2016 Technology Industry Report

Aon Risk Solutions
U.S. Technology &

Communications
Industry Report
Powered by Aon GRIPSM, February 2016
Risk. Reinsurance. Human Resources.
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Top 10 Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Preparedness for the Top 10 Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Losses Associated with Top 10 Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Projected 2018 Top Five Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Identifying, Assessing, Measuring and Managing Risks. . . . . . . . 10

Identifying & Assessing Major Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Risk Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Risk Management Department and Function . . . . . . . . . . . . . . . 15

Chief Risk Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Risk Management Department. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
External Drivers Strengthening Risk Management. . . . . . . . . . . . . . . . . . . 18
Risk Management Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Risk Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Retentions/Deductibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Limits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Cyber Risk Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Multinational Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Captives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Market Insights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Priorities in Choice of Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Desired Market Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Carrier/Marketplace Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Common Carrier Win Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Common Reasons for Carriers Not Quoting. . . . . . . . . . . . . . . . . . . . . . . . 34
Common Reasons for Rejecting a Carriers Quote. . . . . . . . . . . . . . . . . . . 35
Key Carriers Financials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Financial Insights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Key Contacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Technology and Communications Industry Report
Introduction
In todays global environment, technology and communications companies are facing
increasingly complex challenges: weak and uneven global economic recovery, evolving
regulatory and industry standards, frequent new product introductions, and large-scale
network security breaches, all of which could potentially affect corporate profitability
and, for some, survival. The stakes for the sector are high. With increased scrutiny on
operating efficiencies and a need to constantly innovate to meet mercurial consumer
tastes and demands, it is critical to access accurate and timely information, and
proactively address risk at every level of the organization.
At Aon, our 72,000 colleagues in over 120 countries handle more risk and people issues
on a daily basis than any company in the world. As the leading provider of risk and
human capital solutions, we have an appreciation for the challenges these issues create
and the opportunities that can be unlocked if they are identified and addressed.
We believe in the power of data and analytics to provide insight in this era of greater
complexity and are committed to leveraging our unmatched global network to provide
leading organizations with business intelligence.
Aons 2015 Technology and Communications Industry Report provides comprehensive,
industry specific data on key issues and concerns. These findings allow organizations
to benchmark their risk management and risk financing practices against those of their
peers and help identify practices or approaches that may improve the effectiveness of
their own risk management strategies.
If you have any comments or questions about the survey, or wish to discuss the findings
further, please contact your Aon account executive.
Best regards,
Eric Boyum
National Practice Leader
Technology Practice
Aon Risk Solutions
eric.boyum@aon.com
1.303.639.4120
Executive Summary
In the age of information overload, the technology and
communications industry is facing a barrage of data about
their customers, but many are struggling to make sense of the
Current and projected top risks

Risk readiness and losses
information, and figure out how to capitalize on it. Aon aims to
Techniques utilized to identifying and assessing major risks
bridge this gap. It is Aons belief that information and analytics
Organizational risk maturity
will be the way to complement and supplement the knowledge

base of our clients, enabling them to understand the risks and
Risk management department and function

Risk financing
succeed.
As part of our efforts to help companies stay abreast of emerging
issues and learn what their peers are doing to manage risks and
capture opportunities, we have compiled this report, which
is based on Aons 2015 Global Risk Management Survey and
Cyber risk coverage

Multinational programs
Captives
contains some detailed facts and analyses on the technology and
Market insights
communications sectors. Topics in the report include:
Financial insights
Key Findings
Topic
Key Finding
Top 10 risks
Increasing competition is ranked as the most challenging risk for the technology and communications sectors. Second on
the list is damage to reputation/brand, followed by failure to innovate and meet customer needs. Given the recent highprofile cyber attacks, it is not surprising that computer crime/ hacking /viruses /malicious codes has jumped in ranking,
from number eight in Aons 2013 survey to number five this year.
Risk preparedness for the top 10 risks
In comparison with that of 2013, overall readiness for the top 10 risks has decreased slightly by two percent to 65
percent. Preparedness for two closely inter-related risks - business interruption, and computer crime/hacking/viruses/
malicious codes and technology /system failure have experienced the greatest percentage changes, jumping from 73
percent in 2013 to 92 percent in 2015, and from 72 percent to 92 percent respectively. Economic slowdown has seen
the largest decrease in readiness, from 63 percent to 26 percent.
Losses associated with top 10 risks
On average, reported loss of income from the top 10 risks has decreased from 49 percent in 2013 to 24 percent in
2015. Increasing competition and technology/system failure top the list of income losses related to the most cited risks
in the past 12 months, at 56 percent and 42 percent respectively. The reduction in losses can also be attributed to the
fact that corporate leadership is taking a more proactive role in managing risks.
Projected 2018 top five risks
The ranking for the top five risk concerns in the next three years remains the same as this years - increasing
competition, damage to reputation/brand, failure to innovate/meet customer needs, failure to attract and retain top
talents, and computer crime/hacking/viruses/malicious codes.
Identifying and assessing

major risks
Board and/or management discussion of risk during annual planning, risk assessment or other processes is cited as the
method most often used by surveyed organizations to identify major risks facing their organizations (67 percent), and
senior management judgment and experience the most cited for assessing major risks at 57 percent.
Risk maturity
The Aon Risk Maturity Index (RMI) includes a variety of questions concerning risk management practices, corporate
governance and management decision processes. Overall, an organization can rate at a maturity level ranging from
initial (1) to advanced (5). The technology industry sample set includes over 50 organizations to date, with an
average risk maturity of a 2.5 or basic to defined. This is in line with the current global average that represents
all industries.
Chief Risk Officer
About 17 percent of technology and communications respondents report having a CRO whose duties
include risk management.
Risk management department
Seventy-six percent of technology and communications respondents have indicated that they have a formal risk
management department. Ninety-three percent of organizations over $1 billion have a risk manager. Those with an
in-house risk management department typically maintain a staff of one to five people.
Key Findings
Topic
Key Finding
External drivers strengthening

