Here we review the most popular stories on the subject of cyber through the first half of 2016.
1. Guy Carpenter Forms Strategic Alliance to Develop Cyber Aggregation Model: Guy Carpenter & Company announced the formation of a strategic alliance with Symantec Corporation, a global leader in cyber security, to create a cyber aggregation model. The model will include a comprehensive catalogue of cyber scenarios from which insurers can derive frequency and severity distributions to measure the potential financial impact of loss from both affirmative cyber coverages and “silent” all-risk policies where cyber is the peril, but no cyber exclusions exist.
2. Cyber Risk: As businesses, both large and small, throughout all sectors of industry, become more and more reliant on technology to improve service efficiencies and functionalities, cyber risk has become one of the most pressing public topics addressed in corporate boardrooms and by governments across the globe. The corresponding awareness of a business’s susceptibility to a cyber-attack has grown along with a spate of high-profile attacks. Consequently, cyber risk is now an embedded feature of the global risk landscape, not only as a privacy/network liability, which is where much of the publicity has arisen, but also as a peril affecting traditional insurance lines. Therefore, preventative and post-event remediation are gaining importance as shareholders, regulators and rating agencies are increasingly focused on enterprise risk management activities for cyber risks.
3. Cyber Gaps in Traditional Insurance Products/Standalone Insurance Products: Although the insurance market has developed a dedicated product line that addresses the initial risks faced by companies, such as data breach and business interruption due to network failure, traditional insurance products in their design have not historically contemplated the exposure to protect against cyber risks. Companies can purchase cyber specific cover in the form of extensions to traditional policies or as standalone cyber policies.
4. Cyber Risks: Aggregation: Businesses and (re)insurers should be concerned by risk aggregation, given the possibility of single attacks leading to losses across a large number of firms, which can create counter-party risk for the insured and potential failure for the insurer. At the moment, a large systemic event has not materialized, but that does not mean that the risk is not present.
5. Cyber Risk Management: Cyber risk is already an embedded feature of the global risk landscape, not only as a privacy/network liability, but also as a peril affecting traditional insurance lines. As such, insurance has the potential to greatly enhance cyber risk management and resilience for a wide range of organizations and individuals who are exposed to its impacts. Nevertheless, the likelihood and impact of severe events remain subject to much uncertainty and the pace of insurance innovation should be linked to the rate at which this uncertainty can be reduced.