Corporate

Book Review: Cyber Risks, Social Media and Insurance

 We live in a world in which rapidly shifting technologies and communications modalities have changed the way we interact and conduct business. These new media and means of interaction have introduced innumerable benefits and efficiencies. Unfortunately, these new alternatives have down sides; among other things, they mean new risks and even liability exposures for both individuals and companies that use them. We are all well aware of what can happen to a company that experiences a major data breach. But the new technologies and communications approaches also introduce a host of other potential business liability risks and exposures.

In the new 2015 edition of their interesting and readable book Cyber Risks, Social Media and Insurance: A Guide to Risk Assessment and Management (here), Carrie CopeDirk E. Ehlers and Keith W. Mandell take a comprehensive look at the new technologies and communications approaches, review the changed liability environment that these new alternatives present, analyze the current state of the insurance marketplace for these various exposures, and make some projections about what may lie ahead.

These days, when anyone is talking about cyber risk and cyber liability, they typically are talking about the risks associated with a data breach. Of course those risks are serious and should be considered and addressed. However, there are so many more sides to the liability risk and exposures that the new technologies and communications approaches have introduced. Companies’ use of social media for advertising, research, and communication introduce a host of concerns. Consider for example a company’s use of a Facebook page to try to develop brand awareness. The interactive features of the Facebook page allow all sorts of opportunities for allegations of the company’s own or it s page’s users’ comments – defamation, copyright infringement, invasion of privacy, and so.

By the same token, employers who use or access social media to monitor or investigate employees and applicants take on a host of other kinds of potential liability risks and exposures. Depending on how the employer approaches these activities, the employer potentially could violate the employees’ or applicants’ privacy rights or impede the employees’ or applicants’ rights under employment laws.

There are innumerable other ways that companies’ use of the new technologies and communications approaches increase their liability risks and exposures. Moreover, these risks and exposures are rapidly evolving as the technologies change and as business practices change. The insurance industry is scrambling to keep up with these exposures and to provide insurance solutions. In addition, the insurance industry itself is encountering its own issues as it uses these new media for its own advertising, underwriting, and business process purposes, which, for a highly regulated industry like the insurance industry, carries its own special set of regulatory risks.  In the midst of all of these changes, it can be difficult to keep track of everything and to develop a useful overview of the landscape as it changes.

This most recent edition of the authors’ book does a laudable job organizing all of these developments into a useful structure. This well-organized book provides a helpful overview of how social media usage has evolved and the ways that companies’ use of these media has changed their liability risks and exposures. The book also reviews the changing cyber risk (that is, the risk of a data breach) environment as well. The book provides a useful overview of the liability disputes that have taken place so far; the insurance industry responses to this evolving liability landscape, as well as the insurance coverage disputes that have arisen along the way; and makes so predictions about where we might be headed next.

Although this book contains a great deal of useful and interesting information, from my perspective, its most useful sections are those talking about the liability risks and exposures associated with individual and business usage of social media. Social media outlets have changed quickly and they way the media are used and the way third-party individuals interact with these media has changed quickly as well. Simply put, there may be liability exposures out there of which many users may be unaware.

This book will be useful and worthwhile for any individual or business trying to better understand their cyber and social media risks and exposures; for any lawyer or other advisor called upon to consult with businesses about their cyber and social media risk exposures; and for any insurance industry participant who needs to understand and counsel others about the particular risks that insurance-related businesses may face in connection with their use of social media. The  book also makes a very useful contribution in its analysis of the potential future exposures associated with developing practices such as “bring your own device to work,” the Internet of Things, as well as from the shift of business practices from desk devices to handheld or mobile devices.

In keeping with the digital world in which we all now increasingly live, this book is available not only in traditional book form but in eBook form as well (both for tablets and for mobile phones). I think many of this blog’s readers will find this book at be a useful and worthwhile resource to have at hand, whether as a desktop reference, or as archived content on a mobile device.

Though comprehensive, the current book is a relatively slim volume. I suspect that if the authors continue to issue updated editions as practices change and case law develops, this book will quickly grow into a very considerable tome.

Many thanks to Carrie Cope for reaching out to me to review the book.

An Amazing Feet Feat: It has been a tough few days for Wolfsburg, Germany. First, Wolfsburg-based Volkswagen with hit with allegations that the company rigged its cars to falsely give the impression its diesel-engine cars met emissions standards. And then on Tuesday in a Bundesliga soccer game between the Wolfsburg team and reigning league champion Bayern Munich, a calamity of a different sort occurred. The Wolfsburg team was actually leading the game, 1-0, at halftime. At the start of the second half, Robert Lewanddowski entered the game as a substitute. What happened next is one of the most amazing things I have ever seen a sporting event. (Note the VW logo on the Wolfsburg players’ jerseys. Sorry about the ad at the beginning of the video, it is short.)