Understanding cyber risk by insureds and insurance companies alike is proving to be an enormous challenge. For some industry observers, gauging the attendant risks—at least for the moment—often amount to sheer guess work where they are estimating the scope and impact of exposure.
In this crucial moment, progress must be made in gathering, modeling, and interpreting cyber risk and cybersecurity data. Without analytical advances, insurance companies can expect to struggle in helping potential business clients assess vulnerabilities in coverage gaps. What’s more, insurers themselves would be at a disadvantage in their need to create sound pricing and set aside proper loss-reserve amounts. Such a scenario surely could invite regulatory scrutiny and negatively impact reputation.
Through a collaboration with KPMG’s Innovation Lab, this paper discusses: