technological advancements.

Closing the skills gap

The future of insurance depends on attracting talent adept in areas such as data science, cyber governance and AI ethics. Fresneau pointed out a significant hurdle: “This area is in its infancy, and attracting people from university is challenging. Not only is the technology constantly changing, but insurance is largely unknown to many jobseekers.”

She advocated for a focus on foundational skills: “Employing people with the underlying skill set of data literacy is helpful but so is critical thinking; truly understanding the issues our customers face.”

“It’s about doing the right thing for the end customer.”

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