DRONES: THE FIRST WAVE OF EMERGENT BEHAVIOR TECHNOLOGIES

Transcription

1 DRONES: THE FIRST WAVE OF EMERGENT BEHAVIOR TECHNOLOGIES Presented By: William H. Walsh Risk and Insurance Management Society April 12, 2016

2 Emerging Technology IT S ALL ABOUT THE DATA Artificial Intelligence Google Glass Drones Data 3D Printing Oculus Rift/Virtual Reality Self Driving Cars Dramatic increase in data Discovery implications Emergent behavior Non-human decision-making UAV/aerial technology is at the forefront of new technology wave Information is innovation Serious privacy concerns Tension between privacy and innovation Implications of Additive Manufacturing, Artificial Intelligence

3 Explosive Growth in Drone Technology RISE OF THE MACHINES 9 INDUSTRIES USING DRONES TODAY Law Enforcement & Defense Hostage situations, surveillance, bomb threats Rapid Response & Emergency Search and rescue, forest fires Research Scientific and conservation Photography & Film Hobby and artist use News Cover breaking news, disaster, war zones Agriculture Disease and data inspection Energy Oil, pipeline inspection Real Estate & Construction Monitor and inspect Insurance Claims Investigations THE DRONE MARKET $11.3 BILLION in 2013 $140 BILLION in 2020

4 Current Status of the Law TECHNOLOGY HOSTILITY Enacted Anti-Drone Laws Anti-Drone Legislation FAA regulations - recreational drones Registration for drones between pounds FAA Registration numbers linked to owners Penalties for failure to register (criminal/civil) Registration requires name, address, Must fly within visual line of sight Future of drone law will be dramatically impacted by a catastrophic event State laws follow same format: 1. Law enforcement prohibition 2. Creates private cause of action 3. Prohibition on carrying lethal payloads 4. Armed forces exceptions

5 The Catastrophic Event Scenario: A catastrophic drone accident will expose vulnerabilities for a number of target defendants The lawsuit is already written Recoverability drives exposure Two recent close encounters underscore the risk Liability: Recoverability drives definition of target defendant Operators may not have sufficient insurance or assets Third-party liability and empty chair are key Uncertainties exist with regard to insurance policies and the necessity of specialty insurance Case law not well developed Prevention: How much preventive technology is enough? Risk Management Efficacy of Updating Technology

6 Complaint Already Written Plaintiff s lawyers are already prepared Anticipating defenses and limiting risks will help prepare likely defendants Much more likely to reach the level of a reportable case = precedent

7 The Scenario Amateur R&D Gone Awry Enterprising student testing bird watching app With app, drone identifies, photographs, and follows rare birds Drone follows bird toward Sea-Tac runway Both drone and bird sucked into engine of plane that has taken off Staggering loss of life Investigation later confirms a drone flew into the right engine Sea-Tac ground radar detected it but it was mistaken for a bird Investigation: amateur R&D Estate of Jones, et al.

8 Drafting the Complaint OBJECTIVE: MAXIMIZE RECOVERABILITY Parties Jurisdiction Causes of Action Damages/Prayer for Relief

9 Potential Parties Operator Airports Manufacturers Software developers Sellers Others?

10 Jurisdiction Or, How can I get my case in to Cook County without getting sanctioned? Boeing Likely FNC Pros and Cons to stretching jurisdictional arguments Anyway to defeat diversity? Review domicile of passengers Hertz and the situs of various defense corporations

11 Causes of Action Negligence: Failing to maintain UAS/mechanical failures Failing to account for weather conditions Losing control of or signal to UAS Lack of proper training Violation of FAA regulations (per se) Intentional Torts Trespass Outrage/emotional distress Privacy Assault/Battery Products Liability Design, manufacture, warnings, Risk utility/consumer expectations Preemption? Unlikely

12 Airport Liability DRONES Airports/air traffic duty to communicate with UAS operators or prevent UAS from interfering with other aircraft? Parallel to bird strike liability: Airports must act with due diligence in adhering to FAA-approved wildlife management plans. Specific duties may include: Being proactive in preventing collisions (e.g., shutting down UAS in airport airspace but impact on other systems?) Management plan/protocol in place to prevent UAS collisions Risk managers should look at their drone prevention plans with the same scrutiny as a lawyer looking for a basis to sue. Airmap App

