Catastrophe risk modeling firm AIR Worldwide today released ARC (Analytics of Risk from Cyber), a cyber risk modeling application that can evaluate any commercial policy, and measure aggregations of cyber risk within a company’s portfolio, allowing for easy assessment of key firms’ cyber risk from across the globe.
The application uses proprietary databases of industry exposures from commercial and public sources of key companies, to provide evaluations for commercial policies vulnerable to silent cyber and estimate total potential insured cyber losses for portfolios.
“Insurers typically have very little information about the cyber risk characteristics of the companies they insure and instead rely on a crude market-share approach,” said Scott Stransky, assistant vice president and principal scientist, AIR Worldwide.
“ARC takes advantage of the detailed information that AIR has compiled on companies to help insurers identify their sources of aggregation risk and to determine with greater certainty which of their insureds would be affected by various aggregation scenarios,” Stransky explained.
AIR’s new cyber risk application capitalises on the firm’s comprehensive proprietary data on millions of organisations’ risk attributes such as company industry and size, data storage and transfer mechanisms, and cloud and domain name service providers, to offer a comprehensive view of the insurable cyber market for key firms around the world.
Laila Khudairi, underwriter, Tokio Marine Kiln, said; “Understanding an insured’s virtual supply chain is a critical first step toward managing systemic cyber risk within a portfolio.
“A global database of exposures such as the one underlying ARC gives us more confidence that the modeled loss estimates reflect the risk within our portfolio.”
The AIR model uses a firm’s risk profile as the basis for assessing the severity and causes of loss – it then allows users to determine how each cause of loss will be represented within the insurer’s unique policy cover framework – it can then be used to evaluate any of these commercial policies.
In 2017 so far, cyber risk has been a key theme for reinsurers product expansion and development, as firms move to better comprehend and take advantage of the growing cyber re/insurance market – which has grown to 2nd most feared threat of loss in the U.S. and Europe, and 3rd globally, according to an Allianz industry survey.
And in the coming months many more re/insurance players are likely to continue to roll out new cyber risk models and products as coverage expands along with the opportunities for the fast-developing cyber line of business.