The Lloyd’s Market Association has set out a framework for Lloyd’s insurers to consider using when managing their exposure to lesser-known systemic cyber risks.
While systemic scenarios such as the failure of a cloud service provider or a widespread ransomware attack have been extensively modelled, the rapid digitalisation of society is creating new cyber risks with which insurers are less familiar.
In a new report published alongside the framework, the LMA examines the impact of two alternative, theoretical cyber events, including an attack on an electronic healthcare record system, and an attack on an electronic chart display and information system used in the shipping industry. In both cases, the LMA’s Cyber Risk Strategy Group experts apply the new framework in order to create a much more detailed understanding of these risks and their possible accumulations.
Kelly Malynn, underwriting product leader for cyber physical damage MAP at Beazley and chair of the LMA’s Cyber Risk Strategy Group, said: “One of the standout features of our report is its focus on the aggregation potential of cyber risks – particularly these lesser-known ‘other cyber’ scenarios. The interconnectedness of modern systems means that a single point of technological commonality can lead to widespread disruptions, underscoring the necessity for advanced risk modelling and comprehensive scenario planning to facilitate informed underwriting.”
Chris Mather, senior executive, Technical Underwriting at the LMA, added: “The detailed examples provided in this report in the healthcare and maritime sectors, offer valuable insights into how such scenarios can unfold across specific industries with common nodes of aggregation.
“By working together to enhance our understanding of cyber threats, strengthen our resilience to cyber attacks and develop innovative risk management solutions, we can mitigate the potential for catastrophic disruptions.”
Source: cirmagazine.com