risk management
Cyber threat environment (51 percent), pressure from customers (39 percent) and increased focus from regulators
(31 percent) are the most important external drivers strengthening risk management for the technology and
communications industry.
Risk management budget
Forty-one percent of respondents say their risk management spend/resources over the next 12 months remains the
same while 29 percent have indicated a marginal or significant planned increase.
Retentions/deductibles
The majority of organizations have not changed their retentions from the prior policy period. Three lines have registered
the most changes in retention levels: general liability (14 percent), director and officers liabilities (13 percent), and
properties (12 percent).
Limits
Technology and communications respondents say the most commonly purchased umbrella/excess liability limit
stands at USD100 million and the average limit purchased for all surveyed companies totals USD113 million. Similar
to umbrella/excess liability, directors and officers liability limits purchased by publicly traded technology and
communications companies are in direct proportion to a companys revenue size. The highest limit purchased stands at
USD655 million, while the lowest limit purchased was USD1 million.
Cyber risk coverage
About 40 percent of respondents say their companies have purchased cyber insurance coverage, and 17 percent plan
to purchase this coverage. Among companies that have purchased cyber insurance coverage, the majority feel that the
terms and conditions, and the liability limits are sufficient and effective to manage their exposures (at 83 and 67 percent
respectively).
Multinational programs
In the survey, half of technology and communications respondents with operations in more than one country have
indicated that their corporate headquarters control procurement of all of their global and local insurance programs
while 38 percent say their corporate headquarters purchase some lines and leave local offices to handle. General
liability, property, and directors and officers liability coverage continue to be the lines of business most frequently
purchased on a multinational basis.
Captives
About 13 percent of technology and communications respondents have reported having an active captive or Protected
Cell Company (PCC), with nine percent also indicating a plan to create a new or additional captive or PCC in the next
three years. Product liability and completed operations, professional indemnity/Errors and Omissions and Property are
the most frequently underwritten lines of coverage within a captive, all at 71 percent.
Priorities in choice of insurer
Ability to execute and deliver risk finance support proximate to global locations is cited by technology and
communications respondents as the top criterion in an organizations choice of insurers, followed by coverage terms
and conditions.
Desired market changes
Respondents are looking for broader coverage/better terms and conditions, along with more flexibility in underwriting,
coverage, pricing; and recognition of investments in internal risk management efforts through lower premiums.
Common carrier win reasons
When it comes down to selecting a carrier, the most common win reason is incumbent relationship.
Common reasons for

carriers not quoting
The most common reasons for a carrier not providing a quote for casualty/liability, automobile liability, workers
compensation, financial lines and property are: terms and conditions, underwriting concerns and pricing.
Common reasons for

rejecting a carriers quote
The reason most often given by clients for rejecting a carriers quote is inferior pricing.
Financial insights
The share prices of information technology have outperformed the Russell 3000 and S&P 500 Indexes since August
2014 while telecommunication had weaker results when compared to both indexes. The technology sector has less
employment issues than the overall industry and communications sector. In terms of annual revenue change, the
Russell 3000 Index has outperformed the technology sector nine of the last ten quarters. If you look at the aggregate
asset size of the 500 largest US technology and communications companies since 2009 you will observe an upward
trend in total assets and an average year on year growth rate of 10.6 percent.
Aon Risk Solutions
Top 10 Risks
Top 10 Risks
In Aons 2015 Global Risk Management Survey, respondents are
When comparing with the ranking of various risks in the 2013
provided a list of 53 risks and asked to select 10 that they believe
survey, we have noted that computer crime/ hacking/viruses /
to be the top risks facing their own industries and organizations.
malicious codes has jumped from number eight to number
Increasing competition is ranked by the technology and
five. New technologies such as cloud computing, social media,
communications sectors as the most challenging risk. Second
mobile devices and big data analytics have helped companies
on the list is damage to reputation/brand, followed by failure to
achieve profits and reach operational goals. However, these same
innovate and meet customer needs.
businesses face an increasingly diverse and sophisticated array of
Competition, central to the operation of markets, fosters

innovation, productivity and growth. At the same time,
increasing competition can also eat away a companys market
threats to the security of their information management systems.

Each time the industry develops or adds a new feature to a
system, the chance of cyber risks rises.
share and end a business. Increasing competition presents an
Each year, the security industry strives to protect companies
acute risk for the technology and communications companies,
with new potent tools, but a new crop of hackers emerges with
which face tougher anti-monopoly rules, competition from
more damaging cyber attack techniques. At the same time,
foreign suppliers of basic communications services, rapidly
users careless online behavior will continue to create exploitable
changing technology, fast-evolving regulatory and industry
opportunities for hackers or directly result in security breaches.
standards, frequent new product introductions, and price and
As hackers and anti-hackers remain locked into a fierce arms race,
cost reductions. While larger business organizations may be able
survey participants expect the risk to be a top risk concern three
to fend off higher amounts of competition than smaller ones
years from now.
with limited resources, all organizations, regardless of size, see

competition as a priority risk.
The Center for Strategic and International Studies, a well-known
If we break down the technology and communications group
cyber crime and economic espionage to the world economy
further to sub-categories, well see that the communications
runs as high as USD 445 billionor almost one percent of global
sector sees damage to reputation/brand as a number one risk.
income. The average time to resolve a cyber attack is also rising,
This could be attributed to a long list of well-known companies,
climbing to 45 days, up from 32 days in 2013. As cyber crimes are
which saw their reputation affected by unexpected incidents
becoming more rampant, more costly, and more time consuming
customer services snafus, privacy concerns, inappropriate
to resolve, businesses are faced with an increased possibility of
remarks or behavior by company executives and large-scale data
legal exposure, reputation damage, and operational interruption
breaches. In an age of 24-hour news cycles and instant social
that can wreak havoc on their bottom line.
media, crisis could spread globally within hours or minutes.

As a result, reputation, which was categorized by experts as
priceless or an intangible asset, is becoming increasingly
Washington think tank, has estimated that the annual cost of
Similar to the prior survey, our study findings highlight the

interdependency among many of the top risks. For example, a
pricey, exerting a direct impact on the companys bottom line.
cyber attack causes disruption to business and IT operations and
For the technology sector, where the lifetime of products
will dent a businesss competitiveness, making it harder to attract
continues to shrink, the race to market has intensified and
and maintain top talents. Lack of talents stunts a companys
consumer needs are fickle, failure to innovation/meet customer
ability to stay competitive in a tough business environment. The
needs pose as the number one risk.
list goes on. This interdependency between risks illustrates that
a business disruption leads to damage to reputation/brand, which
organizations can no longer evaluate risk in isolation but must

consider their interconnectedness.
Aon Risk Solutions
Top 10 Risks
Technology and Communications Industry 2015 Top 10 Risks

Rank
Technology & Communications Sectors
Technology
Communications
Increasing competition
Failure to innovate/meet customer needs
Damage to reputation/brand
Regulatory/legislative changes
Failure to attract or retain top talent
Economic slowdown/slow recovery
Computer crime/hacking/viruses/malicious codes
Loss of intellectual property/data
Directors & Officers personal liability
Loss of intellectual property/data
Merger/acquisition/restructuring
Technology failure/system failure
Technology failure/system failure
Distribution or supply chain failure
Distribution or supply chain failure
Business interruption
10
Data Source: Aons 2015 Global Risk Management Survey

Note: Where ranking for a risk was tied, the all respondent ranking was utilized to determine what risk would be ranked higher
Risk Readiness for the Top 10 Risks

