Atlas Magazine October 2019

Cyber risks: insurance up against high technology

Worse than natural disasters, having yielded their mysteries throughout history, relatively easy to define, model and control, cyber-risks are a more dreadful prospect for insurers. The latter appear shocked by this multi-faceted new risk due to its unpredictable outlooks and high loss potential.
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In fact, insurers are struggling to respond quickly to the economic and social changes introduced by new technologies.

The key position of the internet in corporate operations and in the daily life of hundreds of millions or even one to two billion individuals has led to the emergence of a new economy endowed with digitized and interconnected activities: online banks, online shopping, online betting, virtual companies and agencies, autonomous cars,…

The growth of this digital economy is going together with the rise of cybercrime. The proliferation of connected objects has facilitated computer attacks of various origins: disgruntled office workers, mafia groups, competing entities, foreign countries, a multitude of claim sources.

In increasing frequency and severity, the most feared attacks pertain to theft of data, the introduction of viruses into connected objects, the disruption of strategic infrastructures: distribution of drinking water, electricity, airport, road traffic,... For example, Airbus has sustained four major attacks in the last twelve months. In May 2017, the WannaCry virus paralyzed more than 300 000 computers in 150 different countries.

For the time being, the insurance market is struggling to adapt to the new economic situation. Unstructured, the industry is struggling to deal with the demands of customers who, under the spell of digital technology, are doomed to go forward.

Analyzing the scenarios of "cyber disasters" and quantifying their impacts have, therefore, become insurers' priorities for the years to come.

Atlas Magazine N°164, October 2019

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