AIR Worldwide launches new cyber modelling tool

Catastrophe modelling firm AIR Worldwide, a Verisk Analytics business, has unveiled a cyber risk modelling application for the re/insurance market that will provide underwriters and risk managers with a variety of cyber analytics.

The ARC (Analytics of Risk from Cyber) tool is designed to evaluate any commercial policy, including those vulnerable to silent cyber, measure and monitor aggregations of cyber risk within a portfolio, and estimate potential insured cyber losses for portfolios, the company said.

"Insurers typically have very little information about the cyber risk characteristics of the companies they insure and instead rely on a crude market-share approach," according to Scott Stransky, assistant vice president and principal scientist at AIR Worldwide.

"ARC takes advantage of the detailed information that AIR has compiled on companies to help insurers identify their sources of aggregation risk and to determine with greater certainty which of their insureds would be affected by various aggregation scenarios."

Laila Khudairi, underwriter at Tokio Marine Kiln, commented: "Understanding an insured’s virtual supply chain is a critical first step toward managing systemic cyber risk within a portfolio. A global database of exposures such as the one underlying ARC gives us more confidence that the modelled loss estimates reflect the risk within our portfolio."

As part of the new cyber application, AIR offers a variety of cyber scenarios, such as cloud service provider downtime, accidental data breach, and blackout, that can be used to estimate the financial impact of a defined event on an individual company or portfolio. With the ability to modify severity parameters, risk managers can implement their own view of the risk, test the sensitivity of portfolios to different event circumstances, and explore the impact of adjusting cyber policy terms.

A cyber risk consulting practice is also available to help clients augment the cyber exposure information in their existing books of business and to produce custom reports on aggregation risk and the probability of breach, the company said.

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