Risk readiness refers to the level of a companys risk preparedness
have received from stakeholders, one would expect a dramatic
undertaking a formal review of risks and putting in place a
uptick in the percentage point. The situation may indicate that
comprehensive risk management plan. In comparison with that
insurance markets solutions have not been responsive to key
of 2013, overall readiness for the top 10 risks has decreased
risk sensitivities and that it is important to manage risk from an
slightly by two percent to 65. The results fall below expectation.
enterprise perspective.
Given the attention and scrutiny that risk management practices
Top 10 Risks
Risk Readiness for the Top 10 Risks Technology and Communications Sector
2015 Risk Readiness
2013 Risk Readiness
66%
Increasing
competition
68%
53%
Damage to
reputation/brand
62%
58%
Failure to innovate/
meet customer needs
75%
Failure to attract or
retain top talent
62%
70%
92%
Computer crime/hacking/
viruses/malicious codes
73%
26%
Economic slowdown/
slow recovery
63%
74%
Loss of intellectual
property/data
65%
64%
Regulatory/
legislative changes
60%
92%
Technology failure/
system failure
72%
64%
Distribution or supply
chain failure
58%
0%
20%
40%
60%
80%
100%
Despite the slight decline in overall risk readiness, two closely
In a field, where the lifetime of products continues to shrink, and
related risks - computer crime/hacking/viruses/malicious codes
consumer needs are fickle, failure to innovation/meet customer
and technology failure/system failure, have registered the
needs is posing an increasingly significant risk. Only 58 percent
highest percentage of risk readiness, both at 92 percent. The
say their organizations are ready for the risk of failure to innovate
rising preparedness is probably driven by heightened media and
and meet customer needs, a whopping 17 percent decrease
public scrutiny after a series of high-profile computer hacking and
from that in 2013. The percentage of readiness for economic
system failure incidents.
slowdown/slow recovery has slipped from 63 in 2013 to 26 due

to the improvement of overall economic conditions worldwide.
Aon Risk Solutions
Top 10 Risks
Losses Associated with Top 10 Risks

On average, reported loss of income from the top 10 risks has
Once again, topping the list of income losses relating to the most
decreased from 49 percent in 2013 to 21 percent in 2015. All
cited risks in the past 12 months are increasing competition at 56
but one of the top risks for the technology and communications
percent. The second on the list is technology failure/system failure
sectors have registered a decrease in losses in the past 12 months
at 42 percent.
with damage to reputation / brand experiencing the greatest

decrease of 39 percent. The reduction in losses can also be
attributed to the fact that corporate leadership is taking a more
proactive role in managing risks.
Losses Associated with Top 10 Risks Technology and Communications

2015 Loss of Income
56%
Increasing
competition
67%
5%
Damage to
reputation/brand
44%
37%
Failure to innovate/
meet customer needs
50%
24%
Failure to attract or
retain top talent
46%
8%
Computer crime/hacking/
viruses/malicious codes
43%
32%
Economic slowdown/
slow recovery
74%
16%
Loss of intellectual
property/data
39%
18%
Regulatory/
legislative changes
49%
42%
42%
Technology failure/
system failure
5%
Distribution or
supply chain failure
35%
0%
Data Source:: Aons 2015 Global Risk Management Survey
2013 Loss of Income
20%
40%
60%
80%
100%
Top 10 Risks
Projected 2018 Top Five Risks

When asked to project the top five risk concerns in the next three
Respondents in the communications sector see damage to
years, technology and communications respondents have listed
reputation as the top concern. This could be driven by several
increasing competition, damage to reputation, failure to innovate
high-profile incidents which have happened to well-known
and meet customer needs, failure to attract or retain talent, and
companies over customer service snafus, privacy concerns,
computer crime/hacking/viruses/malicious codes. Their rankings
inappropriate remarks or behavior by company executives and
remain the same as this years.
data breaches. Second on the list is regulatory and legislative
Interestingly, the technology sector breakout shows failure to

innovate/meet customer needs and increasing competition
two closely related risks - are listed as the top two projected risk
changes, to which the industry has been highly exposed.

Regulatory and legislative changes makes a fundamental impact
on corporate profits.
concerns. If one examines the recent list of technology companies

that have failed or suffered losses - Nextel, GT Advanced
Technologies, and OLED Technology and Solutions, one will note
that fierce competition and failure to innovate/meet customer
needs are key elements that have contributed to
their fall.
Projected 2018 Top Five Risks Technology and Communications Sectors

Rank
Technology & Communications
Technology
Communications
Computer crime/hacking/viruses/
malicious codes
malicious codes
malicious codes

Note: Where ranking for a risk was tied, the All respondent ranking was utilized to determine what risk would be ranked higher
Aon Risk Solutions
Identifying, Assessing,
Measuring and Managing Risk
10
Identifying, Assessing, Measuring and Managing Risk
Identifying & Assessing Major Risks

Risk identification and assessment give an organization a clear view
Risk experts have long recommended that organizations tackle
of the potential internal and external obstacles it needs to manage
current and emerging risks with a structured enterprise-wide
and overcome, and the opportunities on which it can capitalize.
risk identification and assessment process. Overall, 45 percent of
A sound assessment enables leaders to define the companys risk
surveyed companies utilize a structured enterprise-wide method
appetite and tolerance, and fashion an effective response to risk. In
to identify risks, while 37 percent use this process to assess their
todays global environment, risks are evolving fast and becoming
risks. In practice, a majority of respondents are using two or more
more volatile and complex. Risk managers can no longer rely on
methods for identifying and assessing.
one method. They have to cultivate a comprehensive process to

identify and assess current and emerging risks.
Board and/or management discussion of risk during annual
When asked to assess and rate their organizations preparedness to
and communications respondents as the method most often used
identify, assess, and manage current and emerging risks, surveyed
to identify (67 percent) and senior management judgment and
technology and communications companies have achieved an
experience for assessing (57 percent) major risks facing
average score of 6.78 out of 10.
their organizations.
planning, risk assessment or other processes is cited by technology
Identification of Major Risks

Technology &
Communications
Technology
Communications
Structured enterprise-wide risk identification process
45%
50%
35%
Board and/or management discussion of risk during annual

planning, risk assessment or other processes
67%
64%
74%
Senior management judgment and experience
55%
55%
57%
Risk information from other function-led processes (e.g.

internal audit, disclosure, compliance, etc.)
55%
50%
65%
Industry analysis, external reports
39%
41%
35%
4%
5%
4%
Technology &
Communications
Technology
Communications
Structured enterprise-wide risk assessment process supported

by a standard toolkit and methodology
37%
39%
35%
Board and/or management discussion of risk during

annual planning, risk assessment or other processes
49%
50%
48%
Senior management judgment and experience
57%
61%
48%
Risk modeling / risk quantification analysis
33%
30%
39%
Consult with external service provider/advisor
33%
36%
26%
Other
4%
2%
9%
Category
Other
Assessment of Major Risks

Category
Aon Risk Solutions
11
Risk Maturity
The Aon Risk Maturity Index (RMI) includes a variety of questions
concerning risk management practices, corporate governance and
management decision processes. Overall, an organization can rate
at a maturity level ranging from initial (1) to advanced (5).
The technology and communications industry sample set includes
over 50 organizations to date, with an average risk maturity of a
2.5 or basic to defined. This is in line with the current global
average that represents all industries. We typically observe
Developing capabilities to identify, assess and prioritize risks

across the organization
Developing capabilities to analyze risk consistently, but
approach may be primarily qualitative
Developing capabilities for monitoring existing risk exposure
across the organization
Informal and inconsistent consideration of risk and risk
organizations at the defined level to be:
management information in decision making

