Buffett warns on cyber risks

Warren Buffett said he doesn’t want Berkshire Hathaway being a leader on cyber insurance because neither he nor others in the industry really know the risk, according to a May 5 Bloomberg News report.

"I don’t think we or anybody else really knows what they’re doing when writing cyber" insurance, Buffett said at his firm’s annual meeting in Omaha, Nebraska. "We don’t want to be a pioneer on this."

Buffett explained that cyber risk is part of his estimate that every year carries about a 2 percent chance of a super catastrophe that would cause $400 billion or more of insured losses. While that kind of disaster will wipe out many companies, Berkshire will aim to keep its exposure low enough to remain profitable in such a year, the 87-year-old chairman said.

Buffett also reportedly said that he’s fine with writing some cyber policies to remain competitive but doesn’t want to be among the top three in the industry. Anyone who claims to know the base case or worst case for losses is “kidding themselves,” Buffett noted.

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