Envelop Risk: Bringing insurance into the age of AI

Jonathan Spry is co-founder and CEO of Envelop Risk. He started the company in 2016. It has its HQ in Bristol, but also operates in London and Bermuda.

It specialises in cyber and emerging risk underwriting for the insurance industry.

After a career in insurance and investment banking, Spry realised there was an opportunity in applying the science of machine learning to the reinsurance industry, especially in the area of cyber-attacks on business.

His technology is now empowering many insurance companies behind the scenes.

So how should British SMEs protect themselves against attacks?

Too many still don’t get “basic cyber hygiene right”, says Spry. Setting up two-factor authentication is one important thing to do. And think about your “correlation of risks”, he advises, as multiple small weaknesses together could collectively create a vulnerability.

Insurers want risks to be mitigated, he points out, so they often offer warranties when good cyber hygiene is put in place.

The number of SMEs with cyber-insurance in place is “less than you might speculate”, says Spry, and usually “in the low teens”. Even some large companies, including retailers, don’t have it in place, he adds.

“Threat actors are the biggest concern”, he says, but his team uses AI to brainstorm “hundreds of thousands” of possible scenarios, covering everything from cloud failures to ransomware gang attacks to so-called Black Swan events.

Their AI modelling also looks at an often-overlooked risk, he says. These are human mistakes, known as “non-malicious cyber-risk”. Catastrophic failure can be a result of incompetence or mistakes in staff training.

The benefits that AI brings “analytically are incredible”, says Spry, and will benefit the consumer by lowering the price of insurance. However, AI also presents challenges, which increase risk for businesses. It can be used inappropriately in professional contexts, chatbots can hallucinate and bad actors can use it to create new “attack vectors” at speed, as well as creating deepfakes to trick people.

“There are clearly risks associated with the turmoil that this can cause for the economy,” says Spry, “in terms of jobs, the job market, the future of work. And I think the insurance industry can help with almost all of that.”

Spry is proud to have his fintech based in Bristol. While London and Cambridge are better known for their tech firms, he points out that Bristol has a “great pedigree” in the defence and aerospace industries, it has GCHQ nearby, Bristol University with a powerful supercomputer and a young, vibrant population to recruit from.