Report | March 2025
Edge computing and cyber security
Global investment in edge computing is expected to rise to close to US$400bn by 2028, meaning this market will have almost doubled in just five years. For sectors where secure, reliable data processing is vital to critical decision-making harnessing the benefits while also managing the inherent risks will be essential, according to a report from Allianz Commercial.
Cloud computing has long been the foundation of modern IT infrastructures, offering businesses flexible, scalable solutions for data storage and processing. Over the past decade, the cloud has enabled organizations to outsource the maintenance and management of IT resources. But as businesses generate ever increasing volumes of data, largely driven by the growth of the Internet of Things (IoT), cloud infrastructures are struggling to keep pace.
Edge computing was developed as a solution to these challenges. By processing data at or near the source, it reduces latency, alleviates bandwidth constraints, and enhances data security. Edge computing is not a replacement for cloud computing; rather, it is a complementary solution that decentralizes some computing tasks. In this hybrid model, edge devices are responsible for preliminary data processing and analysis, while the cloud remains the primary location for long-term storage, advanced analytics, and larger-scale data aggregation.
“Edge computing is set to be a game-changer in the world of data processing, offering significant benefits in terms of performance, efficiency, and real-time capabilities,” says Rishi Baviskar, Global Head of Cyber Risk Consulting, Allianz Commercial. “The adoption of edge computing presents new opportunities for industries to enhance customer experiences, improve risk management, and offer more personalized products. However, the transition towards decentralized data processing also presents a range of new challenges, particularly in the context of cyber security.”
Competitive advantages
For businesses in sectors such as manufacturing, healthcare, retail, and finance, the ability to process data locally provides a competitive advantage, according to the report.
In the manufacturing sector, edge computing facilitates real-time monitoring of production lines, enabling operators to respond rapidly to potential issues. This results in reduced downtime, increased efficiency and, ultimately, cost savings. The capacity to act on real-time data is of particular importance in industries where even a few seconds of delay can result in significant losses.
In the healthcare sector, edge computing is transforming the way patients are monitored in real-time and how diagnostics are conducted. The generation of data from wearable devices and smart medical equipment can be processed ‘at the edge’, providing healthcare providers with instant feedback and improving patient outcomes. With telemedicine, real-time processing of health metrics enables doctors to make prompt decisions, which is crucial in emergency situations.
Edge computing is also proving beneficial for retailers and financial institutions. In the retail sector, edge computing is facilitating the delivery of personalized customer experiences through the processing of data at the point of sale, enabling the provision of real-time product recommendations and dynamic pricing adjustments. In financial services, edge computing can improve fraud detection and speed up transaction processing, enhancing both security and customer satisfaction. Among the specific benefits for the insurance industry and its customers are faster claims processing, more accurate pricing, and enhanced customer engagement.
Navigating cyber security risks and liability challenges
Despite its advantages, edge computing introduces significant cyber security risks, the report also notes. Its decentralized nature increases the attack surface, potentially making devices more vulnerable to breaches, data theft, and disruptions. Meanwhile, liability determination in edge environments is particularly complex. Responsibility for breaches often spans device manufacturers, software providers, and users.
Edge computing frequently involves processing data across multiple geographic regions, each with its own set of regulatory requirements. Meeting these diverse regulations, such as GDPR (General Data Protection Regulation) in Europe or HIPAA (Health Insurance Portability and Accountability Act) in the US, can be complex. Organizations must develop comprehensive data governance strategies to guarantee that data processed is protected in accordance with local laws.
“Edge computing is unlocking unprecedented opportunities across industries, empowering organizations to process data closer to the source, drive real-time decision-making, and create more efficient, secure, and personalized experiences for customers, ultimately transforming the way businesses operate and innovate,” concludes Mehdi Meyer, Cyber Risk Consultant, Allianz Commercial.
This is the final report in a series from Allianz Commercial on cyber risk issues, which were voted the top concern for businesses in the Allianz Risk Barometer 2025. The first looks at Generative AI, its impact on cyber security and how it might impact the insurance sector while the second looks at the use of blockchain and how it will reshape the risk and insurance landscape in future.
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