Tradeable cyber is the future, says CEO of AkinovA

As cyber risk has an increasingly pervasive influence on the insurance market, the industry needs to find a better way to cover it. The solution could be finding a way to make it tradeable, Henri Winand, chief executive officer of AkinovA, an independent electronic marketplace for the transfer and trading of insurance, reinsurance and insurance-linked securities (ILS) risks, told Monte Carlo Today.

“Cyber will change the future of the market. Every boardroom you go into, in every country, cyber is at the top of the lists of risks that concern them.

“Because of this, it is a matter of urgency that, as an industry, we find a solution to cover this risk. We think the way to do this is by making cyber a tradeable risk,” Winand said.

With $6 trillion in annual cyber-related declared losses predicted by the early 2020s, attacks are already impacting trillions of dollars of insured assets today, he said.

“Cyber crosses all lines of business—every aspect of our lives is potentially touched by cyber risks.

“From governments that could be brought down, hospitals going offline and patients’ lives put at risk, and distribution channels disrupted, to small businesses being put out of circulation—it could disrupt anything and everything. It is a morphing, constantly changing risk,” Winand said.

“Traditional modelling does not work, certainly not alone. This is partly because we simply do not have the data to create models, but also because you cannot look back at a hacking event and say that this could happen in the same way next month.

“What’s needed is a mix of dynamic, continuous market-based pricing combined with models where they are available,” he explained.

Currently, he said, there is no effective mechanism in the market to insure cyber exposure easily at scale. He said a good solution would be to create an electronic trading market.

“Nobody said this would be easy, but sometimes the biggest prize is not always the lowest-hanging fruit. At Monte Carlo, cyber will have to be a topic discussed. It is what cedants want,” he concluded.