Cyber risk modelling specialist CyberCube has launched a set of exposure databases for cyber risk, claiming them as the first of their kind, something seen as a key pre-requisite for broader cyber insurance-linked securities (ILS) activity.
Exposure databases detail industry insured sums exposed to specific perils, in this case cyber breaches, attacks and security related losses.
They are useful in the risk management and risk transfer processes of insurance, reinsurance and ILS market participants and have been a key tool for developing ILS and catastrophe bond activity for natural perils.
CyberCube said that its new and detailed Exposure Databases will allow re/insurers and brokers to perform a wide array of benchmarking, sensitivity, and real-time analyses for cyber risks.
They include CyberCube’s Economic Exposure Database (EED) and Industry Exposure Database (IED), with both designed to work seamlessly with the firm’s Portfolio Manager cyber portfolio modeling solution.
Users will be able to view each Exposure Database and run analyses to develop industry loss estimates for specific scenarios, something seen as key in reinsurance, retrocession and ILS.
Cody Stumpo, CyberCube’s Senior Director of Product Management for Portfolio Manager, explained, “Detailed IEDs have been invaluable in natural catastrophe modeling, for benchmarking, creating exposure and risk proxies, and modeling industry risk for Insurance Linked Securities (ILS). Now, the cyber market can benefit from all of those same use cases.”
The first release of CyberCube’s Exposure Databases feature US standalone cyber insurance, representing the global insurance industry’s cyber exposure and risk to US companies.
“IED values are fundamental in developing Industry Loss Curves (ILCs) for all scenario types. This information can be used by (re)insurance and broker clients to quantify and better understand cyber catastrophic risk and the potential impacts,” CyberCube explained.
This is key to any development of cyber industry loss based risk transfer products, which has been seen as one possible avenue for building more retrocessional reinsurance capacity for cyber risks, as well as for the potential to issue cyber industry loss trigger catastrophe bonds, or other capital market instruments.
Jon Laux, CyberCube’s VP of Analytics, added, “We’re excited to make our cyber IED available to the (re)insurance industry. It’s an essential step forward for insurers to better understand the segments they are underwriting or could be covering, and for the (re)insurance community, collectively, to have a clearer view of the big picture about what’s driving cyber exposures.
“The release of these exposure databases furthers CyberCube’s objective to enable a common currency for cyber risk transfer discussions.”