Willis Re unveils industry-first cyber model
Willis Re, the reinsurance division of Willis, has launched the insurance industry’s first cyber risk modelling tool.
The new tool, PRISM-Re, will enable insurers to quantify and manage their portfolio exposure to data breaches, the leading cause of cyber losses. Based upon the latest exposure data, the tool estimates the frequency of data breaches and the potential severity of insured losses arising from those events.
PRISM-Re was developed in collaboration with Willis Retail’s cyber team and actuaries from Willis Risk & Analytics.
The model also offers a way of simulating the data breach impact of a so-called ‘cyber hurricane’ or ‘cyber tsunami’, where numerous breaches take place systemically across a single industry sector or related sectors.
Mark Synnott, executive vice president of Willis Re, said: “Cyber-crime now costs the global economy around $450 billion annually and is increasingly high on the agenda for national governments and corporate boards.
“With recent high-profile data breaches including those of Sony, Target and Home Depot, it is an area that is seeing a huge upsurge in demand. In a largely mature and static insurance market, cyber represents one of the key avenues for growth.
“Until PRISM-Re no model existed that could quantify the exposure across an insurer’s portfolio. A lack of this kind of ‘holistic model’, which are now so well-established for natural catastrophes, has hindered the industry’s ability to offer wider protection – without clarity around the potential total exposure faced, insurers have ultimately been constrained in underwriting this risk class due to the uncertainty of the potential financial impact.”
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