Latest models will help insurers get to grips with cyber
The latest version of modelling tools coupled with internal expertise and potentially external advisors can give re/insurers a good understanding of their cyber risk accumulation, Christer Pehrson and Laurent Marescot of RMS, told Baden-Baden Today.
“Cyber is on the top of the agenda of reinsurance and insurance clients,” Pehrson, a managing director at RMS, said.
“Clients are interested in understanding their accumulation, but they are also very much interested in understanding how they can be more relevant to their clients, and how cyber can be an opportunity for them to grow their business.”
RMS is gathering cyber incident data as well as data about the vulnerability of specific corporate clients. This is incorporated in the models to help clients better understand their accumulation risk across their cyber portfolio, for affirmative specific cyber cover and for the silent cyber risk, Pehrson said.
Re/insurers may carry silent cyber for example within their property portfolio or directors and officers (D&O) specialty line of business.
RMS has developed five scenarios for its cyber tool which includes data exfiltration, contagious malware, financial theft, cloud outage and distributed denial-of-service (DDoS) attacks.
“These five threats cover 95 percent of cyber threats globally,” said Marescot, a senior director at RMS.
In order to assess the cyber risk exposure and accumulation, re/insurers need to enter data such as on the size and types of businesses included in their portfolios as well as their global footprint and where they are domiciled.
Additional data on how well the insured businesses are protected from cyber attacks—which is provided for example by agencies that offer security ratings—can be added to refine the results.
The model helps to articulate the exposure numbers which can then be challenged, Marescot explained. “You are able to quantify the risk.”
“You can stress-test the business and understand what the worst-case scenario looks like,” he concluded.
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