cyber insurance Tom Wilson Chief Risk Officer, Allianz SE 11th Financial Risk Forum Paris, March 26-27

Cyber Insurance Source Affirmative cyber stand-alone cover Affirmative cyber endorsement Non-affirmative cyber exposure – gaps in explicit cyber exclusions Non-affirmative cyber exposure – policies without cyber exclusions Covered losses Notification expenses Credit monitoring Legal costs Forensics Public relations Business interruption Regulatory fines Affirmative Growth Expected growth 20% p.a. until 2020 and thereafter more than 30% p.a. Source Specific policies for losses resulting from Cyber incidents, either accidental or malicious Extension of the traditional insurance to cover cyber-induced losses A range of traditional policies that have an exclusion for malicious cyber attack but not total Policies without explicit exclusions for losses that might occur via cyber attacks 8-Dec-18

Risk ManagemenT: Challenges and solutions Lack of reliable loss experience Dynamic threat vectors Challenging risk engineering and underwriting Challenging risk aggregation and scenario modeling Limited reinsurance or capital market capacity for peak exposures Solutions Multi-disciplinary talent Develop underwriting capabilities Train underwriters Provide underwriting tools Ensure risk assessment / engineering Develop guidelines, wordings Set risk appetite and limits Control accumulations First, sum of risk limits Next, scenario approaches End-game, sophisticated cyber models Scenario 2 Scenario 1 Single policy limit Scenario Approach probable maximum loss (PML) for scenarios Cyber Model Thousands of PMLs Sum of policy limits Blackout Cyber attack on power grid Cloud Outage Disruption of cloud-service provider Cybercrime e.g. WannaCry, Meltdown