Global Topics: Cyber Liability

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Cyber Liability

Rapid progress spawns new risks

Many of us can no longer imagine a world without computers, electronic data processing, the internet or smartphones. “Bits and bytes” are an essential part of our daily lives, both at work and at home. Technological development will continue, producing new technologies with new applications, but also new risks. The resultant hazards for companies will be diverse and often difficult to assess. Hazards are developing extremely rapidly.

Globalization brings both advantages and disadvantages for IT users. Internet connections effectively permit access to data, systems and entire organizations throughout the world. However, on the downside, they may also lead to growing losses, as the risks increase with closer networking. Widespread failure of the Internet could lead to extensive claims as many companies depend on the web for their day-to-day business. Cyber attacks on critical infrastructure, such as the water supply, telecommunications and the transportation systems would, the very least, be restricted. Production stoppages and the breakdown of trade would cause considerable economic losses, sending insurance losses soaring, too.

Highly specialized expertise and experience are needed to develop suitable models for new insurance products which can adequately cover these complex risks. This applies not only to individual cyberrisk covers for clients in a wide range of industries, but also with regard to possible accumulations among risk carriers. Microsoft and Munich Re have set up a strategic partnership to find common answers to risk issues such as commercial cloud computing services. This cooperation is just one example of how we, as a motivated and innovative partner, are tackling complex risks.


Keith Farrell
Senior Vice President
Specialty Markets
Munich Reinsurance America, Inc.
Tim Zeilman
Vice President & Counsel
Strategic Products Division
The Hartfrod Steam Boiler Inspectiona and Insurance Co.

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Senior Vice President Keith Farrell provides a quick overview of first-party and third-party cyber risk liability, looks at the waterfall effects of a loss and offers risk management strategies for dealing with cyber risks.

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