Developing understanding of Enterprise Risk Management
(ERM) and its application
12
1.5
3
2.5
3.5
4.5
Aon Risk Maturity Index
Distribution of Risk Maturity Ratings (October 2015)
25%
21.1%
19.6%
20%
14.5%
14.0%
15%
11.2%
10.6%
10%
5%
4.6%
3.7%
0%
0.6%
1.5
2.5
3.5
4.5
Initial
Initial to
Basic
Basic
Basic to
Defined
Defined
Defined to
Operational
Operational
Operational
to Advanced
Advanced
Identification of Major Risks

All Organizations (900+ Organizations Globally)
Developing capabilities to identify, assess and prioritize risks across the organization
Developing capabilities to analyze risk consistently, but approach may be primarily qualitative
Developing capabilities for monitoring existing risk exposure across the organization
Informal and inconsistent consideration of risk and risk management information in decision making
Developing understanding of Enterprise Risk Management (ERM) and its application
Technology (53 Participants Globally)

Developing capabilities to identify, assess and prioritize risks across the organization
Inconsistency in risk management practices or approaches across the organization (i.e., silos)
Limited capabilities for monitoring existing risk exposure across the organization
Informal and inconsistent consideration of risk and risk management information in decision making
Developing understanding of Enterprise Risk Management (ERM) and its application
Aon Risk Solutions
13
Technology and communications organizations as a group appear
Specifically, over 60 percent of less mature organizations rarely
to have especially strong practices related to risk management
or never collaborate with their strategic partners to identify
stewardship, and are more mature in their ability to integrate risk
potential emerging risks, while over 86 percent of more mature
insights into human capital processes. In particular, they are likely
organizations collaborate on an ad-hoc basis, if not more
to have the most transparency around their risk communications.
consistently through a defined process. In an increasingly
The technology and communications industry tends to score

lower in areas related to the use of quantification methods to
understand risk. In addition, technology and communications
of collaboration outside of just an internally-focused risk

identification process.
companies seem to have the lowest level of involvement of key
There also appears to be a notable difference between how
stakeholders in risk management strategy setting. In particular,
organizations measure and track risks once identified. Based
they seem less mature with formally collecting and incorporating
on our research, not only do more mature organizations have
risk information into the decision making process.
processes in place to identify risks at an enterprise level, but
One section of the RMI is dedicated to best practices regarding

identification of existing and emerging risks. When it comes to
these practices, there are a few interesting differences between
those organizations at lower levels of risk maturity (2.5-) and
higher levels of risk maturity (3.5+).
14
interconnected world, this difference illustrates the importance
they are also more than twice as likely to follow through with
implementing, measuring, and tracking risk management
activities to completion.
Risk Management
Department and Function
Aon Risk Solutions
15
Risk Management Department and Function
Chief Risk Officer

Thirty-one percent of technology and communications
include insurance/ hazard risk. About 61 percent of participants
respondents report having a CRO. The responsibilities of a CRO
say they do not have a CRO nor do they plan to create one. They
vary from company to company and industry to industry. Often,
choose instead to leverage existing teams and use risk committees
CROs are given the tasks including managing credit risk, market
for driving change.
risk, regulatory risk and compliance risk, which may or may not
Chief Risk Officer

Technology &
Communications
Technology
Communications
All
Yes, but this role does not include

risk management
14%
16%
9%
11%
Yes, this role includes risk management
17%
16%
17%
17%
No, but we are considering

creating this position
5%
2%
9%
8%
No, and we do not plan to create

such a position
61%
63%
57%
59%
Dont know
5%
2%
9%
5%
Role
Data Source: 2015 Global Risk Management Survey
Risk Management Department

The growing importance and visibility of risk management
Among organizations with a risk management department, 66
have led to the increasing integration of such functions with an
percent say their risk management department reports to the
organizations strategic plan. To succeed in todays competitive
Finance/Treasury/Chief Financial Officer. In the case where no
and heavily regulated business environment, companies have
formal risk management department exists, 32 percent say their
gradually come to the realization that they have to incorporate
CFO handled risk management.
risk management into all aspects of their operations.

Seventy-six percent of technology and communications
respondents have indicated that they have a formal risk
management department, slightly higher than the average
(71 percent) for companies across all industries. If we look
further at this group by organizations over $1 billion we can see
organizational size plays a significant role. Ninety-three percent
of organizations over $1 billion have a risk manager.
16
Those with an in-house risk management department typically

maintain a staff of one to five people (82 percent).
Formal Risk Management/Insurance Department/Function

Yes
No
Yes
No
24%
24%
76%
76%
Number of People In Your Risk Management/Insurance Department/Function

1-2
3-5
6-8
9-11 1-2 Over 12

3-5
10%
6-8
9-11
Over 12
10%
4%
4%
4%
4%
41%
41%
41%
41%
Aon Risk Solutions
17
External Drivers Strengthening Risk Management (past two years)

Cyber threat environment (51 percent), pressure from customers
with that in the recently released Aon-sponsored 2015 Global
(39 percent), and increased focus from regulators (31 percent)
Cyber Impact Report. Compiled by the Ponemon Institute, the
are the top external drivers strengthening risk management
study shows that cyber is one of the fastest growing risks for
for the technology and communications industry. Cyber threat
companies across the globe, and that information technology
environment has displayed the greatest deviation from the
assets are 39 percent more exposed than property assets on a
all industry average for external drivers strengthening risk
relative value to insurance protection basis.
management, being 28 percent higher. The result corresponds
External Drivers Strengthening Risk Management Technology and Communications (past two years)
51%
Cyber threat
environment
22%
28%
Demand from investors

for greater disclosure
and accountability
20%
27%
Economic volatility
37%
12%
Exposure from
suppliers/vendors
15%
18%
Globalization
11%
31%
Increased focus
from regulators
38%
13%
Large third party

liability losses/litigation
18%
16%
17%
Natural weather events
12%
Other
8%
9%
Political uncertainty
15%
27%
Pressure from
competitors
21%
39%
Pressure from
customers
26%
0%
Random acts
of violence
2%
18%
18%
Risk events/black
swan events
16%
15%
Workforce issues
0%
18
All
15%
30%
45%
60%
Risk Management Budget

