Tag Archives: WEF

Another Day, Another Hack

As if we needed another reminder of the rising threat of cyber attacks, the estimated EUR 50 million ($55 million) loss arising from a cyber fraud incident targeting Austrian air parts supplier FACC AG made us sit up and take notice.

As Bloomberg reports here, if the damages do indeed amount to $55 million this would be one of the biggest hacking losses by size.

Bloomberg also points out that the incident is made more intriguing because FACC is 55 percent owned by China-based AVIC.

It will take time for the  details of this attack to emerge, but in a January 20 press release, FACC acknowledged that the target of the cyber fraud was the financial accounting department of FACC Operations GmbH.

The company also noted that its IT infrastructure, data security, IP rights and the group’s operational business are not affected by the criminal activities.

Further, FACC said the $55 million in damage was an outflow of “liquid funds”.

“The management board has taken immediate structural measures and is evaluating damages and insurance claims,” FACC added in its third quarter report.

According to this report by ComputerWeekly.com, the fact that FACC’s financial accounting department was targeted in the fraud is prompting speculation that the company was likely the victim of a so-called whaling attack, also known as business email compromise (BEC) and CEO fraud.

These sophisticated phishing attacks are when cyber criminals send fake email messages from company CEOs, often when a CEO is known to be out of the office, asking company accountants to transfer funds to a supplier. In fact the funds go to a criminal account.

Last year, the Federal Bureau of Investigation (FBI) described BEC fraud as an emerging global threat.

Since the FBI’s Internet Crime Complaint Center (IC3) began tracking BEC scams in late 2013, more than 7,000 U.S. companies have been targeted by such attacks with total dollar losses exceeding $740 million. If you consider  non-U.S. victims  and unreported losses, that figure is  likely much  higher.

The rising incidence of BEC and CEO fraud and its intersection with cyber insurance will form the topic of a future blog post.

Both the WEF Global Risks Report 2016 and the Allianz Risk Barometer 2016 have identified cyber attacks and incidents among the top risks facing business.

Find out more about cyber risks and insurance in the I.I.I. white paper Cyber Risk: Threat and Opportunity.

WEF: Global Risks 2014

Climate change is among the five most likely and most potentially impactful global risks, according to the just-released World Economic Forum (WEF) 2014 Global Risks Report.

The report assesses 31 risks that are global in nature and have the potential to cause significant negative impact across entire countries and industries if they take place.

An analysis of the five risks considered most likely and most impactful since 2007 shows that environmental risks, such as climate change, extreme weather events and water scarcity, have become more prominent since 2011 (see chart above).

This suggests a pressing need for better public information about the potential consequences of environmental threats, the WEF says.

Concern about socio-economic risks such as income disparity, unemployment and fiscal crises has become more prominent over the years.

The report reveals that fiscal crises and structural unemployment and underemployment are among the most impactful risks while the latter also feature among those most likely to occur. This has knock-on effects on income disparities, which is regarded as the overall most likely risk, the WEF notes.

Cyber attacks and the breakdown of critical information infrastructure also feature among the most prominent risks in this year’s report.

The WEF notes:

This arguably reflects the increasing digitization of economies and societies, where rising dependence on information and data, as well as the systems to analyze and use them, has made attacks more likely and their effects more impactful.†

WEF note: Global risks may not be strictly comparable across years, as definitions and the set of global risks have been revised with new issues having emerged on the 10-year horizon. For example, cyber attacks, income disparity and unemployment entered the set of global risks in 2012. Some global risks were reclassified: water supply crises and income disparity were reclassified as environmental and societal risks, respectively, in 2014.

The report is published in collaboration with Marsh & McLennan Companies, Swiss Re, Zurich Insurance Group, National University of Singapore, Oxford Martin School, University of Oxford, Wharton Risk Management and Decision Processes Center, University of Pennsylvania.

WEF: Global Risks 2013

There are many takeaways from the World Economic Forum Global Risks 2013 report  Ã¢â‚¬“ too many for one blog post.

One of this year’s key findings is that the world is more at risk as persistent economic weakness saps our ability to tackle environmental challenges.

The report is developed from a survey of over 1,000 experts from industry, government, academia and civil society who were asked to review a landscape of 50 global risks.

The global risk that respondents rated most likely to manifest over the next 10 years is severe income disparity, while the risk rated as having the highest impact if it were to manifest is major systemic financial failure.

There are also two risks that appear in the top five of both impact and likelihood: chronic fiscal imbalances and water supply crisis.

Unforeseen consequences of life science technologies was the biggest mover among global risks when assessing likelihood, the WEF says, while unforeseen negative consequences of regulation moved the most on the impact scale when comparing the result with last year’s.

The report also introduces three risk cases, based on an analysis of survey results: Testing Economic and Environmental Resilience, Digital Wildfires in a Hyperconnected World and The Dangers of Hubris on Human Health.

Over at the Forum blog, a post titled Global Risks 2013 by numbers offers some revealing facts and figures from this year’s report.

The report is published in cooperation with Marsh & McLennan Cos, Swiss Re, the Wharton Center for Risk Management and Zurich.

WEF: Global Governance Systems Failing

The world is in no position to face new, major shocks, as the financial crisis has reduced global economic resilience and governments lack the capacity to respond, according to the World Economic Forum (WEF).

The warning comes in the WEF’s Global Risks Report 2011, released ahead of the WEF annual meeting in Davos-Klosters, Switzerland, which begins January 26.

Global governance systems are failing to deal with global risks and new systems are needed, the WEF says:

Twentieth century systems are failing to manage 21st century risks; we need new networked systems to identify and address global risks before they become global crises.†

The WEF also warns that economic imbalances and unfunded liabilities contain the seeds of potential future fiscal and financial crises and will require concerted coordinated action to manage them:

Savings and trade imbalances within and between countries are increasingly unsustainable while unfunded liabilities create extreme long-term pressure on fiscal positions. One way out of these imbalances would be coordinated global action but this is challenging given the conflicting interests of different states.†

The report identifies economic disparity as one of the most important risks in the coming decade. Its findings suggest economic disparity is tightly interconnected with corruption, demographic challenges, fragile states, global imbalances and asset price collapse.

According to the WEF, three risk clusters of particular concern are the relationship between illicit trade, crime, corruption and state fragility; a set of interconnected risks tied to water, food and energy; and risks related to global macroeconomic imbalances.

Other top risks identified by the WEF include: cyber-security; demographic challenges; resource security; retrenchment from globalization; and weapons of mass destruction.

Published in cooperation with Marsh & McLennan Cos, Swiss Re, the Wharton Center for Risk Management and Zurich, Global Risks 2011 draws on the insights of 580 leaders and decision makers around the world.