A survey conducted by Willis Re has found that around half of industry practitioners believe that the risk of “silent cyber” exposure will grow over the coming year.
“Silent cyber” exposure refers to “potential cyber-related losses due to silent coverage from insurance policies not specifically designed to cover cyber risk.” One hypothetical example is a cyber-attack on an industrial plant’s control system that leads to a boiler explosion, causing property damage and business interruption. Another example would be a malware that causes an elevator to fall, resulting in casualties.
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Willis Re’s silent cyber risk survey asked respondents to “assess the extent to which, over the next 12 months, the cyber aspect of exposure would increase the likelihood of a covered loss.” Around half of the participants said that the risk of a silent cyber loss from property or other liability was greater than one in 100. Nearly a quarter of the respondents said that the risk was greater than one in 10.
The survey’s results also varied by industry group - IT/utilities/telecom and financial services were seen as higher risk. Although some of the most well-known silent cyber property losses to date have occurred in industrial settings, respondents did not foresee especially high risk for the construction, engineering and industrial, manufacturing and natural resources groupings.
“Buyers of insurance have to consider the exposure that they have in relation to the rising prominence of cyber-related incidents,” commented Willis Towers Watson Global Cyber Risk head Anthony Dagostino. “The results of the survey have reinforced the need for a holistic cyber risk insurance strategy and tailored insurance policies to address the risk adequately.”
“The degree of concern over silent cyber exposure has confirmed the importance of the existing support we are giving to clients to help them better manage their known and unknown cyber exposures,” added Willis Re Global Cyber practice leader Mark Synnott. “Over the last two years, our PRISM-Re modelling tool has allowed us to help underwriters and reinsurance buyers manage their entire cyber portfolio more effectively by identifying contagion risks, monitoring shifts in risk profiles and tracking their risk-adjusted pricing.”
“The results of our survey will help us calibrate PRISM-Re to accommodate silent as well as known cyber exposures,” Synnott said.
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