Risk management is a process by which business risks are
Change in Risk Management Budget in Next 12 Months
identified, analyzed, engineered, reduced, eliminated

or transferred. In recent years, the tougher regulatory
environment and fast evolving risk landscape are profoundly
No,
decrease
No, stay
the same
Unsure
Yes,
marginally
Yes,
significantly
changing the way an organization manages its risks. The board

of directors and senior executives are under increasing pressure
4% 4%
from various stakeholders to maintain effective oversight of

risk management. At the same time, theres been a rising
interest in risk management as a competitive advantage both
in decision-making (tackling the risk the organization wants or
29%
needs to take, and planning accordingly) and event response
41%
(crisis management and business continuity). Such heightened

attention might have driven an organizations increase in risk
management spend.
In the Aon 2015 Global Risk Management Survey, 33 percent of
22%
technology and communications respondents have indicated

a marginal or significant planned increase in risk management
spend/resources over the next 12 months. We would prefer to
see this as a very positive trend following years of declining risk

management budgets. Only four percent of respondents say
they are planning for a decrease in risk management spend.
Aon Risk Solutions
19
Risk Financing
20
Risk Financing
Retentions/Deductibles
The majority of organizations have not changed their retentions
of directors and officers liability have gone up across the board
from the prior policy period. When a change does occur, its
in recent years, with publicly traded companies especially
normally an increase due to an organizations rising exposure to
affected. This is largely due to the increase in litigations filed by
natural catastrophe risk, an adverse loss experience, or the desire
shareholders, employees, competitors or government agencies
to control premium spend.
against senior leaders as well as the large number of mergers and

acquisitions - nearly all M&A transactions involving publicly traded
General liability, and directors and officers liability have
companies resulted in at least one lawsuit.
experienced the most changes in retention levels, at 14 percent

and 13 percent respectively. Its worth noting that the prices
Changes in Retentions/Deductibles
Lower
Workers
compensation
General liability
Products liability
(if separate)
89%
6%
Auto / motor
vehicle liability
(not physical damage)
3%
85%
Professional indemnity/
errors and omissions
3%
92%
5%
0%
9%
90%
8%
Directors &
officers liability
Property
14%
85%
6%
Higher
6%
80%
7%
Same
3%
13%
6%
83%
20%
40%
12%
60%
80%
100%
Aon Risk Solutions
21
Risk Financing
Limits
Umbrella/Excess Liability
When an organization considers what level of risk to transfer via
In the 2015 survey, technology and communications respondents
insurance policies, it has to take into account multiple factors.
say the most commonly purchased limit amounts to USD 100
These include: risk severity, risk mitigation measures already
million and the average limit purchased for all surveyed companies
in place or under consideration, the regulatory landscape, an
totals USD 113 million. The level of limits purchased stands in
organizations historical trend of loss activities, the insurance
direct proportion to a companys revenue size - a larger company
marketplace and its appetite for risk. The choice made by one
with a higher profile could represent a bigger target for legal
individual organization may not work for another. Consideration
actions. As the Chinese saying goes: a tall tree catches most of
must always be given to the impact of that loss retention on an
the wind.
organizations ability to achieve its objectives.
Umbrella/Excess Liability Limits

Revenue
Minimum
1st Quartile
Average
Median
Mode
3rd Quartile
Maximum
All
$4,000,000
$50,000,000
$113,350,877
$100,000,000
$100,000,000
$125,000,000
$700,000,000
$1M-$500M
$4,000,000
$10,500,000
$32,272,727
$25,000,000
$50,000,000
$50,000,000
$100,000,000
$500M-$1B
$10,000,000
$24,000,000
$44,000,000
$25,000,000
$24,000,000
$62,500,000
$100,000,000
$1B-$5B
$25,000,000
$50,000,000
$90,500,000
$100,000,000
$100,000,000
$100,000,000
$200,000,000
$5B-$15B
$75,000,000
$100,000,000
$171,875,000
$125,000,000
$100,000,000
$225,000,000
$350,000,000
Over $15B
$5,000,000
$125,000,000
$237,545,455
$175,000,000
$150,000,000
$262,500,000
$700,000,000
Data Source: Aons 2015 Global Risk Management Survey and other Aon proprietary databases
Directors and Officers Liability

Similar to the umbrella/excess liability, directors and officers
companys revenue size. The highest limit purchased stands at
liability limits purchased by publicly traded technology and
USD 655 million, while the lowest limit purchased USD 1 million.
communications companies are in direct proportion to a
S&P Technology and Communications Sector

Market Cap
Minimum
1st Quartile
Average
Median
3rd Quartile
Maximum
All
$1,000,000
$35,000,000
$102,582,645
$65,000,000
$130,000,000
$655,000,000
$1M-$100M
$1,000,000
$5,000,000
$11,718,750
$12,750,000
$15,500,000
$30,000,000
$20,000,000
$25,000,000
$45,714,286
$35,000,000
$60,000,000
$120,000,000
$500M-$1B
$5,000,000
$50,000,000
$90,153,846
$70,000,000
$130,000,000
$230,000,000
$1B-$5B
$10,000,000
$60,000,000
$86,470,588
$75,000,000
$121,250,000
$200,000,000
Over $5B
$20,000,000
$125,000,000
$212,857,143
$200,000,000
$270,000,000
$655,000,000
$100M-$500M
Data Source: The Aon Financial Services Group
22
Risk Financing
Cyber Risk Coverage

In the Aon-sponsored 2015 Global Cyber Impact Report (the
While a cyber attack often causes disruption to business and IT
research was conducted by the Ponemon Institute), we have found
operations, catastrophic cyber losses can also result in potential
that cyber is one of the fastest growing risks for companies across
directors and officers liability allegations. In the wake of
the globe as mobile technologies, cloud computing, corporate
numerous publicly reported material incidents in 2015, cyber
bring-your-own-device policies, and big data analytics are
insurance gross written premium is forecast to grow at the
becoming increasingly popular. About 37 percent of companies
same time insurance carriers are limiting capacity, coverage and
surveyed experienced a material or significantly disruptive
raising premiums for certain industry classes, such as large retail,
security exploit or data breach one or more times during the past
healthcare and financial institutions.
two years and the average economic impact of the event was
USD 2.1 million.
In the face of more frequent contractual insurance requirements
Given the proliferation of internet-connected devices, which
forward-thinking companies are taking proactive steps to
are expected to grow from 10 to 50 billion within five years,
explore and transfer cyber risks. Underwriting and purchasing
cyber risk is expected to skyrocket. On average, probable
of cyber insurance process can assist to:
maximum loss of tangible assets amounts to USD 648 million and

probable maximum loss on intangible assets USD 612 million.
But, organizations buy insurance to cover just over half of the
maximum probable loss of property, plant and equipment, and
only 12 percent of the probable maximum loss of information
for cyber liability and potential shareholder derivative actions,
Satisfy customer and partner cyber insurance

contract requirements
Stabilize balance sheet
assets.
Address regulatory (including SEC) guidelines
Organizations need to consider cyber assets and exposures in
Reduce Total Cost of Risk
the context of financial statement impact compared to historical

tangible assets and exposures. According to a sobering new
report from FireEye, on average 96 percent of computer systems
across all industry segments have been breached. Yet, the
Verizon 2015 Data Breach Investigations Report only shows
Enable organization-wide cyber risk management culture

Align cyber insurance solution with Enterprise
Risk Management
confirmed data loss in less than three percent of the almost
Finally, despite the growth of cyber insurance sales,
80,000 incidents reported. As far as financial impact
initial insurance carrier denials of 2015 cyber insurance
is concerned, 80 percent of incidents result in less than
claims re-emphasize the critical importance of negotiated
USD 1 million in total cost and indemnity, 15 percent in losses
customized coverage the devil is in the details.
between USD 1 million and USD 20 million, and five percent

in losses over USD 20 million. Identification, quantification,
mitigation, incident response plans and risk transfer are some
of the key issues in macro-level enterprise risk management.
Aon Risk Solutions
23
Risk Financing
Cyber Risk
No coverage
Property
1st Party Privacy/Network Risks
Physical damage to data only
Virus/hacker damage to data only
Denial of service attach
B.I. loss from security event

Extortion or threat
Employee sabotage of data only
3rd Party Privacy/Network Risks
Theft/disclosure of private info.

