Simon Fagg and Ross Wirth discuss the cyber risk modelling opportunity.

Ross Wirth’s mobile had been pinging messages throughout the night with urgent news from London.

CyberCube’s head of partnership and ecosystems woke up in the United States to discover an update from cybersecurity firm CrowdStrike had triggered a massive global outage, crashing millions of Windows systems.

With insurance companies scrambling to discover their risk exposure, CyberCube showed a cool head to lead the way.

The San Francisco-headquartered firm’s cyber experts helped insurance firms quickly understand their risk exposures, to the dollar amount – even though the crisis was at such an early stage a fog of ambiguity hung over its exact causes.

Wirth says: “It was a bit of a proof point for us to kind of validate. This is how we can do this. This is how we can respond and help the market.”

As the world grows more digitally interconnected, effective cyber risk modelling is crucial. The partners that support cyber risk modelling, such as AdvantageGo, play a vital role.

AdvantageGo integrates CyberCube into its powerful property and casualty underwriting workbench, bringing the risk modeller to the fingertips of underwriters and data specialists spread across the world.

Importantly, AdvantageGo has tailored its underwriting workbench to work expertly with different lines of business, including cyber.

Simon Fagg, AdvantageGo’s product and solutions strategist, told the Voice of Insurance podcast host Mark Geoghegan: “How do we change their view utilising that trusted third-party data that’s going to make them assess that risk differently? That’s what’s really going to matter to them.”

Challenges of cyber risk

When there is a cyber event, it always stems from a ‘single point of failure,’ explained Wirth.
One of CyberCube’s core missions is to focus on those single points of failure to assist insurers with their cyber risk exposures.

A major challenge in cyber is that bad actors look to build on their last havoc-wreaking incident.
Wirth said: “The next hurricane that’s forming out there in the ocean is not watching that hurricane to figure out how to do more damage based on what the first hurricane did exactly. But guess what the bad actors are doing? They’re doing exactly that.”

Fagg highlighted the threat of a big systemic risk in cyber, one which can cause enormous damage.
Even risks below scale are complex and challenging.
Fagg said: “You have a supply chain attack or interconnected events that happen on a global scale at cyber. I think that’s what makes it so difficult, from quantification.”

Bright future

The need for cyber modelling is high. More than 70% of global cyber premium works with CyberCube analytics. CyberCube has 130 staff and clients across the world.
New forms of funding to boost capacity are flowing into cyber, such as alternative capital, helping fuel premium growth.

As the market expands, CyberCube needs different skill sets to help it grow.
Wirth explains: “We need underwriters, but we need underwriters who specifically know cyber as it’s changing quickly. We also need cybersecurity professionals, right, which is why you’ll see former members and leaders of cybersecurity organisations on our board of directors, as well as throughout our organisation.”

Looking to the future, Fagg believes artificial intelligence holds the promise of enormous opportunities.
AdvantageGo is looking at ways AI can boost efficiency across areas including risk management, compliance, claims processing, fraud detection, and pricing.
There are also AI pricing and insights enhancements.

Fagg eventually envisions AI automating valuable insights that it presents to underwriters and pricing teams at key points of decision-making.

Fagg said: “Have you thought about these three things? These are top of mind. Here’s the alignment to current risk appetite. Here’s the alignment to dynamic capacity management.

“Here’s the alignment to current risks: things that are happening day-to-day in the news cycle that can rapidly change your view on whether you wish to underwrite that risk or not.”

The optimism borne out in the discussion has a positive impact on host Geoghegan. He enthused, wrapping up the discussion: “I’ve really enjoyed this conversation. It’s kind of put me in a good frame of mind.
“I feel like sort of striding out into the world, feeling slightly better about the world, and that there are some people who do a good job here, trying to make it a slightly safer place.
“Keep up the good work.”