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Insurers are good at underwriting risks. Years of understanding risks, collecting data and building models, with a reasonable level of assurance to underwrite policies with certainty. P&C, health, D&O and other traditional policies have a wealth of historic information available.
Cyber as a relatively new risk and as far as the insurance industry is concerned an immature risk, devoid of data to accurately assess and underwrite the risk. Which is a challenge; given that the risk can have a proven and significant financial impact. By way of example, as this article discusses, 4 cloud providers have 61% of the market share and it is estimated that the financial impact of a cloud outage could be as high as $19bn.
The insurance industry needs data to effectively underwrite cyber risk, to accurately model cause and effect relationships. To understand the inherent risk profile of its clients and work forward to examine the impact of controls on residual risk. The only way to do this is by working with clients and dig deep into organisations to gather data. As any modeller will tell you, loss data will not be enough, we need to go back to develop robust and repeatable analytics. Which will benefit the insurance industry and insured alike.
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