A strategic cornerstone of Zurich Commercial Markets is the study of businesses in vertical categories in order to build superior expertise within each vertical. That means going into fine detail about each grouping of vendors, products and processes—and assessing relevant risks. To extend this strategy forward, there is a Zurich team charged with incubating new business categories. It examines emerging sectors with the goal of being first to market with appropriate consulting expertise and insurance programs.
That activity was intensified recently by a proprietary study into the fast-changing conditions and new business developments of the post-recession era. “Interestingly, the categories where we saw the biggest opportunity—agriculture, manufacturing, health care and energy—don’t sound particularly futuristic,” says Craig Fundum, President of Zurich Commercial Markets. “Where we perceive dynamism is in the new technologies that will reshape commercial activity, versus what we’re used to.”
Big data and cloud computing have emerged less as commercial categories than as game-changing technologies. For industries of all types, they represent extraordinary upside, but also daunting challenges. “Big data and cloud computing are compelling prospects to Zurich, and have been for some time,” says Fundum. “If you are geared toward harnessing and processing information to help create customer value, the idea of unlimited storage and hosting, plus data management at the greatest possible scale, is obviously of great interest.”
For Zurich, as a source of business guidance, supersizing data sets is a clear path forward. It is through these combined—and therefore massive—runs of related data that otherwise undiscoverable patterns come to light. From those patterns come ever greater competencies in predictive analytics. “We look to always improve our ways of tracking and forecasting risk for customers and industries,” says Fundum. “Operationally, there are also better and richer ways of knowing how our customers are conducting business, interacting with their customers and managing their outcomes overall,” he adds.
Along with dramatic IT upgrades, big data and cloud computing bring two separate tiers of risk. One is the normal competitive risk—the problem of adopting new tools at a drawn-out pace even as rivals move more quickly. A second risk stems from the exponentially greater vulnerability to errors, misuse and wrongdoing that arises when data expands in volume geometrically. In IT, server-sharing as a new normal only seems to further imperil data security. “For any organization managing big data or using shared storage and hosting,” says Fundum, “comes the potential of security and accessibility challenges.”
A risk manager always strives to identify and understand vulnerabilities. These are often specific to an insured customer, but they can also be highly systemic or skewed toward a sizable network of at-risk entities. In such cases, Zurich risk engineers will take steps to make known the nature of the vulnerabilities and risks. For example, Zurich took significant measures to explain in advance of Superstorm Sandy the specific hazards it posed to East Coast businesses and organizations.
Conversion to these technologies also raises questions of business continuity and reputational risk. Zurich doesn’t approach those imperatives with any less intensity, despite the scaled-up nature of big data as an IT mainstay. “Our process or preference is to build an integrated business continuity plan,” Fundum explains, “one that takes in a variety of negative scenarios and ensures that the business can continue operating to the degree that customer retention and cash flow don’t become extreme problems.” That’s true whether the threat is traditional storm clouds—or the metaphorical cloud containing terabytes of valuable and potentially vulnerable business data.