Finding the Elusive Cyber Loss Curve Can Pay Big Dividends for Financial Institutions: What is the likelihood that your organization will experience a material cyber event in the next 12 months? Is the risk greater than 50 percent? Less than 25 percent? These questions are ever-present on the minds of risk managers, who long for at least a practical – if not precise – answer. Cyber risks are among the most serious perils facing the financial industry. Cybercrime is not only increasing in frequency, but also in magnitude, costing the world an estimated USD 600 billion, or 0.8 percent of global gross domestic product, according to a recent report published by McAfee and the Center for Strategic and International Studies. But while financial institutions have become practiced at estimating most operational risks and using this data to develop risk capital strategies, they often perceive roadblocks to extending these methods to cyber.
What Is the Future of Alternatives to Traditional Insurance Markets? There’s been much discussion in risk finance circles over the past decade about alternatives to traditional insurance markets. Much of the focus has been on the provider side – the pension funds, sovereign wealth funds and other investors that provide the capital behind so-called alternative risk transfer (ART) solutions.
Preparing For a Cyber Attack: Cybersecurity in many organizations has over the last few years been exposed as kind of a Swiss cheese solution, as cyber criminals have found vulnerable entry points to pull off major hacks costing companies hundreds of millions of dollars. In countless cases, companies have failed to erect strong defenses, or failed to recognize and quickly react to an attack. Clearly, cybersecurity needs to be elevated to the top levels of risk-mitigation strategy, alongside currency risk, natural disaster and terrorist attacks.
Evolving Regulatory Pressures Signal Potential Turning Point in Cyber Risk Management Strategies: Cyber risk presents an exciting opportunity for (re)insurers, but as one of the most dynamic perils in the industry, regulators are formalizing capital requirements and quantitative and qualitative measurements of risk appetite. In the United Kingdom, the Prudential Regulation Authority (PRA) is now asking (re)insurers to develop a silent cyber action plan by the end of the first half of 2019 and will conduct deep-dives on select firms in the second half to assess how they are meeting expectations described in a 2017 supervisory statement. It will then further assess affirmative cyber risk via an exploratory stress test later this year.
A Risk Overview of Wildfire: Today, the frequency and severity of wildfires are garnering greater attention – not only from the media, but also from (re)insurers, catastrophe modelers, mitigation experts and other invested parties.
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The Middle East and North Africa Risks Landscape: The results of climate inaction are becoming increasingly clear. The year 2018 was the fourth warmest on record. In the MENA region, Algeria had the hottest temperature – 51.3ºC – ever reliably recorded across the whole of Africa, and Oman recorded a minimum temperature of 42.6ºC. Rising temperatures led the United Nations to warn that melting ice sheets were causing sea-level rise to accelerate. The World Bank identified 24 port cities in the Middle East and 19 in North Africa at particular risk of rising waters.