The evolution of risk for digital media

Sian Rolfe Media Practice Manager UK & Ireland Chubb

The media industry is dealing with an increasing array of threats as technology transforms the sector. Chubb's Siân Rolfe explains why brokers need to constantly review policy offerings to make sure the demands of multi-channel/ multi-platform clients are met.

Digitalisation has transformed the media industry beyond recognition in the last 20 years. The development and almost ubiquitous use of smart phones in particular has meant that many people are almost permanently online and “consumption” is more than just habitual  - it has become ingrained in the very fabric of our lives. This technological shift has driven a relentless demand for new content.

The media industry has responded by traversing a fine line between meeting these non-stop expectations while facing pressures to align their business models with increasing digitalisation, ever-changing online privacy laws and the omnipresent threat of a cyber attack or data breach.

An industry unprepared: data and privacy.
A survey earlier this year by PWC revealed that data and IP theft are among the top threats media companies face today. These cyber risks are significant because an attack or breach can damage, severely, both the reputation and revenues of a business.

This was exemplified in 2015 when four episodes of HBO’s Game of Thrones were leaked prior to official release. Over the course of seven days, they were downloaded from filesharing sites many millions of times. In 2017, HBO was targeted again, with hackers leaking sensitive company information.

Three years earlier, Sony Pictures experienced a similar highly-damaging attack which exposed embarrassing emails, personal details and data about some of the world’s biggest movie stars and threatened the release of a new film. The bottom line? Media companies must ensure they are appropriately covered for cybersecurity risk, as the sheer volume of data they possess becomes an increasingly attractive target for criminals.  

Data misuse and privacy concerns are a significant area of risk exposure, particularly since the introduction last year of the General Data Protection Regulation (GDPR) In January this year, Google was fined €50m (£42.7m) by the French data regulator CNIL, for “lack of transparency, inadequate information and lack of valid consent regarding ads personalisation”.

The social media giant Facebook was last year embroiled in a data misuse scandal where personal information of millions of users was shared without their permission. The reputational damage to the brand and the business was considerable with the share price impacted and some users deleting their accounts.

It culminated in an appearance by the company’s CEO Mark Zuckerberg before a US Senate hearing. As new legal frameworks continue to define how customer data can be used, the need for media companies to have adaptive, up to date coverage for data and privacy-based exposures is paramount.

Blurring boundaries
Digitalisation and advances in technology have had a significant impact on more “traditional” media, creating both threats and opportunities. As print sales continue to decline for most national newspapers and magazines, new online distribution models have developed.

In certain areas, this has resulted in a de-escalation of some traditional risks. Online publications can correct errors easily without the costly need to reprint. Digital content creation and design software do not expose employees to the risks associated with manual printing presses.

By contrast, the 24-hour news cycle has opened up new potential liabilities. An exhaustive demand for content coupled with changing supply chains, outsourcing and the more widespread use of freelancers has altered editorial control and the associated dependencies.

As an example, consider how Facebook and Twitter play a key role in how news media is disseminated and distributed. Almost 30% of Buzzfeed’s traffic comes through maintaining a constant presence on social media. Consequently, the associated risk exposure is also high, and even trivial mistakes, such as failure to secure the adequate permissions for a photograph, for example, can prove costly.

Defamation is a risk endemic to the media industry but that risk has risen sharply in the last decade particularly with material published through social media and “new media” news websites. Subsequent legal battles as a result of this have brought into question the responsibilities of the media industry. This in turn brings into focus legislative discrepancies around national and international jurisdictions.

The specific nature of these risks, particularly those to do with professional indemnity, highlights the importance of insurance coverage that can contend with some of the main perils within the ever-changing nature of the media landscape. Policy offerings, therefore, require constant review, and specialist understanding is also needed to conceptualise the multi-channel and multi-platform demands of clients.

As new digital technologies challenge industry traditions and norms, the need for media-specific propositions will continue to grow. From broadcasters to publishers and producers, the stakes surrounding successful risk management strategy have never been higher.


Siân Rolfe is, media practice manager, UK and Ireland, Chubb

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