The rise of silent cyber risk: Adapting to the new normal  

1 May 2019:

Significant cyber events such as the NotPetya malware attack and the Equifax data breach grabbed international headlines in 2017 and put the spotlight on cybersecurity. Just months before, Willis Re conducted its first insurance industry survey studying the perceived dangers of silent cyber risk or, in other words, coverage under policies not specifically designed to cover cyber. For insurers, the resultant claims and losses in lines as diverse as property, marine, and directors and officers (D&O) liability have left their mark.

Significant increases in the level of expected cyber-related losses were evident in the 2018 Silent Cyber Risk Outlook global survey. Over 60% of respondents said they will likely incur more than one cyber-related loss for every 100 non-cyber covered losses over the next 12 months in all lines of business except workers compensation — compared with less than 50% who envisioned this in any line of the classes of business surveyed in 2017.

Variations by industry

The indiscriminate nature and reach of cyberattacks such as WannaCry have caused respondents to our survey to re-evaluate potential liability in different industries. In 2017, a majority of respondents rated only two of the nine industry groups included in the survey as having a silent cyber risk factor of greater than 1.01 for Property coverage, while none of the industries met this threshold in Other Liability. In 2018, a majority of respondents attached at least that level of risk to all industries in both lines of business.

Furthermore, the largest number of respondents now see Other Liability posing the biggest silent cyber risk (greater than 1.10) in two industries: hospitals/medical facilities/life sciences and financial services. Over a third of respondents believe the silent cyber risk factor in medical fields is 1.10 or greater, a sharp increase from 19% in 2017. Meanwhile, the perceived threats associated with critical infrastructure has meant that the information technology (IT)/utilities/telecom sector continues to be seen as the biggest risk for silent cyber under property coverages, with 42% judging the risk factor as 1.10 or higher.

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Source: Financial Director

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