Abstract
As cyber events have virtually no geographical limitations and can result in economic losses on a global scale, the assessment of return periods for such economic losses is currently debated among experts. The potential accumulation of consequential insurance losses due to intrusions or viruses is one of the major reasons why the (re-)insurance industry has limited risk appetite for cyber related risks. In order to increase the risk appetite for cyber risk and based on a first batch of data provided by Symantec, the goal of this article is to: Check if IT activity, i.e., the number of virus or intrusions being blocked by Norton on end-user computers could be used as an index for parametric covers that reinsurance companies could propose to their cedants; Look into the correlations of this IT activity across different regions, thereby confirming the absence of geographical limitations for cyber risk, and hence confirming the systemic nature of this risk. This first study on the Symantec dataset shows that a cyber index based on IT activity could be a useful tool to design parametric reinsurance product.
Highlights
Cyber risk commonly refers to any risk of financial loss, disruption or damage to the reputation of an organization, resulting from the failure of its information technology systems
As mentioned above, based on a first batch of data provided by Symantec, this paper aims at confirming quantitatively some key features of cyber risk, in particular, the systemic nature of this risk and the possibility to use such IT data to create an index which would reflect the insurance losses
This article will focus on the analysis of this first batch of data to derive some quantitative elements that could be used for pricinginsurance products covering cyber risk
Summary
Cyber risk commonly refers to any risk of financial loss, disruption or damage to the reputation of an organization, resulting from the failure of its information technology systems. In order to protect organization or persons from cyber risk, a few companies propose protection tools such as Symantec, AVG or Microsoft. Among these companies, Symantec is one of the major providers of end-user (personal computer) protection with its software Norton. In its 2018 Internet Crime Report (see Federal Bureau of Investigation 2018), the USA Federal. Bureau of Investigation describes the mission of its IC3 department as “provide the public with a reliable and convenient reporting mechanism to submit information to the FBI concerning suspected. The report shows a steady increase of Internet crime, totaling, in 2018, 1,509,679 complaints for a total loss estimated at USD 7.45 billion. As an illustration of the growing crime activity on the internet, Guy Carpenter and Cybercube mentioned
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