Cyber Risks and Insurance
A Global Threat
Bengt von Toll, Head of Cyber Europe and Latin America
Source 2016: https://www.cnbc.com/2017/02/07/cybercrime-costs-the-global-economy-450-billion-ceo.html
Source Estimation for 2021: http://securityaffairs.co/wordpress/50680/cyber-crime/global-cost-of-cybercrime.html
The costs of cyber crime
450 2016
2021
Cyber risks constitute one of the greatest threats we face…
Economic losses are increasing without limits
bn US$
6,000 bn US$
Our biggest risk is: Strategic risk not to find any
insurance solution for cyber.
Digital transformation demands new solutions from
(Re)insurance industry/Top 10 Risks Europe
Source : Allianz Risk Barometer 2019 /https://www.agcs.allianz.com/content/dam/onemarketing/agcs/agcs/reports/Allianz-Risk-Barometer-2019.pdf
Business Interruption
2018: 42% (1)
1
37%
Image donvictorio / Shutterstock.com
=
Cyber Incidents
2018: 40% (2)
2
37%
Image Donat Sorokin / TASS / dpa Picture Alliance
= Image mauritius images / Masterfile
2018: 30% (3)
Natural catastrophes
28%
3
=
Fire explosion
2018: 20% (6)
6
19%
=
New technologies
2018: 15% (7)
7
19%
Image Ociacia / Shutterstock.com
=
Image Shutterstock.com
Changes in legislation and regulation
2018: 21% (5)
4
27%
Market developments
2018: 22% (4)
5
23%
Image blackred / Getty Images
Climate change / weather volatility
2018: no value
8
12%
Image: Alto Crew on Unsplash
Loss of reputation or brand value
2018: 13% (8)
9
13%
Image mdd / Shutterstock.com
Shortage of skilled workforce
2018: no value
10
9%
Image: Dylan Gillis on Unsplash
0
5
10
15
20
25
2015 2016 2017 2020 2025
0
100
200
300
400
500
2014 2015 2016 2017 2018
PI RI
GWP global cyber insurance market1 GWP Munich Re cyber portfolio
Strong correlation with cyber security market
Higher awareness of cyber risks/claims reporting
will drive demand for insurance solutions
GDPR implementation in Europe
Munich Re serves all client segments via Reinsurance
and Primary Insurance carriers
Well established player in US and RoW
Munich Re aims to keep 10% market share
in the growing cyber market
RoW US
Digitalization
Claims
Legislation
Cyber insurance market with strong expected growth
Munich Re – Cyber reinsurer of the year 2017 and 2018
Cyber is one of Munich Re’s main strategic growth areas,
therefore we further invest in leading-edge expertise and strong global market presence
1 Estimates based on different external sources (Marsh & McLennan, Barbican Insurance, Allianz).
in US$ bn in US$ mn
Cyber risks are in fact a global threat…
No region around the globe seems to be exempted anymore
Video: Malwarebytes/ Youtube: https://www.youtube.com/watch?v=IEAtGCkbq5Y#t=23s
Cyber risks are in fact a global threat…
Attacks show a global reach
Threat-Matrix Cybercrime Cyberkid Cyberwar and
Cyberspionage Cyber-Terrorist Hacktivist
Motivation Money Fun, curiosity Strategic Ideology/Religion Politics, Ethics
Choice of targets Individual, by chance or
directly aimed
By chance, political
reasons Individual, collateral
Ideological, anti-western,
collateral, media-effected
Ideological and political
targets
Organisation Strongly pronounced Partially Perfect Regional Structured
Competence High Low-high Very high Low-high (external help) Middle-high
Overview on Cyber threat actors
Attacks are driven by human behaviour
Accumulation
Virus &
Malware
Data
breach
IT Service
provider outage
Infrastructure
Failure
Significant Accumulation Potential arises form shared vulnerabilities
and disruption/outage of central IT services and external networks
State of the art risk management as true business enabler
Observed Accumulation Paths
Common software vulnerability
(Wannacry, NotPetya)
Common hardware vulnerability
(Meltdown, Spectre)
Disruptions to IT Service Providers
(Cloud Service Outage)
Attacks on critical infrastructure and/or industrial
control systems
Risk management approach
Cyber risks which are deemed to be insurable and
manageable are tracked against a pre-determined risk
appetite
Critical infrastructure risk, or “Outage of External
Networks” are deemed not within appetite
Accumulation
Virus &
Malware
Data
breach
IT Service
provider outage
Infrastructure
Failure
Transparency is required to eliminate uncertainty regarding coverage
State of the art risk management as true business enabler
Silent Cyber
Transparency – Do we write cyber?
Almost every conventional non-life policy
can be exposed to cyber risk
Silent Cyber exposure is potentially significant,
but it presents also a nearly untapped area of business
opportunities
Action required
Achieve transparency of the inherent exposure
Turn the silent coverage into at least non-silent or even
better affirmative coverage
Risk assessment and pricing
Accumulation control
Munich Re offers a fully fledged, market proven product
with solutions for the whole value chain
Risk
Assessment
Insurance
Policy
Post Incident
Response/Services
Pre Incident
Services
INSURANCE
Claims
Enquiry
Risk
Assessment Coverage
Pricing
support
Accumulation
Control
Data Breach
recovery
Forensics
Extortion
Negotiation
Crisis Manage-
ment
PR
Legal/ Regulatory
Notifi- cations
Hotline 1st Level Response
Sales
Reports
Employee
Aware- ness
GDPR
Checks
Security
Monitoring
Protection
Suite Platforms
App
We bring well-established
experience to the table with
experts who can operate in all
industries and organisations,
from large corporates, to SMEs,
and personal lines
We are actively identifying and
developing cyber initiatives to
improve our customers’
experience and enhance
underwriting
We continuously monitor
changes to the cyber
environment, seek to improve
our understanding of the risk,
and then adapt our cyber
products to ensure we remain
relevant to our customers
Experience and Expertise Continuous Improvement Innovation
Munich Re‘s value add
Where can we support?