Cybersecurity and Related AI Risks Top 2024 Concerns of Risk Professionals – Workers Comp Forum

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Cybersecurity threats, AI ethics and governance and geopolitical risks have emerged as the most pressing issues keeping executives up at night, according to Riskconnect’s 2024 New Generation of Risk Survey.
While risk management is increasingly being recognized as a strategic business function, the survey suggests that approaches haven’t evolved fast enough to navigate the complex web of interconnected risks that are creating a high-stakes environment full of new challenges.
The survey, which polled over 200 risk, compliance, and resilience professionals worldwide, reveals that organizations’ top risk concerns have dramatically changed over the past year.
Cybersecurity has surpassed economic risks and talent challenges to become the number one risk driver for organizations, according to the survey. Nearly three-quarters, 72%, of respondents said cybersecurity risks are having a significant or severe impact, a dramatic increase from 47% saying the same last year. The growing urgency is fueled by the rise of AI-powered cybersecurity threats like ransomware, phishing, and deepfakes. Nearly a quarter (24%) of respondents said these AI-driven attacks will have the biggest impact on their businesses over the next 12 months.
Despite the prominence of AI risks, companies are largely underprepared to address them, according to Riskconnect’s findings. Eighty percent don’t have a dedicated plan for generative AI risks like AI-driven fraud attacks. Sixty-five percent lack a policy to govern partners’ and suppliers’ use of generative AI. Overall, only 8% of respondents feel prepared for AI and AI-governance risks.
“If you don’t have a plan for generative AI and third-party risks, you don’t have a cybersecurity plan. AI risk is cyber risk. Cyber risk is third-party risk. These risks are also ever-changing in nature. You might feel prepared for what’s out there today, but the landscape will change – and fast,” warns Roger Duncan, co-founder and chief strategy officer at Riskconnect.
Despite the current geopolitical climate and the substantial impact these events can have on businesses, organizations remain largely unprepared to handle geopolitical risks, according to the survey. Only 18% of respondents say they’re prepared to manage these threats. Even more concerning, 61% of organizations do not have a plan for managing risks and disruptions related to future geopolitical tensions, such as a potential conflict between China and Taiwan. Just 20% of those companies say they’re in the process of creating one.
Scenario planning is a valuable practice for preparing for potential geopolitical events, Riskconnect noted. Yet most organizations (63%) surveyed in 2023 had not simulated their worst-case scenarios, which commonly revolve around geopolitical risks, cyber threats, and natural disasters. This year’s research reveals that companies haven’t made significant moves in the past 12 months to close this gap, with 56% still not simulating their worst-case scenarios.
However, some crises are simply too big to plan for.
“Building general resilience in the system is also critical for getting through any high-risk, high-impact event,” says Jim Wetekamp, Riskonnect’s CEO. “Focus on your financial position, debt, relationships with your contract workers, and other factors in your control. These are things you can fall back on and will help you get to the other side of a crisis.”
Despite advancements in risk management technology, many organizations continue to rely on spreadsheets for managing risk, according to the survey. Over half (53%) of companies are only or mostly using spreadsheets, with more than a quarter (27%) exclusively using them. This persistent reliance on spreadsheets is leading to data integrity problems, with only 21% of respondents expressing high confidence in the accuracy and actionability of their risk data.
Most companies (63%) say there are some gaps in the breadth, accuracy, and timeliness of their data, hindering their ability to make confident decisions. Sixteen percent even say their data can’t be trusted, and they can’t get real-time information.
However, the outlook over the next 12 months looks brighter as companies grow in their tech maturity. Forty percent of companies say that within a year they’ll have made some investments in risk management tools. Twenty-five percent say they will have actively adopted modern risk management software, and 20% will have dedicated risk software that is integrated with other functional areas in the organization. Still, 16% say they will continue to exclusively use spreadsheets.
View the full survey here. &
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CyberCube report predicts that over the next decade cyber will become a peak peril, driving growth of cyber insurance premiums, as well as demand for capital.

