RMS unveils cyber accumulation tool - FREE
RMS has unveiled the first of its new cyber risk products and
launched a management tool to help clients get a better understanding on their
exposure to this rapidly growing and fast developing threat.
The risk modeller has been working closely with the Cambridge
Centre of Risk Studies, as well as a host of re/insurance industry firms, to
develop the new cyber products. The new tool includes both a software system and framework for cyber exposure
reporting as well as a suite of cyber catastrophe scenarios for loss modelling.
Called the RMS Cyber
Accumulation Management System, the risk modeller said the new tool gives insurers
the framework necessary to properly organise and structure their data. It also
provides five cyber loss models that will allow insurers to stress test their
portfolios against a range of cyber loss methods.
The release of the
new product comes as more re/insurers make the move into the cyber market. Corporate
risk managers view the peril as one of the biggest threats to their businesses,
and while insurers are offering products, they are understandably taking a
cautious view with what is a fast moving risk that constantly and repeatedly
evolves.
As such, insurers
have been offering limits that frequently do not match their clients’ needs, noted RMS.
“While many
insurers see cyber as a growth opportunity they are cautious of scaling their
limits and increasing their exposure because, rightly, they’re concerned about
accumulation,” said Andrew Coburn, senior vice president with RMS.
“What happens if many of their insureds are impacted in a large-scale ‘cyber
catastrophe’? To prudently increase capacity for cyber insurance, insurers need
to first understand both their cyber accumulation and correlations. Assessing the probable maximum loss (PML)
for cyber is a key determinant for an insurer to set its risk appetite,
enabling firms to understand the potential size of cyber catastrophes.
“Without an ability
to set a PML, insurers are compelled to assume a conservative approach,
limiting their capacity and reducing the efficiency of their capital management,”
added Coburn.
RMS developed the Cyber
Accumulation Management System in collaboration with the Centre of Risk Studies at Cambridge
University and was supported by Amlin, Aon Benfield, Axis Capital, Barbican
Insurance Group, Canopius Managing Agents and SJNK, RenaissanceRe, Talbot
Underwriting and XL Catlin.
RMS’ launch of the accumulation tool has been accompanied by a new report
called Managing Cyber Insurance Accumulation Risk. Both the release of the Cyber Accumulation Management System and the
report come after RMS published its Cyber Exposure Data Schema in January.
“Our economy is
undergoing a profound digital transformation and cyber-related insurance has
the potential to be a fundamental driver of growth for the global re/insurance
industry,” said Hemant Shah (pictured), chief executive and co-founder of RMS.
“The global
insurance industry has always played a crucial role in ensuring the resiliency
of our economy, and the launch of the RMS Cyber Accumulation Management System is
not only an important first step in furnishing our clients with the models and
tools to safely grow capacity for this line of business, it also helps to
create a fundamental opportunity for the industry to increase its relevance in
a rapidly changing economy.”