QBE Insurance Group has licenced the RMS Cyber Accumulation Management System as it attempts to model potential cyber catastrophes on a massive scale.
As a proximate cause of loss, cyber risk has the potential to impact not just specific cyber insurance policies, but also multiple other policies, for example marine or property and the news follows calls by regulators – notably Lloyd’s of London – for insurers to get their act together and properly ascertain exactly how exposed they really are.
In 2015, RMS partnered with The Cambridge Centre for Risk Studies for the paper Managing Insurance Accumulation Risk, which illustrated the types of scenarios which may cause a catastrophic loss. These included mass co-ordinated data breaches and distributed denial of service (DDoS) attacks on a biblical scale, causing amongst other things, a global collapse in consumer confidence or the theft of billions in assets from financial institutions.
According to RMS the breadth of loss process models included in the RMS Cyber Accumulation Management System will enable QBE to “identify and manage its potential cyber risk accumulations in its portfolios, and so support the growth of QBE’s resilient and diversified cyber business.”
Christer Pehrson, managing director of client development at RMS, said: “Accumulations of cyber risk are hugely complex and not geographically limited, unlike perils such as hurricanes or earthquakes. The web of potential impacts and losses is enormous and insurers are increasingly concerned about the growing accumulation of risks within their cyber insurance business. The RMS Cyber Accumulation Management System will enable QBE to understand and control this accumulation to maximize the opportunity provided by cyber as a new line of business.”
Eric Letourneau, senior vice president and group head of catastrophe modeling at QBE, said: “Cyber has the potential to trigger a correlated loss across many accounts. Therefore, a deep understanding of its systemic risk and the consequent impact on our interconnected world is critical to managing the risk. QBE’s objective is to manage cyber exposures within a well-defined risk appetite, similar to established practices for property accumulations.
“The RMS Cyber Accumulation Management System helps us address the significant
challenge of aggregate cyber risk and we are excited about its future roadmap.”
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