Fortune 1,000 firms in the insurance and health care and technology sectors top the list of industry groups most concerned about cyber threats, according to a new report by Willis North America, a unit of Willis Group Holdings, the global risk advisor, insurance, and reinsurance broker.

The Willis Fortune 1000 Cyber Disclosure Report 2013 is the second in a series of reports examining U.S. public companies filings in response to U.S. Securities and Exchange Commission guidance issued in 2011 that asked U.S. listed firms to provide extensive disclosures on their cyber exposures. For this report, Willis expanded the scope of the review to a wider pool of companies, focusing on the Fortune 1,000 while examining the responses of various industry groups.

The report found that among the Fortune 501-1,000, 22 percent remained silent on cyber risk. “The reason for this may be as companies get smaller, they see themselves as less likely targets of an attack, or it may be that smaller companies needed more time to identify their cyber exposures,” according to the Willis report.

Commenting on the firms that remained silent, Ann Longmore, executive vice president, FINEX, Willis North America, and co-author of the report, cautioned, “This is concerning because the view that firms may see themselves as less likely targets of an attack runs contrary to our experience, and, in fact, many of these firms are sitting at the center of the bull's eye.”

The report also divided the Fortune 1,000 into 20 industry groups to compare the disclosures of each risk, weighing the scope of the risk; how the exposure would manifest; and what protections were being employed to mitigate the risk. With respect to “perceived risk,” the report found that health care was the industry most concerned about cyber risk, closely followed by the technology, insurance, telecom, life science, and retail sectors. Meanwhile, real estate, financial services funds, conglomerates, and the energy and mining sectors expressed the least concern for cyber risk.

Other key findings included:

  • The top three cyber risks identified by the Fortune 1,000 included: privacy/loss of confidential data, reputation risk, and malicious acts.
  • Cyber terrorism and intellectual property risks ranked lower than expected among the Fortune 1,000 given the focus of the federal government on these areas of risk and their importance to the health of the U.S. economy overall.
  • When describing the “extent” of cyber risk exposures, financial institutions and technology companies rose to the top of the list disclosing distinct cyber exposures. Meanwhile, firms in the energy and utility sector reported the fewest distinct exposures.
  • In evaluating loss control measures, the industry groups that disclosed the greatest number of technical protections against cyber risk, including firewalls, intrusion detection, and encryption, included the technology, health care, professional services, and financial institution sectors. Within financial services firms, insurance companies referred to technical risk protection 63 percent of the time.
  • With respect to cyber insurance protection, the funds sector (33 percent) followed by utilities (15 percent), the banking sector and conglomerates (14 percent) reported the greatest levels of insurance. Insurance and technology sectors both disclosed the purchase of insurance coverage at the 11 percent level. However, the report indicated that many companies may be under-reporting the level of cyber insurance coverage based on Willis data and other industry data indicating higher take up rates, particularly for the health care sector.
  • The disclosure of actual cyber events remained at one percent, a seemingly low number given the number of attacks that appear in the press on a regular basis, the report said.

“Action taken at the U.S. federal level clearly shows that cyber-security disclosure is high on the federal agenda and will continue to pose a unique challenge for public companies,” said Chris Keegan, senior vice president for national resource errors and omissions and e-risk for Willis North America and a co-author of the report. “Government authorities may require companies to step out of their comfort zone for disclosure in order to bolster IT security for the entire U.S., opening up greater liability to directors and officers in the process,” he said.

Willis' study also featured examples of cyber disclosures to demonstrate both the level of detail and lack of detail supplied to the SEC; tracked actions by the U.S. federal government to stem rising cyber exposures; and featured commentary by Willis' cyber and executive risk professionals.

The study is on-going and the next issue will feature separate, in-depth industry reports on unique cyber disclosures of the Fortune 1,000 subgroupings. An upcoming webinar series will present the survey results in more detail and consider the impact both on directors and officers and cyber liability insurance.

The Willis Fortune 1000 Cyber Disclosure Report for 2013 can be downloaded here: http://blog.willis.com/cyber-disclosure-fortune-1000-2013.

Learn more: www.willis.com.