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Cyber risks : the financial risk will be lower than those of natural disasters


Justine Montminy

August 21, 2018 11:30

According to the firm’s rating A.M. Best, the financial risks posed by cyber risks is likely to be lower than those of natural disasters for years to come. To come to this conclusion, the firm has studied the impact of two hypothetical scenarios of cybercatastrophes on insurers.

The hypothetical scenarios were created by Lloyd’s and A.M. Best has applied the risk analysis model of Guidewire’s Cyence on the 20 largest insurers in cyber risks as if it were a disaster in 2022. However, the results do not take into account the treaties of reinsurance.

Gross losses of excess fonts

In the first scenario, many client servers based on the cloud are failing which causes widespread disruption to activities. In the second scenario, a software package operated as a whole is compromised.

A.M. Best considers if these two scenarios occurred within a period of 12 months at a business on the 200, five insurers among the top 20 would be gross losses ranging from 11% to 233 % of their estimated surplus of police 2022.

Possible delisting

“For the majority of these companies, even the gross losses do not match the estimates of the maximum losses likely caused by the natural disasters. However, in some cases, some insurers might lose a surplus of fonts, important, which could have a negative effect on their rating of financial strength and even lead to a downgrade, ” says the associate director at A.M. Best, Fred Eslami.

A.M. Best said doing this kind of test since it will use the results in its review process of the approach of an insurer against cyber risks. The firm then evaluates the cyber risks and their effects on the financial balance sheet of an insurer to confirm that its portfolio of cyberrisque does not pose stress on its capital.

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