Aon, a global professional services firm, has released its 2024 Intangible versus Tangible Risks Comparison Report, underscoring the need for businesses across Europe, the Middle East, and Africa (EMEA) to reassess their cyber insurance and intellectual property (IP) protection strategies.
This addresses the growing risks linked to generative artificial intelligence (Gen AI) and the rising vulnerability to losses involving intellectual property and intangible assets.
The report presents a detailed analysis of the risks associated with intangible assets, revealing that these assets are significantly more susceptible to losses compared to tangible ones.
It finds that the average Probable Maximum Loss for intangible assets is nearly 43 percent greater than that for tangible assets.
In terms of insurance coverage, there is a contrast: while 60 percent of property, plant, and equipment (PP&E) is insured, only 17 percent of information assets receive similar protection. This insurance gap has remained unchanged over the past two years, despite the rising importance and value of intangible assets and the increasing frequency of major cyber breaches.
Insights from 596 respondents across EMEA underscore this discrepancy in insurance coverage. The survey also highlights that the probability of a major cyber event affecting intangible assets is three times higher than for PP&E.
Yet, despite these elevated risks, many companies are still underinsured for issues such as trade secret theft and intellectual property liability, which could lead to substantial financial exposure.
The report further indicates that 69 percent of businesses in the EMEA region are currently utilising or planning to implement AI products or services.
This widespread adoption of AI could amplify the risk of cyber incidents and present additional challenges related to regulatory compliance. New regulations, such as the European Union’s AI Act, may unintentionally increase the likelihood of legal disputes with copyright holders.
David Molony, Head of Cyber Solutions EMEA at Aon, said: “Cyber insurance has rapidly evolved to address more effectively the key loss drivers associated with cyber events. It offers more favourable coverage and premium pricing for businesses that demonstrate strong cybersecurity practices.
“However, the increasing value of intangible assets, alongside the rise of generative AI, represents a paradigm shift in cyber risk, while the EU’s new AI Act is only likely to introduce more regulatory complexity. Businesses must prepare for these evolving risks and potential liabilities.”
The growing threat posed by generative AI is expected to intensify the scale and impact of cyber-attacks over the next two years.
Generative AI could refine and advance the techniques used by cybercriminals, making it easier for even inexperienced hackers to carry out successful attacks. This trend is anticipated to contribute to a global increase in ransomware threats.
The report notes that only 36 percent of respondents have cyber insurance policies that cover ransomware costs. This leaves a significant number of businesses financially vulnerable to the consequences of cyber incidents.
Molony continued: “The recent global IT outage served as a powerful reminder of the dynamic nature of cyber and technology risks and emphasised the importance of robust business continuity and incident response protocols. It also reiterated the need for a comprehensive cyber insurance policy to mitigate these risks.
“This evolving landscape presents major opportunities for global businesses to rethink their risk strategies,
whether through conventional risk transfer mechanisms or by leveraging capabilities in alternative capital arrangements, such as captives and reinsurance markets.”
