A list of common catastrophic exposures typically includes floods, storms and earthquakes. The day is coming though, that cyber risk will be added to that list. It may not take a single Hurricane Katrina magnitude loss, but the potential for huge and frequent losses may eventually put it on the top of the list.
We’ve now got thousands of people world-wide working around the clock to create cyber exposures including viruses, denial of service attacks, data breach, extortion and even acts of war and terrorism. These hackers can be anything from a high school student in China pulling a prank to an organized military operation attempting to bring down a country’s banking system. All you need is a computer, access to the internet and the skills to pull it off.
Providing insurance for these exposures challenges the traditional assumptions of the industry. There may not be any actual physical damage to property or even knowledge of whom or what caused the loss or even where in the world it originated. How do you value the loss of data, the loss of business or damage to reputation? New cyber threats emerge every day and technology changes very, very quickly.
Technology and data breach exposures should be taken very seriously and be a part of every insurance risk analysis.