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The risks of technology’s advance
April 1st 2016
Asia-Pacific airlines are no strangers to the multitude of potential risks to their businesses. Read More » They range from terrorism and social unrest to health pandemics, severe weather events and volcanic eruptions. For the industry, it is not a matter of if but when these crises will occur.
Risk management puts in place financial systems to cope with the unexpected events that are part and parcel of airline management. But a new study by global advisory, broking and solutions company, Willis Towers Watson, has revealed is not the known risks of past experience that most concern the occupants of aviation C-Suites.
They say the greatest risks to the operation of their businesses is keeping up with the explosive pace of technological change and protecting their company from the increasing threat of amoral worldwide cyberattacks.
Staying ahead in the IT game is a constant challenge as multi-million dollar systems upgrades can become obsolete very quickly. A cyberattack is a different sort of threat: it can cause total, instant disruption, financial losses and often huge brand damage.
WTW said the survey showed the parameters of risk have shifted for aviation but that insurers have not kept up with the times.
It’s no longer the case that the one size fits all package offered by insurers against risk can meet the requirements of airlines in the 21st century.
Generic offerings against risk are not sufficient, WTW said.
They may compensate for direct cash losses caused by disruption but do they, for example, take into account the damage such an event can have on an airline brand?
To answer that question, airlines, their representative bodies and other aviation sectors need to collectively discuss all aspects of these new threats with their insurers.
It is clear that like hull loss or cover for war, insurance against cyberattacks must have a high priority presence in the insurance portfolio of airlines, airports and their partners.
Insurers must recognize that the raised priority of these technological and security risks requires it to produce risk management tools that match the demands of the aviation industry of today – and not yesterday.