The commercial property insurance market has had its ups and downs in recent years. The good news is that property rates seem to have stabilized in the second quarter of 2024, though businesses are still seeing single-digit increases. It’s a reminder for businesses to keep an eye on their property exposures, especially when it comes to the large equipment they use to keep their operations running.
Equipment breakdown can lead to property damage, business interruption, and additional expenses for repair or replacement. This can increase the overall cost of property risks, as organizations need to account for the potential consequences of equipment breakdown when assessing their property risk management strategies.
Today’s business equipment is more high-tech and specialized than ever before, making unforeseen breakdowns, malfunctions or damages a substantial risk, should they occur. Even the most well-maintained piece of equipment can experience mishaps and cause significant financial loss.
“The changing nature of property risks, especially with high-tech equipment in distribution centers and electronic sorting equipment, is a significant factor contributing to an increase in insured property losses,” said Michele Sansone, CUO property, Americas, AXA XL.
“The equipment breakdown aspect is critical. If specialized machinery is the only source and there is no backup, it creates significant exposures for the business,” added Cheryl Geidel, vice president, equipment breakdown, AXA XL.
The value of complex equipment continues to climb alongside the cost of fixing it, as more expensive replacement parts and specialized diagnostic technicians contribute to an uptick in pricing. Coupled with the recent strain on property insurance, this is one risk businesses can’t afford to overlook.
For those operating large machinery and other equipment that requires regular maintenance, it is imperative to get ahead of potential breakdown and disruption, and to make sure they have the right risk mitigation tools in place.
Michele Sansone, CUO Property, Americas, AXA XL
The first piece of the equipment protection puzzle is the need to understand exactly what is affecting property rates and, consequently, pricing.
Verisk’s 2024 Global Modeled Catastrophe Losses reported that the average annual loss from global natural catastrophes has reached a new high of $151 billion. In the past five years, the actual annual insured losses from natural catastrophes averaged $106 billion, compared with less than $83 billion in the preceding five-year period.
“The pricing in the catastrophe insurance market is highly dependent on the specific peril being insured. With the increased frequency and severity of catastrophic events, insurers are seeing a significant uptick in activity in this segment,” said Sansone.
“As a result, pricing is being adjusted to account for the heightened risk exposure. The specific rates will vary based on the particular catastrophe being covered, such as hurricanes, wildfires or floods.”
That can place rates at the mercy of Mother Nature — a challenge that’s led some insureds to take on their own risk.
“To control pricing, customers are increasingly retaining more risk through captives or larger deductibles, removing exposure from the market,” Sansone explained.
Supply chain disruption is another big factor: “Supply chain issues and long lead times for components and equipment have created challenges, often extending business interruption periods to 15 to 18 months while waiting for critical parts to arrive,” Geidel said.
Supply chain delays aren’t the only things causing strife; the rising cost of materials and labor do as well. These factors continue to impact property insurance, driving up the frequency and cost of claims and drawing attention to contingent business interruption risks.
“Insureds often don’t fully understand the origin of their equipment, products or stock. We view this lack of information as a significant risk — one that must be addressed,” Sansone said.
Cheryl Geidel, Vice President, Equipment Breakdown, AXA XL
Another element businesses have to understand is that accurate valuation of property goes a long way in managing the cost of equipment breakdown. Even with rates showing a slow decline, it’s essential to have accurate values for property, including equipment value.
“Regardless of whether the rate is two cents or ten cents, the starting point — the values — must be accurate. There seems to be a misplaced sense of relief in the industry that as pricing declines, the valuation issue will resolve itself. However, the fundamental importance of getting the values right remains unchanged,” Sansone explained.
If a business and its equipment are underinsured due to an incorrect valuation, the insurance payout may not cover the full cost of repair or replacement.
Further, because of today’s higher rebuilding, repair and replacement costs, businesses must be particularly wary about their policy limits. A loss could end up costing significantly more than anticipated, causing insureds to quickly erode any sublimits in place.
“It’s a challenging discussion, especially as the market softens and the focus on values diminishes,” said Sansone.
However, this is one area where all insureds can get ahead. Partnering with insurance professionals will ensure the right questions are being asked and accurate values are being reported. Risk managers, brokers, the account executive and producer all have a role to play in helping the insured to understand their exposures.
Valuating individual equipment can be tricky, noted Geidel, especially as more technology is incorporated into the machinery being used.
Breakdowns or failures often involve individual pieces of equipment rather than an entire building. Insurance partners that ask questions, review and compare values year-over-year on equipment types and rely on risk engineering reports to better understand the equipment being used are a boon to the underwriting process.
“Values are the basis of everything an underwriter does, so focusing on values should be the starting point of the process,” Geidel said.
Technology is enabling property owners to place a larger emphasis on protection. The unpredictability of hurricanes, earthquakes, wildfires and other Nat CATs can’t be controlled, but technology offers some control over their impact.
Advanced weather modeling, wildfire modeling, drone inspections and other innovations help to predict and assess damages more quickly and accurately than ever before.
Sansone also said that data-sharing can build resiliency into the market, putting clients in an even better position should an incident arise.
“There’s an unfortunate perception that data is proprietary and sharing it could undermine one’s competitive advantage. However,” she said, “this reluctance to share data can hinder the industry as a whole.”
Collaboration and data-sharing among carriers could open the door for better risk assessment and improved underwriting practices, in addition to resiliency.
“Transparency is a game changer in risk management. Sharing data can greatly improve how organizations handle and reduce risks,” said Sansone.
Effective risk management makes clients better, which ultimately improves their overall risk profile. At AXA XL, the team takes this philosophy and brings it into everything it does. It’s not about a transaction; it’s about maintaining relationships with customers in order to best protect them.
“When we commit to a piece of business, we aim to maintain that relationship. Our focus is on risk improvement rather than just transactions so that we may build lasting partnerships with our clients,” Sansone said.
AXA XL has done this by building a team of more than 400 risk engineers who work closely with underwriting in order to provide the most accurate and detailed insights about each client’s needs.
“Our underwriters rely on the data and insights that our property risk engineers collect on site to price the risk we assume. But we also share the data they collect with our clients to help them in their loss control efforts as well as our own,” Geidel said.
“Our approach to underwriting and risk evaluation streamlines the claims process in several ways. By engaging in bespoke underwriting and thoroughly assessing each risk, we gain a deep understanding of the potential claims scenarios from the outset,” Sansone added.
This comprehensive risk evaluation allows AXA XL to anticipate and prepare for potential claims more effectively. As a result, when a claim does occur, the team is well-equipped to handle it efficiently, because its process has established a clear understanding of the underlying risk factors and policy details.
 To learn more, visit: https://axaxl.com/insurance/products/machinery-breakdown-insurance.


This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with AXA XL. The editorial staff of Risk & Insurance had no role in its preparation.

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