Confidential corporate
info. breach
Technology E&O
Media liability
(electronic content)
Privacy breach
expense/notification
Damage to third-partys
data only
Regulatory privacy defense/fines
Virus/malicious code
transmission
* For reference and discussion only.
24
General
Liability
Crime/Bond
K&R
Limited coverage
Professional
Indemnity
Coverage
Cyber
Risk Financing
In Aons 2015 Global Risk Management Survey, 40 percent of
Purchase of Cyber Insurance
respondents say their companies have purchased cyber insurance

coverage, and 17 percent plan to purchase this coverage. If
we separate the results by sector, 46 percent of technology
companies have not purchased cyber insurance versus 37 percent
for communications. About 21 percent of respondents in the
communications industry plan to purchase cyber insurance.
The following activities by these industries may result
in more risk exposure, and have led to higher take up
rate. This probably explains the difference in purchasing
patterns for technology and communications industries.
Storing and disseminating personal information
A high degree of dependency on electronic processes or
computer networks
Technology &
Communications
Technology
Communications
Insurance
currently
purchased
40%
39%
42%
Not
purchased
and no
plans to
purchase
43%
46%
37%
Plan to
purchase
17%
14%
21%
Category
Among companies that have purchased cyber insurance
Engagement with vendors, independent contractors or

additional service providers
coverage, 83 percent of respondents feel the terms and
Regulatory compliance
percent of communications companies say they are effective).
PCI Security Standards/Plastic Card Security compliance
conditions are effective to manage their exposures (100

However, respondents are less satisfied with the liability limits,
with over one third expressing concern over the adequacy of
Contingent bodily injury and property damage that may

result from cyber incidents
their limits carried.
Operation reliant on critical infrastructure (Personally

Identifiable Information risks are less prominent for industries
such as utilities, manufacturing and logistics)
Effectiveness of Current Cyber Insurance
Intentional acts by rogue employees

SEC Cyber Disclosure Guidance of 2011.
Technology &
Communications
Technology
Communications
Yes
83%
73%
100%
No
17%
27%
0%
Category
Adequacy of Limits For Cyber Insurance

Technology &
Communications
Technology
Communications
Yes
67%
64%
71%
No
33%
36%
29%
Category
Aon Risk Solutions
25
Multinational Programs
26
Multinational Programs
Globalization continues to be a consistent theme for companies
General liability and property coverage continue to be the lines
pursuing improved operational results. As such, risk managers
of business most frequently purchased on a multinational basis.
need to focus on larger geographic spread while addressing
However, there have been a dramatic increase in the number of
variations in regulatory controls, exposures, available solutions,
respondents purchasing multinational programs for directors
and options for optimal risk finance program design.
& officers liability (86 percent), workers compensation and
Looking at control and placement of multinational risks, half of the

technology and communications respondents with operations
in more than one country have indicated that their corporate
headquarters control procurement of all of their global and local
employers liability (54 percent) and auto/motor vehicle liability.

These upticks may be attributable to the continued need for
certainty of coverage and costs, all of which could drive the
decision to purchase multinational programs.
insurance programs while only 38 percent purchase some lines

and leave local offices to handle other lines.
Multinational Insurance Purchasing Habits
Types of Multinational Insurance Coverages Purchased
Technology &
Communications
All
Corporate headquarters controls

procurement of ALL insurance
programs (global/local)
50%
45%
Corporate headquarters controls

some lines and leaves local office
to purchase other lines
38%
No, each operation buys its own

insurance with no co-ordination
from corporate headquarters
13%
Category
44%
11%
Data represents respondents operating in more than one country

Importance to Multinational Program Purchase Decision

Technology &
Communications
All
Certainty of Coverage Knowledge of what coverage

is included in the program
Cost - This approach is

more economical
Statutory Compliance -Access to

local admitted coverage where
non-admitted is prohibited
Fiscal Compliance - Ability

to pay insurance premium
and related taxes
Program Performance - Access to

local claims and/or other services
from local insurer/policy provider
Accounting - Ability to allocate risk

transfer costs to local operations
vs. pay from corporate
Category
Technology &
Communications
All
General Liability/Public Liability
89%
81%
Property (property damage

and business interruption)
79%
79%
Directors & Officers Liability
86%
73%
Marine/Ocean Cargo
46%
49%
Workers Compensation/
Employers Liability
54%
48%
Auto/Motor Vehicle Liability
50%
42%
Crime
61%
42%
Product Recall and Contamination
11%
18%
Trade Credit
25%
17%
Other
11%
11%
Category


Aon Risk Solutions
27
Captives
28
Captives
Organizations in all industry groups and geographies continue
Survey results demonstrate that product liability and completed
to use captive insurance companies as an effective way to
operations, professional indemnity/errors and omissions liability,
take financial control and manage risks. About 22 percent of
and property (property damage and business interruptions)
technology and communications respondents have reported
are the most frequently underwritten lines of coverage within a
having an active captive or Protected Cell Company (PCC) with
captive, at 71 percent respectively. For other surveyed industries,
four percent also indicating a plan to create a new or additional
general third-party liability and property are the most frequently
captive or PCC in the next three years.
underwritten lines. Continuing the theme of strategic risk
Even though the insurance market continues to be challenged

with soft rates and low interest rates, an appetite for captive
management, warranty risk is cited with the greatest growth

potential in the next five years within captive entities.
utilization still exists. Aons survey shows that technology and

communications companies use captives predominantly as a
strategic risk management tool (64 percent) that facilitates greater
control over their risk program, particularly around policy terms
and conditions.
Organizations with a Captive or PCC

Category
All
Plan to create a new or additional captive or PCC in the next 3 years
9%
6%
Currently have an active captive or PCC
13%
18%
Have a captive that is dormant / run-off
2%
2%
Plan to close a captive in the next 3 years
2%
1%
Aon Risk Solutions
29
Captives
Current and Future Coverage Underwritten

Technology &
Communications

Continue/plan to underwrite
same/new risk in next five years
Percentage
change
Auto Liability
14%
13%
-2%
Aviation
0%
0%
0%
Catastrophe
43%
50%
7%
Credit/Trade Credit
0%
25%
25%
Crime/Fidelity
14%
13%
-2%
Cyber Liability/Network Liability
29%
50%
21%
Directors & Officers Liability
29%
25%
-4%
Employee Benefits (Excluding

Health/Medical and Life)
29%
38%
9%
Employers Liability/Workers Compensation
14%
50%
36%
Employment Practices Liability
14%
38%
23%
Environmental/Pollution
0%
13%
13%
Financial Products
14%
25%
11%
General/Third Party Liability
57%
63%
5%
Health/Medical
14%
38%
23%
Life
29%
38%
9%
Marine
14%
25%
11%
Product Liability and Completed Operations
71%
63%
-9%
Professional Indemnity/Errors and

