A Guy Carpenter study highlighted the need for insureds, insurers and reinsurers to all recognize the loss potential of cyber catastrophes, and the value in appropriately priced risk transfer solutions.
Over the past several years, catastrophic risk from extreme weather, driven by climate change, has drawn much attention from activists, the media, governments and an increasing number of business leaders. Less attention has been paid to another potentially catastrophic risk: the failure of technology to perform. In a global, digitally interconnected economy, such a failure can have devastating consequences.
Were technology and digital infrastructure to fail catastrophically — either through intentional attacks or errors — global commerce could grind to a halt. Data would be lost, or rendered inaccessible. Systems would fail to communicate. Critical infrastructure such as power plants, hospitals and airports could be shut down. In every sense, massive technology failure could be catastrophic.
Guy Carpenter-affiliate Marsh’s 2020 Technology Industry Risk Study explores a new definition of catastrophic risks: The greatest catastrophic risks for technology companies and technology-enabled businesses are not natural disasters. They are technology and data infrastructure failures.
The reinsurance sector has shown itself to be well versed at navigating market-changing events, and Guy Carpenter’s multi-dimensional approach allows us to review many different views of our cyber risk, quantify our exposures and manage accumulations.