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CyberCube, a leader in cyber risk analytics, has released new research that underscores the value of diversification and mitigation in a (re)insurer’s portfolio. The report, which used the company's catastrophe model, Portfolio Manager v6, found that strategic actions can significantly decrease exposure to catastrophic cyber risk. Diversification across factors like geography, industry, and technology can lower potential losses by over 40%, while strong security posture and mitigation practices can reduce them by nearly 60%.
A new report from CyberCube analyzes the impact of diversification and mitigation on cyber risk.
The analysis used the latest version of CyberCube’s catastrophe model, Portfolio Manager v6.
Diversification across geography, revenue, and industry can reduce potential cyber losses by up to 42%.
Mitigation practices such as strong patch management and robust backups can decrease modeled losses by up to 57%.
The report highlights that the global cyber insurance market is heavily concentrated in the United States, which accounts for roughly two-thirds of the market.
Continued market growth outside the U.S. will help increase diversification over time.
The cyber insurance market has experienced rapid growth, becoming a line of business that is both catastrophe-exposed and capital-intensive. This growth, while promising, has also heightened the need for a deeper understanding of diversification and risk mitigation. Jon Laux, CyberCube’s Vice President of Analytics, commented, “The cyber insurance market has experienced rapid and sustained growth over the past several years, emerging as a catastrophe (CAT)–exposed and capital-intensive line of business. This trajectory, while promising, heightens the need to understand the role of diversification and risk mitigation—two themes that have been extensively examined in natural catastrophe insurance, but remain comparatively underexplored in cyber.”
The report, "Reducing Cyber Catastrophe Risk: Diversification and Mitigation in Action," provides clear, quantitative evidence of the benefits of these strategies. It highlights that the cyber hygiene of insured enterprises has material implications for portfolio performance and capital requirements. While the full benefits of geographic diversification are currently limited by the concentration of insured cyber risk in the United States, the report anticipates that this will change as European and Asian insurance markets expand and mature over the next few years. The insights from this report reflect the rationale behind the key changes made in the latest version of Portfolio Manager, helping organizations better prepare for catastrophic cyber events.
CyberCube is the leading provider of software-as-a-service cyber risk analytics to quantify cyber risk in financial terms. Driven by data and informed by insight, we have harnessed the power of artificial intelligence to supplement our multi-disciplinary team. Our clients rely on our solutions to make informed decisions about managing and transferring cyber risks. We unpack complex cyber threats into clear, actionable strategies, translating cyber risk into financial impact on businesses, markets, and society as a whole. The CyberCube platform was established in 2015 within Symantec and now operates as a standalone company. Our models are built on an unparalleled ecosystem of data and validated by extensive model calibration, internally and externally. CyberCube is the leader in cyber risk quantification for the insurance industry, serving over 100 insurance institutions globally. The company’s investors include Forgepoint Capital, HSCM Bermuda and Morgan Stanley Tactical Value.
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