Maximizing Cyber Insurance Opportunities by Understanding Cyber Accumulation Risk
Cyber risks are among the biggest threats facing businesses today, which makes mitigating cyber risk a top business priority. While cyber represents a fundamental growth driver for the global (re)insurance industry, quantification of this risk is still in its infancy.
To grow, insurers need to understand the attritional losses and the potential for risk accumulation, a difficult task without a common data standard or mechanism for understanding aggregations of risk. To assist, RMS released a Cyber Accumulation Management System in February 2016 that provided a common exposure data standard, as well as the first models understanding aggregations of risk. This system has been adopted across the market by many leading cyber writers.
In partnership with the University of Cambridge Centre for Risk Studies, the RMS Cyber Exposure Data Schema offers a standardized approach for identifying, quantifying, and reporting affirmative and silent cyber exposure. This open data standard provides the common language and approach needed for understanding and measuring cyber accumulation risk.
Cyber Loss Process Models
Defining a Probable Maximum Loss (PML) for cyber insurance is challenging with the absence of a truly systemic “catastrophe” loss. RMS has created a series of risk models to stress test a (re)insurer’s portfolio. They reflect the key IT-related cyber threats facing insurers, along with a suite of cyber-physical stress tests. These risk models allow insurers to explore plausible examples of systemic cyber catastrophes that impact insurers.
Flexible Reporting Analytics Engine
The RMS Cyber Accumulation Management System "engine" provides a framework for
analyzing exposure and loss results across both affirmative and silent cyber insurance policies.
With out-of-the-box analytics to help support both the understanding of risk accumulations and key drivers of loss from within the scenarios models, the accumulation engine delivers business insight required to set and monitor risk appetite over time.