CyberCube, an InsurTech focused on cyber risk analytics, is calling on the insurance industry to set global cybersecurity standards as the world digitizes.
“Internet-connected technologies is a prime opportunity for the insurance sector to be at the forefront of understanding the risks, setting standards for controlled growth and assuming financial risks on its balance sheets where needed,” states the report, which CyberCube issued Jan. 22 to coincide with the World Economic Forum annual meeting in Davos, Switzerland. CyberCube CEO Pascal Millaire is participating at the event.
The CyberCube report argues that the “exponential rise” in the connected economy presents opportunities both for innovation and exploitation, which is why the insurance industry is the ideal player to step in and set standards as it has with other industrial or societal innovations.
“For centuries, the insurance sector has played a pivotal role in unlocking the economic potential of technical innovation by providing crucial financial support for organizations to transfer risk that cannot be balanced on balance sheets,” according to the report.
But that’s easier said than done. For insurers to step in to set cyber risk insurance standards, they must help companies and organizations develop their risk tolerance and strategies concerning technology, the CyberCube report said.
“Scenario-building is an important tool in helping organizations to develop their own risk tolerance and strategic direction with technology,” CyberCube said, noting that “disciplined imagination” helps this approach succeed, rather than relying on more far-out scenarios. In other words, the disciplined approach helps produce realistic cyber attack scenarios that insurers and clients can really use and learn from.
“The use of models to consider realistic cyber attack scenarios and to quantify the financial loss from those events is a useful tool to assess risk and make informed decisions,” the report noted.
Simply put, CyberCube argues that insurers can help safely unlock the potential of digital technology and insure solid management of the risks it entails.
Here’s how CyberCube’s report recommends insurers can accomplish this:
- Insurers can give smaller business clients access to “approved vendors” that help cover cyber losses but also boost cyber attack resilience.
- Carriers can develop standard scenarios that project cyber attack size and scope by working with multiple stakeholders. This could help produce an enhanced “shared view of risk, collaboration across public and private sectors on innovation, and resilience.”
- Insurers could work with government to “jointly enforce minimum levels of cyber resilience.” This could include elements such as mandated purchase of cyber insurance products meeting minimum standards.
The full report is “Understanding the Societal Impact of the Fourth Industrial Revolution and the Role of Insurance.”