Page 34 - Insurance Times January 2018 Sample

Cyber Risks Scenario is emerging since 2011-12 and real viii) Business Houses and Insurance Industry leaders have to
impact is being felt since 2014. make gross investments in security technologies.
ix) First line of defence against Cyber Threats of concerned
We have to look through contemporary historical
Business houses means Comprehensive Risk
advancements in IT Technologies and Cyber Risks.
Management practices to be handled jointly by Insured,
B) Complexities in Handling Cyber Risks: Insurer, Reinsurers and Brokers.
The scope of possible losses from Cyber Risks includes NDBI x) It is very important that for better understanding of
Non-physical Damage Business Interruption. Cyber Risk Data base must be built from all angles.
Insurers should closely study various problems and
This type of insured risk is detached fully form asset related prospects of clients in dealing with Insurability of Cyber
property risk. The cover protects earnings even when there Risks.
are events of 'Electricity Blackouts', Digitalization etc.Data xi) Insurance of Cyber Risks must help to build RESILIENCE
is turning into a critical asset and such events cause OF BUSINESS HOUSES in an Interconnected world of It
significant economic damages to business. Cyber Risk can Technologies.
trigger events for NDBI. Non-physical Damage Business
Interruption. xii) Even information given by clients can be incomplete and
ambiguous.
First and Third Party NDBI loss events caused by Cyber Risks
have a broad base. Paperless offices remain with larger blanks in
interconnections of information stored in computers when
In 2016 Swiss Re/ IBM conducted a survey of companies breaches take place. Back-up data have their own missing
impacted by Cyber risk landscape covering incidences of links.
2014-2015-2016. The median cost of $ 200,000 of a data
breach event with significantly higher aggregates of losses. C) Some Observations of various lead
Knowledge of the full range and size of Cyber Risks is still in underwriters Emerging Scenario of
its 'infancy stage'. Size of Cyber Risks and reliability of Cyber Risks from Reinsurance Week and
incident data are not easy to generate 'Actuarial Estimates'.
Reinsurance Magazines from London in
Insurers also worry that the aggregation of Cyber Risks in 2016-17:
an event of loss may result in billions of US$ and modelling
occurrences is for more difficult even there can be threats 1) The most recent Ransomware Attacks are something
to solvencies of Business Houses. that everyone can be affected but 'main business
remains unprepared and unprotected against them'.
The main challenges in insuring Cyber Risks Up until now Cyber Insurances have typically focused
are……….. on breach response, notifications and liability costs
i) Uncertainty about frequencies and severities of losses. increased by companies holding high volumes of
sensitive data such as healthcare providers, financial
ii) Potential correlations of various Cyber Risks.
institutions and retailers.
iii) Cyber Crimes and Cyber Terrorism.
In the recent Wannacry and Petrawrap outbreaks all
iv) Malicious intents behind coordinated attacks like have witnessed 'Crippling Disruptions' that can be
Ransomware inflicted by the 'ransomware' across all sectors of
v) Constantly changing threats from untreatable industries.
perpetrators of crimes. Even Large Scale Blue chip are globally recognized

vi) Many business houses using most sophisticated IT brands which are not immune.
Technologies are not well prepared to deal with Cyber The costs of such incidents are not limited to payments
Risks and loss events to quantify volumes of Cyber Event of ransom. Decrypting files or restoring data from back-
losses. ups have higher costs. All these consume valuable
vii) Historical Data of Cyber Loss Events is to be built up for resources and can destroy hard-won reputation.
evolving Risk Modelling. No business is safe from determined Hackers.

34 The Insurance Times, January 2018

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