Willis Re unveiled the insurance industry's first cyber risk modeling tool that will enable insurers to quantify and manage their portfolio exposure to data breaches, the leading cause of cyber losses. In doing so, the new model - PRISM-Re™ - is a major breakthrough in advancing the insurance industry's ability to manage cyber risk and offer wider protection against the growing tide of cyber-attacks.
Leveraging expertise from across the Willis Group, PRISM-Re™ was developed in collaboration with Willis Retail's cyber team and actuaries from Willis Risk & Analytics, whose Privacy Risk Insurance Strategy Model (PRISM™) enables a single insured to assess their exposure to data breach losses.
Similarly, PRISM-Re™ provides an objective analysis of the susceptibility to data breach events across the insurer's portfolio. Based upon the latest exposure data, the tool estimates the frequency of data breaches and the potential severity of insured losses arising from those events.
The model also employs a 'common shock' methodology to encompass the possibility of contagion behavior, whereby numerous breaches could take place systemically across a single industry sector or related sectors. PRISM-Re™ therefore offers a way of simulating the data breach impact of a so-called 'cyber hurricane' or 'cyber tsunami'.
Commenting on the model's release, Mark Synnott, Executive Vice President of Willis Re, said, "Cyber-crime now costs the global economy around $450 billion annually and is increasingly high on the agenda for national governments and corporate boards. With recent high profile data breaches including those of Sony, Target and Home Depot, it is an area that is seeing a huge upsurge in demand. In a largely mature and static insurance market, cyber represents one of the key avenues for growth.
"Until PRISM-Re™ no model existed that could quantify the exposure across an insurer's portfolio. A lack of this kind of 'holistic model', which are now so well-established for natural catastrophes, has hindered the industry's ability to offer wider protection – without clarity around the potential total exposure faced, insurers have ultimately been constrained in underwriting this risk class due to the uncertainty of the potential financial impact.
"Our model helps provide greater objectivity and will allow insurers to underwrite this risk with more confidence and to therefore write more and/or higher limits. It may also give those not currently providing coverage the confidence to enter into this line. We at Willis Re can then assist our clients in evaluating and then executing the most effective reinsurance strategy."
Latest from Cyber Policy Magazine
- Aon and Guidewire Launch Cyber Scenario for a U.S. Dam Attack
- Generali Launches Its Fully-Dedicated Cyber Insurance Function And The CyberSecurTech Start-Up
- Silent Cyber Added To Willis Re’s Cyber Portfolio Management Tool PRISM-ReTM
- Companies Will Make Major Enterprise Wide Changes To Address Cyber Risk In 2018
- DAS Spain Launches DAS Cyberbullying Insurance