As with all evolving technical sectors, the term ‘cyber risk’ will mean very different things to different people.
A risk manager or CIO at a corporation will think immediately of how to identify, quantify, mitigate and transfer the risks that face his own operations.
An IT service provider will be considering how to monitor, understand and outwit the perpetrators of cyber crime and develop new tools to thwart their criminal intents.
Insurance professionals attempt to understand the implications of the business risks faced by corporations and offer effective, affordable solutions to their risk transfer needs.
Advisen’s role in this community is to put itself in the shoes of all the major protagonists and seek to inform, analyze, educate and contextualize the risks.
But first, this section of the Cyber Risk Network’s Weekly Download will define the Advisen datasets that the CRN will draw on for its weekly analysis, outline the taxonomy Advisen uses for cyber risk insurance terms and outline the types of data the CRN will analyze on a weekly basis throughout the calendar year.
Advisen’s ability to generate, integrate, analyze and communicate unbiased, real-time insights for the global community of commercial insurance professionals puts it in a unique position as the go to source for cyber related information and a locus of cyber risk community activities.
By harnessing its proprietary cyber databases comprised of loss, policy and transactional data, CRN provides subscribers with one-of-a-kind access to exclusive market intelligence.
Advisen has actively collected cyber intelligence since 2000. As a result, it is able to provide the cyber insurance community with unparalleled real time market insights. An area of particular value is Advisen’s extensive, continuously updated archive of cyber events, available through its interactive Loss Insights database. This database enables risk professionals to identify the types of events where insurance could protect against future losses, estimate future loss costs, set appropriate reserves and populate (re)insurance pricing models among other benefits.
In an environment where cyber risk profiles are continuously evolving, the ability to keep pace and understand where and how losses are occurring is vital.
The Advisen Loss Insights database currently captures over 10,000 cyber losses and is growing by approximately 300 cases every week.
The data is collected from a variety of sources including government websites, keyword news alerts and searches, litigation sources, data security companies, annual reports and analysis and both governmental and private international data security sites.
Once the data is collected, it is loaded into the Advisen Loss Insights database where it is tagged and tracked throughout the lifecycle of the case.
The table below illustrates an 8-day snapshot of the cases in our database. Cyber Cases are classified as the actual event plus the Related Cases that surround the event such as litigation, fines and penalties, response costs and legal and public relationship costs among others.
Cyber cases in Advisen’s database are classified as the actual event plus the Related Cases that surround the event such as litigation, fines and penalties, response costs and legal and public relationship costs among others.
In addition to loss data, Advisen datasets also include policy and transactional data.
Advisen has compiled what it believes to be the largest library of cyber-technology insurance policies. The library currently consists of 364 insurance policies from nearly every insurer currently writing this type of business. The policy database enables a more comprehensive review and comparison of policy language, as well as insight into the insurance industry’s response to the evolving threat landscape.
The library currently consists of 364 insurance policies from nearly every insurer currently writing this type of business.
One of the foundations upon which Advisen was built is its extensive collection of transactional data. Advisen’s program benchmarking database is currently the home for the industry’s largest 3rd party collection of insurance program information, including limit and retention/attachment point, premium, carrier and broker. This information provides valuable insight into pricing and coverage trends, and will provide a framework for much of the conversation and content available to CRN members.
CRN subscribers will continually benefit from insights derived from this data.
The insurance industry has yet to develop a standardized approach to defining the cyber risk market. The evolving cyber risk landscape coupled with differing viewpoints on how to define a particular risk can create confusion among buyers and ambiguity when it comes to policy interpretation.
Additionally, policy language crafted to protect against a particular exposure often become quickly obsolete as the nature of the exposure evolves.
Developing a consensus-driven industry-wide framework for cyber exposures, coverage and the cyber risk market itself could reduce much of the confusion and provide significantly more clarity to buyers and their brokers.
Advisen’s information assets and position as an independent third party resource to the cyber insurance industry puts it in a unique position to craft a consensus around key risk and coverage terms and concepts.
Advisen’s objective is to function as a centralized industry resource to help define and categorize the cyber risk landscape.
An initial step toward this goal is its cyber risk taxonomic framework, which is designed to categorize a cyber event and track it from the initial occurrence through the claims process. To achieve this, the Advisen framework is comprised of three buckets, each consisting of eight terms.
The elements of the taxonomical framework are:
It is Advisen’s view that these 512 possible combinations of 24 terms describe the vast majority of cyber incidents from the root cause to their final impact on a business.
As a member of the CRN, each week you will receive Advisen data-driven analysis that casts a spotlight on a particular sub-section of the cyber risk universe. Weekly content will delve into aspects of the following categories:
Advisen generates, integrates, analyses and communicates unbiased, real-time insights for the global community of commercial insurance professionals. As a single source solution, Advisen helps the industry to more productively drive critical business decisions about pricing, loss experience, underwriting, marketing, transacting or purchasing commercial insurance. Visit www.advisenltd.com to learn more.
