Important to understand response of cyber catastrophe models: Guy Carpenter

Guy Carpenter, the reinsurance broking business within Marsh McLennan, highlights the importance of understanding how cyber catastrophe models respond to various scenarios in its latest cyber research study.

In the reinsurance broker’s study, it emphasises that as cyber risks continue to evolve, so do the parameterisations of these models, influencing their responses to different situations.

Anthony Cordonnier, Global Co-Head of Cyber at Guy Carpenter, comments, “Cyber catastrophe modelling is constantly in motion, due to ever-evolving threats and a continued drive to advance the precision and capability of the models.”

In a summary of the report, Guy Carpenter states, “we need to understand the drivers of divergence in the new model versions, given the context of a greater focus on ransomware and cloud.”

Factors such as the impact of coverage on model variance, vendors’ reactions to recent events, and the evolving threat landscape all play crucial roles.

Moreover, the study underscores the importance of emphasising tail losses and conducting periodic reviews to gain insights into the impacts of model divergence.

By staying abreast of these developments and understanding how these models respond to different scenarios, re/insurers can enhance risk mitigation strategies and make more informed decisions in an ever-changing cyber risk landscape.

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