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7 US insurers pool their resources to focus on cyber insurance. AIG, AXIS, Beazley, Chubb, The Hartford, Liberty Mutual Insurance and Travelers have formed a separate company to pool data and expertise to focus on cyber risk mitigation across the industry.
The May 2021 Government Accountability Office (GAO) report on the cyber insurance industry raised has some significant and well reported issues. As the insurance industry went all out to build a new market, underwriting policies at a time when little was/ is understood about the risk.
Cyber insurance is in a difficult place with everything moving in the wrong direction. Take up rates are on the rise, written premiums have increased, attacks are increasing in complexity and severity, claims are increasing as are premiums. There is little historical data to price policies, businesses have poor awareness of the risk and there is concern that it might be a risk which cannot be modelled yet. Highlighting the difficult position the US Government is in as insurers would like more coverage under the TRIP.
A coordinated approach is welcome, with the US drive to increase cyber regulation, the cyber insurance industry needs a coordinated approach both for the public and private sector. The risk is currently clearly to big to underwrite and governments cannot afford to be the insurer of last resort.
Risk management is a simple equation. It is a balance between inherent risk and control, to manage residual risk. The problem for insurers is they have no mechanisms to manage or assess controls. These belong to their clients. So the residual risk will always be close to the inherent risk. Which is always rising as cyber attacks increase in number, complexity and impact.
The gap Between inherent and residual is what needs to be managed and the only part of the equation which can be managed easily is the ‘control’. It is one outcome of the US DoDs CMMC programme to manage cyber risk for global defence contractors.
Ted Dziekanowski‚Â Brian McCarthy‚Â Jason Spezzano
#cybersecurity‚Â #SupplyChainRiskManagement‚Â #CyberRiskManagement‚Â #riskmanagement‚Â #compliance‚Â #cyberinsurance‚Â #insurance‚Â #regulatorycompliance‚Â #regulatoryoversight‚Â #esgrisk‚Â #cyberregulation‚Â #esgreporting
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