As the cyber insurance and reinsurance market continues to develop and expand, with the risk also growing in popularity within the insurance-linked securities (ILS) space, Matt Harrison, Director of Product Management for Cyber at Moody’s RMS, highlights the importance of understanding exactly what cyber insurance is.
In a recent video interview with our ILS-focused sister publication, Artemis, Harrison, who’s responsible for the strategy of building the company’s cyber risk modelling products and analytics solutions, explained that the starting place is to really understand what the risk is.
“I think there’s always a confusion in my mind of sort of what is cyber risk when we’re talking about these products,” said Harrison.
“But more importantly, the products that we’re seeing, right, are transactions on cyber insurance. So, we really need to understand what cyber insurance is.”
“There’s a tonne of stuff that isn’t covered in a cyber insurance policy, and therefore, that’s not part of the risk that an ILS investor would be taking on board. So, to me, we’ve got to really understand that kind of venn diagram of overlap,” he added.
He went on to explain that at Moody’s RMS, the focus is on exposures to companies and these are typically the intangible risks, so what’s happening to them when they’re hacked.
“But the kind of physical losses and things like that aren’t covered, that’s not stuff that we’re worried about,” said Harrison.
Later in the Artemis Live interview, Harrison expanded on how RMS attempts to solve this.
“To me, that’s the starting place, right. There’s no point me building models that cover stuff that isn’t insured. So, I’m not going to build this huge, comprehensive suite of stuff and waste my time, I really want to be targeted about that. And then, when we’re thinking about cyber risk, I suppose there’s a degree between what types of events can be covered… Really, from a from a model perspective, we try and divide the world into like perils.
“I think sometimes we hear this language about scenarios and scenarios are very bespoke things. We’ve got to think much more holistically, or otherwise we’re not covering the whole risk spectrum,” said Harrison.
The video interview is embedded below and can also be viewed in full, along with previous Artemis Live video interviews, over on the Artemis YouTube channel.
You can also listen in audio to these interviews by subscribing to the Artemis Live podcast here.
