Voice over internet protocol (VoIP) has become a popular way for a tech-savvy society to conduct calls over the internet. By using this method, rather than the public telephone network, companies and individuals can benefit from reduced communication and infrastructure costs, the ability to transmit more than one call over a single broadband connection and location independence. The security of VoIP is in question, however. A recent report issued by Emerson Development states that "the unprotected internet-based telephone services are expected to produce major insurance losses."  

The report highlights how the technology's recent rise in popularity has caused a shift from the reliable and secure traditional telephone network to an "internet environment of extreme risk." Just as the information of users is at risk with each boot up of a computer, users of VoIP will be at risk from hostile acts such as spying, hacking, intrusion, identity and intellectual property theft and interruption of service.

At risk are a growing number of insured sectors that rely on VoIP, including the government, military, banking industry and hospitals. "Cyber insurance products will be created for users of VoIP as well as for VoIP providers and vendors," said Glenn Tippy, report co-author. "The effect on our economy will be profound."

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Emily Holbrook is editor of Risk Management.

The above article is reprinted from the September 2010 on-line edition of Risk Management Magazine.