Cyber risk modelling gets an upgrade
Cyber modelling will move from testing portfolios against certain risk scenarios to including probability of occurrence in Europe, Yörn Tatge, senior vice president AIR Worldwide, told Baden-Baden Today.
Currently, the risk modeller can test insurance portfolios against 20 cyber risk scenarios to see how the model would react, Tatge explained, but AIR Worldwide is working on an upgrade for the model so that it also includes the probability of occurrence, which will make the testing of portfolios more accurate.
AIR Worldwide uses information in its global database of companies for the portfolio testing. The difficulty in further developing the modelling is a lack of data on cyber incidents in Europe, Tatge explained. In the US, the availability of information on cyber attack incidents is much wider than in Europe, because disclosure rules have been in place for several years. In Europe, corporations are not required to report cyber attack incidents.
“The information on cyber attacks available in the US cannot easily be applied to models in Europe.” because of different rules regarding liability. It has to be adapted to local rules, Tatge explained.
What further complicates the matter is that much of the cyber risk included in insurance portfolios is ‘silent’, which means that the cover does not explicitly refer to cyber risk. Insurers are currently reassessing their portfolios to define the silent cyber cover included.
As a result of this exercise, insurers can limit cyber cover or exclude it completely. The latter could potentially accelerate the trend towards standalone cyber cover as demand for protection increases, Tatge concluded.
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