The cyber risk outlook report released by global insurer Allianz Commercial has highlighted a concerning trend of increasing cyber claims over the past year. This surge in claims is primarily attributed to a rise in data and privacy breach incidents, with two-thirds of large losses involving these elements. The report reveals that the frequency of large cyber claims exceeding €1 million in the first half of 2024 saw a 14% increase, while severity rose by 17%.
One significant emerging risk trend identified in the report is the impact of artificial intelligence (AI) on data breach exposures. AI has the potential to amplify these risks in the future, as it enables greater processing of personal data and serves as a powerful tool for cyber threat actors. The growing adoption of AI across various sectors, including technology, healthcare, finance, and retail, has raised concerns about data privacy and security.
The rapid expansion of AI applications for tasks such as data processing, predictive analysis, and surveillance has led to an increased collection of personal, health, and biometric data. This proliferation of data, combined with the complex nature of AI technologies, poses risks related to data privacy and security. Unauthorized access, data breaches, and privacy law violations are some of the potential consequences of poorly managed AI systems.
As companies and public bodies increasingly rely on AI for various functions, they must address the risks associated with AI technology. Establishing robust data governance practices, implementing stringent security measures, and ensuring compliance with privacy regulations are crucial steps in mitigating these risks. Companies must also adopt ethical AI practices, such as addressing algorithmic bias and incorporating privacy considerations into AI system design.
The evolving regulatory landscape around AI, exemplified by the EU’s AI Act and AI Liability Directive, underscores the need for companies to navigate complex compliance requirements. Different AI applications carry varying degrees of risk, with consumer-focused applications posing higher data privacy risks than administrative AI functions. Privacy-preserving AI techniques, such as federated learning and differential privacy, offer avenues to minimize data privacy breaches and uphold individuals’ privacy rights.
Overall, the Allianz Cyber Risk Trends Report emphasizes the importance of balancing the benefits of AI with the need to safeguard data privacy and security. By adopting proactive measures to address AI-related risks, companies can harness the potential of AI while upholding privacy principles and regulatory requirements. For a comprehensive overview of the report, readers are encouraged to access the full Allianz Cyber Risk Trends Report for 2024.