Willis Group Holdings reinsurance division has introduced a new cyber risk modeling tool, PRISM-Re, which will allow insurers to quantify and manage their portfolio exposure to data breaches.
Claimed to be industry’s first cyber risk modeling tool, the new model will advance the insurance industry’s ability to manage cyber risk and provide wider protection against the growing tide of cyber-attacks.
Willis Re executive vice-president Mark Synnott said: "Cyber-crime now costs the global economy around $450bn annually and is increasingly high on the agenda for national governments and corporate boards.
"With recent high profile data breaches including those of Sony, Target and Home Depot, it is an area that is seeing a huge upsurge in demand. In a largely mature and static insurance market, cyber represents one of the key avenues for growth."
The new tool has been developed in collaboration with Willis Retail’s cyber team and actuaries from Willis Risk & Analytics, whose Privacy Risk Insurance Strategy Model (PRISM) allows a single insured to assess their exposure to data breach losses.
In the same way, PRISM-Re is said to offer an objective analysis of the susceptibility to data breach events across the insurer’s portfolio.
The tool will estimate the frequency of data breaches and the potential severity of insured losses arising from those events, based upon the latest exposure data.
In addition, the model employs a common shock methodology to cover the possibility of contagion behavior, under which multiple breaches will take place systemically across a single industry sector or related sectors.
Image: Willis building in London. Photo: courtesy of Colin.