Cyber

Limited data makes cyber risk a relatively
  unchartered territory. The Geneva Association
    explores the impediments to a sustainable cyber
      (re)insurance market, generates insight into the
        challenges of treating cyber as an insurable peril
          and promotes the contribution of insurance to
            mitigate this risk.

Cyber

Limited data makes cyber risk a relatively
  unchartered territory. The Geneva Association
    explores the impediments to a sustainable cyber
      (re)insurance market, generates insight into the
        challenges of treating cyber as an insurable peril
          and promotes the contribution of insurance to
            mitigate this risk.

Cyber

Limited data makes cyber risk a relatively unchartered territory. The Geneva Association explores the impediments to a sustainable cyber (re)insurance market, generates insight into the challenges of treating cyber as an insurable peril and promotes the contribution of insurance to mitigate this risk.

RESEARCH REPORT

Advancing Accumulation Risk Management in Cyber Insurance

Although cyber risk premiums have expanded sizeably in recent years and loss ratios are favourable compared to other product lines, cyber risk creates unprecedented challenges. Accumulation risk, notably, is at the heart of many concerns about cyber risk.

The research report identifies three prerequisites for ensuring sustainability of the cyber insurance market.

First, there needs to be sufficient resilience at the source of risk. The first steps in addressing any risk are to assess, measure and manage it. Insurance can then mitigate residual risks, or those that cannot be contained at the source.

Second, insurers must make an acceptable return on capital. This requires disciplined and effective underwriting.

Third, the available capital must both withstand shocks from accumulation events and provide adequate compensation to insureds after such an event—in the case of cyber, that means absorbing accumulation risk.

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Cyber incidents are frequent, but the market has yet to experience a major adverse event. For this reason, without due attention there is the potential of slipping into undisciplined underwriting. A single major event, or a series of consecutive events, could generate losses large enough to render the market unprofitable, inducing (re)insurers to withdraw. A large event may also trigger regulatory intervention, requiring insurers to provide cover at unviable terms and rates. Lack of discipline in policy wording, especially to control exposure to acts of terror, is a key concern.


TASK FORCE ON CYBER WARFARE AND CYBER TERROR

The Geneva Association continues to collaborate with thought leaders in the insurance and technology industries, cyber security and defence fields, academia and policymaking to integrate the best thinking on industry-specific mechanisms through reports and initiatives.

The Geneva Association’s Cyber Risk Working Group provides feedback and guidance on the issue of cyber resilience. Additionally, a task force on Cyber Warfare and Cyber Terror is a joint initiative with the International Federation of Terrorism (Re)Insurance Pools (IFTRIP). It focuses on better understanding cyber risk and contextualising the traditional notions of war and terror in a cyber context, taking a global approach in exploring a framework that better enables the industry to assess cyber risk and potential solutions.

The Cyber Warfare and Cyber Terror task force also brings together the insurance industry and cyber security professionals, defence experts, government officials and risk pool leaders to explore the technical nature of cyber risk, primarily through co-authored papers and joint meetings. The initiative intends is to enrich the understanding of what security risks or acts would amount to cyber terrorism and cyber warfare, and how these cyber events differ from the more traditional physical versions. The results of these initiatives will feed into The Geneva Association’s forthcoming cyber resilience research report.


CONFERENCES

The Geneva Association’s Director Cyber, Rachel Carter, contributed her expertise on cyber risks and insurance at the following forums and meetings:


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