The report:
• Explores examples specifically related to cyber risk. It evaluates the current landscape of modelling methodologies available to syndicates, and integrates current market knowledge with an assessment of the unique challenges of this dynamic and complex peril.
• Examines the challenges of collecting and standardising data, the benefits and drawbacks of various modelling methodologies and the need for upskilling within exposure management teams.
• Calls for cross-market collaboration to invest in talent, leverage emerging technologies and adopt a standard approach to exposure management in the cyber market.
Paul Davenport, Finance & Risk Director of the Lloyd’s Market Association, said: “Cyber risk has emerged as one of the most dynamic and challenging perils in today’s risk landscape. It is a human-caused and often maliciously motivated threat that can transcend geographical and sectoral boundaries, creating unique challenges for insurers and reinsurers. Unlike ‘traditional’ perils, cyber events are not easily constrained by time, space or rational progression, complicating efforts to assess exposure, manage accumulations and define events.”
“While the management of cyber risk accumulations is a relatively new discipline, we are well equipped to face the challenges discussed in this report, providing that we work to ensure complete, accurate and timely data collection and storage – a crucial factor. Standardised ‘primary’ cyber characteristics that are routinely disclosed and captured will go a long way towards ensuring that cyber exposure management practices become embedded into syndicates’ exposure monitoring.”
Sanjiv Sharma, Head of Actuarial & Exposure Management at the LMA, said: “Managing cyber risk is a significant and evolving challenge for the modern insurance industry. The risk landscape is particularly dynamic and globally interconnected, so the need for a coordinated and unified approach to exposure management in this area is of the utmost importance. By issuing this best practice document, we are looking to equip the market with a cyber-specific corpus of information and recommendations.”
Follow the link here to download the paper.
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