With the emergence of the Metaverse, it is important to know how to evaluate risks in order to protect virtual assets.
This was the sentiment of Adam Peckman (pictured), Aon’s head of risk consulting and cyber solutions – Asia Pacific and global head of cyber risk consulting, in his report titled “Evaluating risks for virtual assets in a metaverse environment.”
Peckman that the Asia Pacific from Aon’s Global Risk Management survey report showed that about 86% of organizations have not performed any kind of formal risk quantification of intangible or digital asset exposure from security or privacy threats yet.
He added that the challenges that individual companies face when they attempt to evaluate the risks to virtual assets were lack of internal data, technical analysis, and a distributed problem.
“Depending on the area in the Metaverse value chain, traditional insurance may need to be supplemented by emerging digital asset and artificial intelligence insurance products,” said Peckman.
While end-users of virtual assets may be more suitable for existing insurance products, companies and organizations that were building their service on Web3 technology may need to utilize more bespoke insurances like digital asset custody, crypto-crime insurance, bitcoin mining insurance, smart contract and tokenization insurance, intellectual property insurance, and artificial intelligence insurance.
According to Peckman, Aon analysis estimated a gross written premium potential related to the Metaverse to be in excess of $20 billion by the year 2030. Because of this, the company said there is a multibillion-dollar opportunity for the insurance market to support the ever-growing Metaverse.
“The insurance industry can play a positive role in partnership with Metaverse participants, by encouraging equity investment and enhancing capital efficiency through advocating the deployment of risk capital,” said Peckman.
He said that this can be through the legitimacy that the insurance market can provide to the Metaverse industry. This includes improved risk management standards demanded by an insurer’s due diligence, a sophisticated risk analysis through adopting insurer datasets and modelling techniques, availing adequate insurance protection of Metaverse assets and operations that safeguard institutions, and the cultivation of alternative forms of risk financing, which will allow risk from investors to be efficiently transferred to risk capital providers.
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