Innovations born out of technological breakthroughs are redefining both business and society. However, while firms have moved fast to develop new products, assigning liability – who is responsible for any accidents or losses – has often been an afterthought, according to a report from the World Economic Forum (WEF).
Technology-related crime is on a dramatic rise, with new examples generated everyday, with the risks exponentially increasing. For example, a cyber attack on the US Northeast electrical grid could cause economic losses as high as $222 billion, according to research carried out for the specialist Lloyd’s of London insurance market.
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“New risks are emerging, and existing risks are becoming more complex,” the WEF report, written with consultants Oliver Wyman, said.
“The insurance industry will struggle to use its old playbook to address these emerging risks.”
As a result, the WEF is bringing the tech industry and government representatives together to look at new ways to tackle the risks posed by unchecked innovation. The body hopes to achieve this by sharing data and creating universal industry standards.
The initiative will officially begin at the WEF’s flagship annual meeting in Davos, Switzerland, in Jan 2018.
“Things are moving very, very rapidly”, Inga Beale, chief executive of Lloyd‘s, one of the industry participants, said.
“The only way we think the whole world can get to grips with what’s happening out there is if we all work together.”
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Industry participants will also include insurers Allianz and Swiss Re and tech firms Cisco and Hitachi, along with officials from governments across the world, including the European Commission, India, Japan, United Kingdom and the United States.
Mark Boulton, Insurance Sector Lead at Fujitsu UK & Ireland, has responded to the news: “The impact that technology has on our life goes far beyond convenience and speed. With new capabilities come a whole new range of responsibilities, and it is time insurers rethink their approach towards new products, such as drones and driverless cars, and the risks they bring to the table. Assigning liability becomes more and more of a grey area as complex technologies emerge, blurring the lines between the decision-maker and the enabler.”
“It is therefore paramount insurers understand these changes are transformational for the entire industry, and old rules cannot be applied to these emerging risks. The way we collect and share data, and the impact of IoT for instance has the potential to revolutionise the industry. It can also offer a great opportunity to scale up to those insurance providers who will seize the moment.”
>See also: Compliance in the age of technology
“This represents an important state of change. We will need to learn to co-exist with machines, and both the risk factor and future changes will have to accommodate this. Incorporating new technologies such as driverless cars will not happen overnight – a carefully thought out set of rules of integration needs to be in place. Of course, this will add risk and insurance complexity.”
“Ultimately, new technologies represent a business change for the better; revolutionising not only the way in which an insurance organisation company works but the services they can provide to customers by embracing a future in a digital world.”
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