Kroll Institute Newsletter – September Edition

The Kroll Institute Outlook opens the lens on topics related to risk mitigation, good governance and transparency. Here’s what our Kroll Institute Fellows think you should be paying attention to this month.

Looking Beyond Climate Week and the Leadup to the 2021 UN Climate Change Conference

Megan Greene, Global Chief Economist and Kroll Institute Fellow

• U.S. President Biden announced that the U.S. will double its annual funding to $11.4 billion (bn) to help developing countries cope with climate change. Developed countries have pledged to mobilize $100 bn a year for emerging markets. Thus far, developed countries have widely missed this target. Even if President Biden manages to get Congress’ approval for $11.4 bn in annual funding—not a foregone conclusion given other stimulus legislation on the docket—it is unlikely to bring developed countries up to their $100 bn pledge.
• Meanwhile, Chinese President Xi Jinping vowed to stop building overseas coal power stations. “Consigning coal to history” is one of the express goals of the 2021 UN Climate Change Conference (COP26) president Alok Sharma, and China’s pledge to stop financial support for the construction of coal-fired power plants abroad is a major step in achieving this and generating a consensus around phasing out coal. China currently supports just over half of the coal-fired power plant projects planned outside China and India.
• UN Secretary-General Antonio Guterres warned in a speech during climate week that “climate alarm bells” are “ringing at fever pitch” and that we will experience a “hellscape of temperature rise” if countries do not identify more ways to cut emissions. The Intergovernmental Panel on Climate Change (IPCC) report in August showed temperatures have risen by 1.1 degrees Celsius compared with pre-industrial levels, not far from the 1.5 degrees Celsius goal stated in the Paris Agreement. With COP26 representing the six-year anniversary of the signing of the Paris Agreement, we can expect to achieve a near global adoption of a net zero target by 2050. Current trends suggest this target will be widely missed, and the longer countries wait to make the adjustment, the more abrupt the adjustment will have to be. This could effectively create a supply shock for the global economy, with winners and losers emerging.

Data Breach Outlook

Alan Brill, Kroll Institute Fellow and Senior Managing Director, Cyber Risk

• We continue to see a substantial number of cases in which the encryption of files associated with ransomware has been preceded by the theft of data. Thus, what seems like an incident, which was not an actual data breach is, in fact, exactly that. Understanding the details of an incident with forensic accuracy has become vital.
• Criminal organizations continue to evolve their methods of attack and the malware that they employ. Having access to threat information that can be constantly updated has become a vital part of effective cyber defense.
• Sectors being targeted for attacks include small and medium businesses, healthcare (from medical centers to private medical and dental practices), educational institutions (from K-12 to universities) and state and municipal government agencies.
• Some of the criminal organizations behind ransomware that had apparently shut down have come back online. The situation with ransomware operators is fluid, so we advise not to operate on the basis that the “bad guys” are somehow reformed.
• The costs associated with payments to ransomware gangs is well understood by the insurance community. You should expect that insurance carriers will become more interested in the cyber-defensive operations of insured entities. Making sure that your organization has effective defensive measures in place will, we believe, become increasingly important.
• Read more in our Data Breach Outlook.