Guy Carpenter & Co., the global risk and reinsurance specialist and wholly owned subsidiary of Marsh & McLennan Cos., has formed a strategic alliance with cyber security specialist Symantec Corp. to create a cyber aggregation model.
Cyber attacks are estimated to cost businesses as much as $400 billion a year, and the systemic nature of the risk means re/insurers can suffer losses from multiple insureds across vast geographies from a single event, exposing infrastructure, supply chain and other interconnected risks, Guy Carpenter said in a statement.
The cyber aggregation model, which will be developed over the next 12 months, will include “a comprehensive catalogue of cyber scenarios” from which insurers will be able to derive frequency and severity distributions. The model will measure the “potential financial impact of loss from both affirmative cyber coverages and ‘silent’ all-risk policies where cyber is the peril, but no cyber exclusions exist,” Guy Carpenter affirmed.
In the wake of the cyber attack on the Ukrainian power grid in late 2015, re/insurers are attempting to model and assess the aggregation risk of potential attacks on critical infrastructure, including electric grids, telecommunications networks, dams, transportation systems, chemical plants and civilian nuclear facilities, Carpenter explained.
“However, limited historical data and the constantly evolving threat make it a challenging peril to model,” the company continued.
Guy Carpenter’s Cyber Solutions Specialty Practice, which focuses on the development and delivery of cyber reinsurance solutions, will spearhead the development of the model.
“By combining Guy Carpenter’s risk management and catastrophe modeling expertise with Symantec’s technical knowledge and proprietary data, we are pioneering a cyber aggregation model to help reinsurers gain a better understanding of their correlated cyber risks and to manage and protect their capital in extreme cyber scenarios,” said Tim Gardner, CEO of U.S. Operations at Guy Carpenter.
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- Lloyd’s Develops Standardized Data Requirements for Cyber Risks
- Hackers Caused Ukraine Outage with Malware & Remote Power Cut: Report
- Public-Private Catastrophe Scheme in UK Would Help Mitigate Cyber-9/11: Study
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