Since its inception in 2019, DeNexus, the specialist provider of cyber risk quantification tools and software, continues to invest heavily to improve its technology and analytics, and with the sixth version of its DeRISK platform in the works and the receipt of a broker licence in Bermuda, the company sees huge opportunities to solve the cyber issue.
In a recent interview with Reinsurance News, DeNexus Founder and CEO, Jose Seara and George Mawdsley, Head of Risk Solutions, discussed the continued evolution of the company as it tackles the expanding yet challenging cyber risk landscape.
“As a business we keep growing,” said Seara. “We now have about 200 deployments of the technology, and we have recently booked contracts to multiply that by almost three. Most of our customers are still in the US but we have already signed contracts in Europe, and specifically one in the UK and one important contract in Spain.”
On the technology front, DeNexus has continuously released new versions of its cyber risk quantification and management platform, with the latest generation of DeRISK expected to be released towards the end of this year.
“That mainly consists of a new risk aggregation system, leveraging all the lessons learned in the last three plus years deploying previous generations. So, this is an ongoing effort, and we are working really hard on our own modelling system and on our own analytics,” said Seara.
The firm’s progress reflects the fact it still allocates around two-thirds of its funds on improving its technology, analytics, and database.
“We decided to take the hard route. We decided to really delve deep into the problem, which opens up tremendous opportunities to keep improving that technology, and at the same time, uncovers challenges,” he continued.
Expanding on this, Seara explained that while there are other, solid efforts out there, they take a more traditional top-down, outside-in approach, which comes with intrinsic limitations on the visibility they’re able to achieve on the risk.
“In our opinion, those limitations are a total deal breaker when it comes to these large industrial corporates that hide themselves from the outside world. So, if you don’t get inside, you don’t know what’s going on there.
“These large corporates, of course, they are targeted every single day, and they are hit every single day. But they also spend a lot of money and people and time in protecting themselves, in isolating themselves from the outside world, deploying and implementing controls to mitigate those risks. We look behind the fence and we look and see and include those controls in our assessments, which takes the quality of our analytics to a totally different level,” said Seara.
One of the challenges DeNexus faced in the early days was getting access to that inside data, as it reveals a lot about how things are built and why they are vulnerable and how they can be compromised.
“Overtime, we’ve been able to overcome that challenge and today, from the technology standpoint, evidently, we are able to move data from A to B and do it in a safe, secure manner. But we’ve been able also to overcome business challenges. So, our customers are willing to share that data with us. To my understanding, others are failing in their attempt to convince their customers to share that highly sensitive cyber data with them,” said Seara.
Continued efforts by DeNexus to develop from both a technology and corporate standpoint, has resulted in the expansion of its technology product team and SaaS business, and the company has also started working on its risk transfer business.
“We set up legal entities in Bermuda almost a year ago, and one of them secured the licence to operate as an innovative broker under the Bermuda sandbox. While in the sandbox, we are working with our risk customers and with our risk underwriters and partners to test new risk transfer solutions, and to build new capacity using the SaaS technology that we have developed over time to quantify and manage cyber risk in this large industrial environment,” said Seara.
To support its risk transfer business, DeNexus recently hired Mawdsley as its first Head of Risk Solutions, a role in which he will focus on developing next generation risk transfer solutions for the cyber insurance and ILS markets.
Currently, explained Mawdsley, DeNexus is working with two large global re/insurers to define the insurance products, with a view to creating a more tailored solution for each of the industry verticals, where buyers get greater value than the traditional one size fits all approach.
“Our goal is to develop cleaner insurance products, facilitating smoother transfer through the various links in the insurance value chain and into the capital markets”, said Mawdsley. “We anticipate exiting the Sandbox within a few months, and we’re excited to start using DeRISK to facilitate risk transfer in the industrial cyber space.”
Reiterating Seara’s earlier point, Mawdsley emphasised that one of the key benefits of the DeRISK platform is that it’s tackling the cyber problem from the bottom up, rather than coming at it from the top down.
“We want to build a portfolio of DeRISK clients from the ground up, and then transfer through the value chain. We believe the enhanced analytics that DeRISK provides will attract capital to our industrial clients on both a risk and catastrophe basis. The beauty about DeRisk is that it’s also got a portfolio aggregation model, so if you’re hooked into DeRISK, you can see how a loss flows between multiple companies globally, and get a much earlier and more accurate view of what a potential cat loss looks like, which will be able to inform the capital markets.
“That’s the big thing from a capital markets perspective. When a loss happens, you want to know is it a cat event, yes or no, pretty quickly, and a rough estimate of how large that loss might be. At the moment, it is pretty hard on both of those angles to give investors certainty because it’s difficult to see what the true aggregation risk is. So, we’re focused on the ground up, focused on solving those issues,” said Mawdsley.
