As digital risk accelerates, insurers are being forced to rethink product design in response to threats that are increasingly complex and interconnected. From cyber outages and platform failures to systemic dependencies that can trigger losses across markets within minutes, it is reshaping what insurers value, moving the focus away from scale and towards resilience as a core measure of performance.
Resilience is now the defining test of product credibility in insurance — and many digital products currently fail that test because they were designed for scale, not failure.
“Resilient products have to stand up to what is happening in real time,” says senior insurance executive Douglas Robare. “You cannot analyze AI-driven exposures with analog processes. You are not fighting with equivalence.” For Robare, this shift demands a different starting point for product design, one that begins with how and where failure is most likely to occur, rather than relying on historical loss constructs that no longer reflect how digital risk actually propagates.
Redefining Resilience Beyond Traditional Risk Thinking
Historically, insurance products were built around identifiable perils and discrete events. Digital risk has upended that logic. Failures now cascade across systems, geographies, and counterparties simultaneously. Product resilience must start with failure modes rather than historical loss scenarios. Many digital insurance products are, in effect, well-engineered answers to the wrong problem — optimised for efficiency under normal conditions, but brittle when systems behave abnormally, which is precisely when insurance is supposed to work.
The challenge is not simply technological speed, but organisational friction. Many products still carry layers of non-value-adding processes that slow response precisely when immediacy matters most. “Product resilience means getting rid of superfluous activity and focusing solely on what the product is intended to do,” Robare says. “In a digital risk environment, responsiveness is not optional.” Products that cannot respond at pace quickly become obsolete, leaving non-responsive designs exposed when stress hits, like dinosaurs waiting for a comet to come.
The Hidden Vulnerabilities Inside Digital Insurance Products
Modern digital insurance products project confidence through sophisticated data, algorithms, and automation. However, this can create an illusion of understanding. Model-driven products are frequently dependent on third-party data, external signals, and shared infrastructure, introducing vulnerabilities that are not always visible at design stage.
One of the most significant risks lies in hidden concentration exposure. Unlike traditional insurance, where accumulation was constrained by geography, digital concentration has no natural boundaries. “Those concentration exposures can be virtually everywhere at the same time,” Robare says. Platform failures in cyber and cloud environments have already demonstrated how quickly losses can materialise across markets.
Recent cloud and platform outages have shown that accumulation no longer respects geography, policy limits, or portfolio segmentation. A single dependency can simultaneously impair thousands of insureds, leaving insurers exposed not to isolated claims, but to synchronised loss events that traditional accumulation models were never designed to absorb.
Another weakness is behavioural. Product designers often assume rational behaviour under stress and stable system performance. In reality, digital risks evolve faster than human decision-making. Products are built in reaction to past events, raising the risk that they fail to address the next shock. This creates what Robare describes as a concertina effect, where markets contract, expand, and contract again after each disruption.
Governance compounds the problem. “Governance is always underwritten last — and when it is missing, technology simply accelerates failure,” he says. While controls and technology are scrutinised, decision rights and accountability often remain invisible until something breaks.
Governance as an Enabler, Not an Obstacle
“The best governance is silent,” Robare says. “It sits behind the organisation, defining the guardrails and making deviations visible when they occur.” When governance is embedded early, teams move faster because they understand the boundaries and their fiduciary responsibility to capital.
Robare frequently returns to a simple principle: capital follows clarity. Whether an early-stage company raising venture funding or an insurer launching a new digital product, credibility is built through clearly articulated processes, accountability, and risk ownership. “You are a guardian of that capital,” he says. “If you demonstrate that seriousness, you earn trust.”
This approach also shapes culture. Retrofitting governance after a failure rarely works and often appears disingenuous. Resilience must be embedded into the organisational mindset from the outset rather than bolted on after failure, reinforcing the old maxim that culture eats strategy for breakfast.
Leadership and the Trust Equation
Ultimately, resilience is a leadership responsibility. If leadership treats resilience as secondary, short-termism quickly permeates product strategy and decision-making. Insurance remains a trust-based business, even as technology transforms its delivery. Embedding resilience signals to clients, regulators, and investors that the organisation understands both its obligations and its exposures.
“What is more important than building trust and building resilience?” Robare asks.
As digital risk continues to blur the boundaries between technology, insurance, and capital, that question becomes unavoidable. Insurers that embed resilience into product design, governance, and leadership will earn trust and attract capital. Those that do not may discover that credibility, once lost, cannot be retrofitted.
Follow Douglas Robare on LinkedIn or visit his website.