Ommissions Liability
71%
75%
4%
Property (Property Damage and Business

Interruption)
71%
63%
-9%
Terrorism
29%
38%
9%
Third-Party Business
43%
50%
7%
Owner Controlled Insurance Program/

Contractor Controlled Insurance Program
14%
13%
-2%
Sub-contractor default insurance
0%
0%
0%
Warranty
0%
50%
50%
Coverage
30
Market Insights
Aon Risk Solutions
31
Market Insights
Priorities in Choice of Insurer

Technology and communications respondents rate ability to
It is interesting to note that the ranking of value for money/price,
execute and deliver risk finance support proximate to global
and claims services & settlement, two of which topped the list in
locations as the top criterion in an organizations choice of
the 2013 survey, have been dramatically downgraded to number
insurers. This is due to the fact that 77 percent of the surveyed
six and number seven this year. These changes could be attributed
organizations operate in more than one country (64 percent of the
to improved economic conditions worldwide. During a recession,
respondents say they have operations in more than six countries).
if an insurance carrier does not fulfill its promise or there is a long
For companies with multinational operations, it is a priority to
delay in reimbursement, the organizations operations and balance
partner with local firms that understand the specific business and
sheet could be adversely affected. In the worst case scenario,
regulatory conditions, and write policies to meet compulsory
such delay or failure to pay could bankrupt a business. More
insurance requirements.
importantly, the change in ranking has a lot to do with stricter

regulations in foreign countries where the surveyed organizations
An insurance policy is only as broad as the terms and conditions
operate. In an effort to meet local regulatory requirements,
that make it up. When an organization purchases an insurance
an insurers ability to execute and deliver risk finance support
policy, it expects to be compensated in the event of a covered
proximate to global locations trumps claims services & settlement
loss. This explains why respondents cite coverage terms and
and value for money.
conditions as the second priority in an organizations choice

of insurer.
Priorities in Choice of Insurer

Technology &
Communications
Technology
Communications
All
Ability to execute and deliver risk finance support

proximate to global locations
Coverage terms and conditions
Long-term relationship
Flexibility/innovation/creativity
Financial stability/rating
Claims service & settlement
Value for money / price
Capacity
Industry experience
Speed and quality of documentation
10
10
10
10
Category
32
Market Insights
Desired Market Changes

When asked what changes technology and communications
Its a clear indication that organizations are expecting their insurers
organizations would most like to see in the insurance market,
to offer broader terms and more flexible solutions for meeting risk
the majority of respondents desire:
management objectives as they are coping with new risk

and challenges.
Broader coverage/better terms and conditions (67 percent)

More flexibility - underwriting, coverage, pricing (64 percent)
Recognition of investments in internal risk management efforts
through lower premiums (44 percent)
Desired Market Changes

All
67%
Broader coverage/better
terms and conditions
64%
Recognition of
investments in internal
risk management efforts
through lower premiums
44%
50%
24%
Increased capacity
22%
More flexibility
(i.e. underwriting,
coverages, pricing)
64%
65%
27%
More sophisticated
claims information
technology (IT) systems
31%
27%
Streamline/innovate
underwriting process
30%
Improved documentation
accuracy and timeliness
(policy issuances and
endorsement processing)
38%
37%
36%
32%
More product innovation

More globally compliant and
consistent coverage across
multinational programs
42%
29%
5%
4%
Other
0%
20%
40%
60%
80%
100%
Source: 2015 Global Risk Management Survey
Aon Risk Solutions
33
Market Insights
Top Carriers by Premium Volume U.S. (Alpha Order)

Top Carriers by Premium Volume U.S. (alpha order) Aon GRIPSM , provides insights into carrier/marketplace participation for casualty/
liability, automobile liability, workers compensation, financial lines and property. These data are based on Aon placements only.
Casualty/Liability
Automobile
Workers Compensation
Financial Lines
Property
Ace
Ace
Ace
AIG
Ace
AIG
AIG
AIG
Beazley
AIG
Alleghany
Liberty Mutual
CV Starr
Chubb
Berkshire Hathaway
Swiss Re
MS & AD
Travelers
XL
FM Global
Travelers
Travelers
Zurich
Zurich
Zurich
* For a Property/Casualty Package AIG, Ace, Chubb and Zurich are the top market
Data Source: Global Risk Insight Platform
Common Carrier Win Reasons

When it comes to selecting a carrier, the most common win reason cited is incumbent relationship, or taking a boxing metaphor, it is
you need to knockout the champ.
Casualty/ Liability
Automobile
Financial Lines
Property
Incumbent relationship
Pricing
Pricing
Pricing
Pricing
Pricing
Favorable coverage terms
Coverage/capacity not
available elsewhere
Structured portfolio
solution
Global presence and

network capabilities
Global presence and

Financial strength
of carrier
Global presence and

available elsewhere
available elsewhere
Structured portfolio
solution
Flexibility in response to
client needs
Common Reasons for Carriers not Quoting

According to Aon GRIPSM , the most common reasons for a carrier not providing a quote for casualty/liability, automobile liability, workers
compensation, financial lines and property are: terms and conditions, underwriting concerns and pricing.
34
Market Insights
Common Reasons for Rejecting a Carriers Quote

The reason most often given by clients for rejecting a carriers quote is inferior pricing.
Casualty/ Liability
Automobile
Financial Lines
Property
Inferior pricing
Inferior pricing
Inferior pricing
Inferior pricing
Inferior pricing
Incumbent offer
accepted
Incumbent offer
accepted
Incumbent offer
accepted
Incumbent offer
accepted
Inferior terms &

conditions
Inferior terms &

conditions
Perceived weakness
Perceived weakness
Inferior terms &

conditions
Incumbent offer
accepted
Perceived weakness
Inferior terms &

conditions
Inferior terms &

conditions
Claims paying
reputation
Top Technology and Communications Carriers Financial Strength Rating

