%20(500%20x%20334).jpg)
The hacking of public entities isn’t just a problem facing American municipalities – Midland, Ontario was recently the target of a ransom demand when a cyberattack resulted in a lockdown of the town’s computer system. On the flipside, titans of Canadian industry have also been hit by cyberattacks, with a breach of Air Canada’s mobile app at the end of August exposing the personal information of around 20,000 people.
Looking at the cyber turmoil affecting businesses, public entities and consumers in the past year, it’s not hard to see that there’s a clear trend going on.
“The cyber risk overall is already very big and it’s growing rapidly. I believe it’s a growing problem, for society, and if I look at the size of the economic losses of events which happened in the past, and compare it to the insured and reinsured portion, the conclusion is there is a sizeable amount of these losses that remain uninsured,” said Matthias Weber, former group chief underwriting officer and member of the group executive committee at Swiss Re who recently joined the board of directors of the cyber risk analytics start-up CyberCube.
With the risk landscape growing, insurance is an important tool to help society manage cyber events, and Weber is on a mission to help increase the insurability of cyber.
“We have an ecosystem of risk – cyber risk takers and cyber risk producers, and then service providers to help mitigate this risk. Everybody in the ecosystem has a specific role – some of the roles overlap, some of the roles complement each other,” he said, adding that insureds also need to take on the task of protecting themselves while cyber risk modelling firms have their own role to play.
What’s still missing in the market is better forward-looking analytics, according to Weber, rather than models based solely on analysing risks from the past.
“What I expect from the cyber models and the cyber modelling firms over time is to try to reduce modelling uncertainty,” explained Weber. “Cyber modelling is still a relatively new science and hence cyber modelling uncertainty is relatively big. My hope is that over time we can reduce this uncertainty.”
Within the ecosystem of risk takers, risk producers and service providers, brokers occupy a front row seat.
“Brokers have the very important role communicating and strengthening the partnership between the individual players in this ecosystem. I see, and I hope I will continue to see, brokers promoting the flow of data, the flow of information – for instance, data and information to increase the transparency related to the underlying risk, including cyber risk, and innovative products that address these risks,” said Weber.
“Insurers are hesitant to insure risks they cannot quantify for very good reasons and therefore, in my opinion, if the brokers help providing transparency by fostering the exchange of data and fostering the exchange of analysed data, running scenarios, etcetera, that is a necessary condition to help increase the insurable portion of cyber. Of course, this would not solve all problems related to cyber, but it would go a big step into the right direction.”