13 Potential Liability DRONES CRASHES/EPIC FAILS

14 Right to Privacy AT ODDS WITH DATA & TECHNOLOGY To collect data is to improve technology To collect data is to interfere with privacy Virtual Reality Google Glasses Artificial Intelligence Drones PROS Virtual assistants Manufacturing innovation Autonomous and self driving cars Robots or smart machines Machines Learning CONS Private information made public Safety and regulatory issues Ability to hack and control Reduction in work force

15 Right to Privacy LEGAL IMPLICATIONS Attempts to destroy drones over private property have resulted in liability for the property owner Battle of measures and countermeasures: the selfie drone v. the electronic fence State legislatures have created new causes of action for drone and other technology uses/misuses Potential threat of hackers exposing whatever privacy we have left will likely result in liability for manufacturers

16 Cyber Terrorism HACKING INTO MILITARY DRONES ANY PRODUCT with software or that is capable of carrying ordinance or firearms could be VULNERABLE. Aviation relies on computer systems extensively in ground and flight operations and air traffic management, and we know we are a target. Security Architecture Threats have INCREASED Security must IMPROVE Tony Tyler, IATA Director General on cyber attacks and commercial drone risks Cyber terrorism may replace the hijacker and bomber and become the weapon of choice on attacks against the aviation community. Allianz, German Insurer

17 Cyber Terrorism HACKING INTO PERSONAL DRONES

18 Prevention How much technology is enough? A collar or a fence? Tension between optimal routes v. safety/privacy Wildlife management plans and technology Risk management honest assessment of vulnerabilities Reviewing coverages/assessing specialty insurance. Notional Scenario Provided By NASA for UTM

19 Dutch Police Train Eagle to Combat Drone

20 Insuring Drones & Technology OPPORTUNITIES & RISKS Uncertainty makes this high risk/high reward Privacy claims are a primary concern Coverage excludes hijacking, unlawful seizure, hacking, spoofing, etc. Currently UAS risks are being globally written Most policies modeled after manned aircraft policies CGL policy aircraft exclusions (so, endorsement or specialty product?)

21 FAA Recommendations for Commercial Drone Flights New recommendations to the FAA set our four categories of drones that can fly over people, including crowds in some instances. Drones weighing less and a half-pound could fly unrestricted over people, but drone makers could have to certify that if the drone hit someone, there would be no more than a 1% chance that the maximum force of impact would cause a serious injury. Mostly small quadcopters -- drones with multiple arms and propellers, and weighing 4 pounds to 5 pounds -- but there is no weight limit. Flights over people, including crowds, would depend on the design and operating instructions. Manufacturers would have to demonstrate through testing that the chance of a serious injury was 1 percent or less. Could not fly over crowds or densely populated areas. Manufacturers would have to show there was a 30 percent chance or less that a person would be seriously injured if struck. Could have sustained flights over crowds. As before, the risk of serious injury would have to be 30 percent or less.

22 What s Next?

23 Personal Drone Technology NEXIE

24 Drone Technology AMAZON AIR

25 Manufacturing Technology ADDITIVE MANUFACTURING (3D PRINTING) Jurisdictional implications for central 3D manufacturers Manufacturing can be done at point of consumption No supply chain limits jurisdictional venue options Rethink assembly line and supply chains Now being applied in aerospace and defense Lighter airplane parts, aerodynamic car bodies, custom prosthetic devices Possible military use: print replacement parts on location rather than relying on limited parts and supply chains Interference with labor or environmental groups Special interest groups may oppose 3D manufacturing plants through current administrative procedures (e.g., EIS)

26 Manufacturing Technology Gasoline on the fire will transform all emerging technology Combining with 3D printing, nanotechnology will lead to dramatic innovation (and attendant dangers) Significant concerns warnings of Hawking, Musk, others Defending claims: What is the product being defended? Foreseeability when machines do it all? Consumer expectations? Risk Utility? ARTIFICIAL INTELLIGENCE

27 QUESTIONS/COMMENTS

28 William H. Walsh