ACE Cautions Firms on Increased Network Risks from Outsourcing

ACE has uncovered a lack of awareness amongst many Europeanbusinesses of the increasing risks which outsourcing poses to theirnetworks. ACE is also aware that there is a degree of uncertaintyamong many businesses, both as to the level of protection given totheir computer systems and the cover provided by their existinginsurance policies.

Shaun Cooper, ACE's senior network risk underwriter, commented:"Outsourcing presents an additional challenge to the security of ITsystems. Outsourcing systems does not mean outsourcing theresponsibilities for maintaining security. Businesses are not onlydealing with their own employees but with those of a third party,often in another country.

"While technology, such as firewalls and anti-virus software, ispart of the solution, technology alone cannot guarantee networksecurity, particularly in an outsourced environment,' continued ShaunCooper. 'Businesses must look to alternatives, including transferringthe risks to insurers, in order to reduce the impact of technologyfailure, human error or criminal activity."

An Economist Intelligence Unit survey in September 2005, sponsoredby ACE, revealed that more than half of the European companies polledhad suffered significant financial damage as a result of IT systemfailure, including damage or misuse of systems, by staff orcontractors, during the previous twelve months. According to ACE,outsourcing computer operations increase still further the risk ofsecurity breaches as responsibility for the protection of the systemcannot be outsourced in the same way.

Last year, the National Outsourcing Association (NOA) issued apress release responding to allegations that staff in an Indian callcentre had sold data on UK financial services customers. While the NOAsaid it was unaware of any trends in security flaws in this type ofoutsourcing practice, it did point out that security should be ofconcern to any company and that they must ensure that offshoreoperations are managed particularly carefully.

ACE's Dataguard Outsourcing Insurance has been specificallydesigned for companies which outsource their IT systems. It aims tofill the insurance 'gap,' offering comprehensive protection againstfinancial loss arising from malicious or accidental incidents tocomputer networks and telecommunications systems. Data and data mediaare protected from accidental or malicious acts, such as systemfailure or a disgruntled employee, at the business' own premises; atother external places of operations (including overseas) as long asthe other company has been authorised to process the data; at externalbackup storage facilities and during data transmission.

'The success and even survival of many businesses today restssquarely on the security and reliability of their technology systems,'said Shaun Cooper. 'Recent problems at outsourced locations onlyhighlight the need for businesses to take a new approach to ITsecurity, an approach combining both physical and technology securitytools with specialised insurance solutions."

Notes to Editors:

For further information please contact:

ACE European Group

Communications: Miles Russell +44 (0) 20 7173 7578 ormiles.russell@ace-ina.com

Network Risk Underwriter: Shaun Cooper +44 (0) 20 7173 7338 orshaun.cooper@ace-ina.com

ACE

The ACE European Group comprises the operations of ACE Europe, ACEGlobal Markets and ACE Tempest Re Group. With an established presencein 16 countries across Europe and Freedom of Services permissions tooperate in 27 European countries, ACE Europe provides a range oftailored Property and Casualty, Accident and Health and Personal Linessolutions for a diverse range of clients. ACE Global Markets (AGM) isACE's specialty international business, underwriting through ACE'sLloyd's Syndicate 2488 and UK registered company ACE European GroupLimited. Specialty lines include excess and surplus lines business,Marine, Aviation, Energy and Political Risk as well as Property,Financial Lines and Accident and Health. Additional information on ACEEuropean Group can be found at www.aceeuropeangroup.com.

The ACE Group of Companies is a global leader in insurance andreinsurance serving a diverse group of clients. Headed by ACE Limited(NYSE:ACE), a component of the Standard & Poor's 500 stock index, theACE Group conducts its business on a worldwide basis with operatingsubsidiaries in more than 50 countries. Additional information can befound at: www.acelimited.com

ACE Dataguard:

ACE's Dataguard product has been specifically designed forcompanies who have a dependency on their computer network. It bridgesthe gaps in cover with traditional policies and provides leading edgeprotection to take away the resulting first party financial loss, lossof network revenue, data reconstruction and company crisis managementcosts.