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Insurance Solutions

Formerly Moody’s RMS

The global cyber risk insurance market is growing and evolving fast. According to Munich Re, the market is predicted to hit US$20 billion in 2025 – a fourfold increase since 2018. To keep up with this pace, the relatively new field of cyber risk modeling is evolving fast too. Unlike with natural catastrophe risk, cyber modelers cannot rely solely on past events to predict future behavior and frequency because the cyber risk landscape changes so quickly. Just look at the rapid rise of ransomware; the number of ransomware attacks doubled between 2019 and 2020, and 2021 could see it doubling again.

RMS® is well-versed in modeling “new” risks. We were one of the earliest to develop a terrorism risk model after 9/11, the first to develop a probabilistic pandemic model back in 2008, and the first cat risk vendor to launch a comprehensive, probabilistic climate change model. And as a pioneer in the catastrophe risk modeling market, we have a major advantage in accelerating cyber model development – we can leverage over 30 years of catastrophe modeling knowledge and capability.

At RMS, we are constantly improving our cyber modeling and understanding of the risk, and developing the capability of software we deploy to clients. One area we have focused on in our upcoming RMS Cyber Solutions 5.2 release is speed and performance.

Accelerated Time to Insights: Run Models 10 to 20 Times Faster to Match Speed of Business

It’s clear that cat risk vendors need to invest in cyber models that can capture the dynamic nature of cyber risk, as well as build innovative software that can both run robust models and meet the speed of business. We know insurers are under pressure to model more risks and this new release significantly improves the capability and speed of our software.

The model engine has been refined and developed, allowing model runs to use a reduced memory footprint, plus an increased use of parallel processing, and the ability to run models without attritional components. The first two improvements are designed to run the model quicker; the latter significantly reduces the number of simulations being carried out.

The result? Improvements of 10 to 20 times in terms of speed. Our company-matching algorithm also delivers a tenfold speed increase, all with comparable accuracy. This enables insurers to stress test, iterate, and deliver results in a far timelier manner.

Streamlined Cyber Reporting: Introducing New Snapshots of Risk and Improved Usability

In addition to increasing speed, Cyber Solutions 5.2 introduces new methods of running models and outputting data, plus tools offering new ways to think about and communicate the risk:

  • New “Return Period Snapshot”: From our nat cat modeling experience, we know how useful it is for clients to get very quick, high-level results that are accurate across the EP curve, especially where there is not a requirement to drill into account-level statistics. The innovative Return Period Snapshot does this with modeling that can produce high-confidence views on return periods within minutes for different types of cyber events, allowing the user to quickly validate/check data and gain high-level insights at the speed of business.
  • Market Share Cyber Physical:  Assessing cyber physical risk typically requires understanding the order of magnitude of risk being taken, rather than account-by-account portfolio optimization and analysis. Using a model run at a market-share level, clients can get a quick assessment rather than importing vast and often cumbersome portfolios.
  • Better risk reporting and deliverables: There is big demand from retail brokers for analytical tools to help clients understand how much cyber risk they are running, and therefore what magnitudes of limit they need to purchase. Our underwriting tool generates an easy-to-understand PDF report that turns the risks faced by an individual corporate into easy-to-digest financial perspectives, rather than complex insurance jargon.

Together these three innovations provide enormous value to organizations transacting in cyber risk across the entire insurance value chain.

Most Current View of Cyber Risk: Updates to Models, Incident Databases

And as with every new version, in Cyber Solutions 5.2 the attritional rates and costs will be updated, to ensure that our modeling is as current as possible and reflects ongoing trends and dynamics in the cyber risk landscape. Since our last release, we’ve seen the trend of ransomware attacks continue to increase, and with greater leverage and impact influencing who attackers target. On top of this we’ve updated our view on data breach, business email compromise (BEC), and cloud outage events at the non-catastrophic level, all based on our latest data on the current trends.

As previously mentioned, cyber risk modeling is continually evolving, and these major speed improvements pave the way for future model developments. We’re planning exciting new updates for RMS Cyber Solutions 6, which will give new insights into portfolio diversification and assist in event response capability. This will be a material “next generation” step in the history of cyber catastrophe models, delivering new levels of insight and capability to clients. The increase in performance in Cyber Solutions 5.2 provides us with the capability and capacity to support the exciting new developments for Cyber Solutions 6.

To learn more about the Cyber Solutions 5.2 release and trends in the cyber risk landscape, we encourage you to sign up for our RMS annual Cyber Summit on September 21. Registration is easy and free – click here to sign up, or visit our cyber web page.

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Matt Harrison
Matt Harrison
Director, Product Management, Cyber

Matt is the Director for Product Management, Cyber for RMS. He has 15 years experience in exposure management and modeling of specialty and casualty classes, with the last six being firmly focused on cyber modeling.

He has a PhD in Fluid Mechanics from the University of Leeds.



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