A number of rating agencies estimate and publish the financial
A.M. Best and Standard & Poors. All of the insurers below
position of insurance companies, including A.M. Best, Standard
currently carry ratings considered to be secure. Ratings can
& Poors, Moodys Investors Service, and Fitch Ratings. For
change at any point in time and should be regularly track to
this review, we have provided an overview of ratings for key
assure they continue to meet industry standards.
technology and communications markets as assigned by
Carrier
A.M. Best Rating
A.M. Size
A.M. Best Outlook
S&P Rating
S&P Outlook
Ace
A++u
XV
Negative
AA
Negative
AIG
XV
Stable
A+
Stable
Alleghany
A+
XIII
Stable
Stable
Beazley
VIII
Stable
NR
NR
Berkshire Hathaway
A++
XV
Stable
AA+
Watch -Negative
Chubb
A++u
XV
Negative
AA
Negative
CV Starr
XIV
Stable
NR
NR
FM Global
A+
XV
Stable
A+
Stable
Liberty Mutual
XV
Stable
Stable
MS & AD
A+
XV
Stable
Stable
Swiss Re
A+
XV
Stable
AA-
Stable
Travelers
A++
XV
Stable
AA
Stable
XL
XV
Stable
A+
Positive
Zurich
A+
XV
Stable
AA-
Stable
Ratings as of 12/23/15
Data Source: A.M. Best Reports through BestLink for all statutory filing data and S&P
Reports for the S&P categories. CV Starr rating is Starr Indemnity & Liability Company.
Alleghany rating is RSUI Indemnity.
Aon Risk Solutions
35
Financial Insights
36
Financial Insights
Using August 2014 as a starting point, the share prices of
than the overall industry and communications sector. In terms of
information technology have outperformed the Russell 3000
annual revenue change, the Russell 3000 Index has outperformed
and S&P 500 Indexes while communications had weaker results
the technology sector nine of the last ten quarters. If you look
when compared to both indexes. If we compare employment
at the aggregate asset size of the 500 largest US technology
numbers for the technology and communications industry and
and communications companies since 2009 you will observe an
the overall non-farm sectors in the same time period, we can see
upward trend in total assets and an average year on year growth
that of technology sector have had fewer employment issues
rate of 10.6 percent.
Market Performance of Technology Sector
Market Performance of Technology Sector
120
S&P 500S&P Information TechnologyS&P 500 Telecumication Russell 3000
115
110
105
100
95
90
85
80
Aug-14
Sep-14
Oct-14
Nov-14
Source: Bloomberg
Dec-14
Jan-15
S&P 500
Feb-15
Mar-15
S&P 500 Informa.on Technology
Source: Bloomberg
Apr-15
May-15
Jun-15
S&P 500 Telecommunica.on Services
Jul-15
Aug-15
Russell 3000
% Annual Employment Change
% Annual Employment Change
Total Non-Farm EmploymentTechnology EmploymentTelecommunications Employment
4%
2%
0%
-2%
-4%
-6%
Jul-15
May-15
Jan-15
Mar-15
Nov-14
Jul-14
Sep-14
May-14
Jan-14
Mar-14
Nov-13
Jul-13
Sep-13
May-13
Jan-13
Mar-13
Nov-12
Jul-12
Sep-12
May-12
Jan-12
Mar-12
Nov-11
Jul-11
Sep-11
May-11
Jan-11
Mar-11
Nov-10
Jul-10
Sep-10
May-10
Jan-10
Mar-10
Nov-09
Jul-09
Sep-09
May-09
Jan-09
Mar-09
Nov-08
Jul-08
Sep-08
May-08
Jan-08
-10%
Mar-08
-8%
Source: Bloomberg
Source: Bloomberg
Total Non-Farm Employment
Technology Employment
Telecommunications Employment
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Financial Insights
Annual % Revenue Growth
Annual % Revenue Growth

Russell 3000 500 Largest US Tech Companies by Market Cap
12%
10%
8%
6%
4%
2%
Q2'15
Q1'15
Q4'14
Q3'14
Q2'14
Q1'14
Q4'13
Q3'13
Q2'13
Q1'13
0%
-2%
Source: Bloomberg
Russell 3000
500 Largest US Tech Companies by Market Cap
Source: Bloomberg
Total Assets (BN USD) - 500 Largest US Technology & Communications Companies
Total Assets
YoY Growth
14%
3000
12%
2500
8%
1500
6%
1000
4%
500
2009
Source: Bloomberg
38
2010
2011
2012
2013
2014
YoY% Growth
Total Assets (USD Billions)
10%
2000
Contacts
Technology and
Communications
Eric Boyum
National Practice Leader
Technology Practice
Aon Risk Solutions
eric.boyum@aon.com
1.303.639.4120
Aon Inpoint
George M. Zsolnay IV
Analytics Manager
Aon Client and Business Analytics
george.zsolnay@aon.com
1.312.381.3955
For Media and

Press Inquires
Cybil Rose
Kemper Lesnick
cybil.rose@kemperlesnick.com
1.312.755.3537
Aon Risk Solutions
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About Aon
Aon plc (NYSE:AON) is a leading global provider
of risk management, insurance brokerage and
reinsurance brokerage, and human resources
solutions and outsourcing services. Through its
more than 72,000 colleagues worldwide, Aon unites
to empower results for clients in over 120 countries
via innovative risk and people solutions. For further
information on our capabilities and to learn how
we empower results for clients, please visit:
http://aon.mediaroom.com.
Aon plc 2016. All rights reserved.
The information contained herein and the statements expressed are of
a general nature and are not intended to address the circumstances of
any particular individual or entity. Although we endeavor to provide
accurate and timely information and use sources we consider reliable,
there can be no guarantee that such information is accurate as of the
date it is received or that it will continue to be accurate in the future.
No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
www.aon.com
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Aon Risk Solutions

U.S. Technology &

Risk. Reinsurance. Human Resources.

Identifying, Assessing, Measuring and Managing Risks. . . . . . . . 10

Risk Management Department and Function . . . . . . . . . . . . . . . 15

Technology and Communications Industry Report

Current and projected top risks

information, and figure out how to capitalize on it. Aon aims to

Techniques utilized to identifying and assessing major risks

bridge this gap. It is Aons belief that information and analytics

Organizational risk maturity

will be the way to complement and supplement the knowledge

Risk management department and function

Cyber risk coverage

contains some detailed facts and analyses on the technology and

communications sectors. Topics in the report include:

Risk preparedness for the top 10 risks

Losses associated with top 10 risks

Projected 2018 top five risks

Identifying and assessing

Chief Risk Officer

Risk management department

Technology and Communications Industry Report

External drivers strengthening

Risk management budget

Cyber risk coverage

Priorities in choice of insurer

Desired market changes

Common carrier win reasons

Common reasons for

Common reasons for

Aon Risk Solutions

Technology and Communications Industry Report

In Aons 2015 Global Risk Management Survey, respondents are

When comparing with the ranking of various risks in the 2013

provided a list of 53 risks and asked to select 10 that they believe

survey, we have noted that computer crime/ hacking/viruses /

to be the top risks facing their own industries and organizations.

malicious codes has jumped from number eight to number

Increasing competition is ranked by the technology and

five. New technologies such as cloud computing, social media,

communications sectors as the most challenging risk. Second

mobile devices and big data analytics have helped companies

on the list is damage to reputation/brand, followed by failure to

achieve profits and reach operational goals. However, these same

innovate and meet customer needs.

businesses face an increasingly diverse and sophisticated array of

Competition, central to the operation of markets, fosters

threats to the security of their information management systems.

share and end a business. Increasing competition presents an

Each year, the security industry strives to protect companies

acute risk for the technology and communications companies,

which face tougher anti-monopoly rules, competition from

more damaging cyber attack techniques. At the same time,

foreign suppliers of basic communications services, rapidly

users careless online behavior will continue to create exploitable

changing technology, fast-evolving regulatory and industry

opportunities for hackers or directly result in security breaches.

standards, frequent new product introductions, and price and

As hackers and anti-hackers remain locked into a fierce arms race,

cost reductions. While larger business organizations may be able

survey participants expect the risk to be a top risk concern three

to fend off higher amounts of competition than smaller ones

years from now.