The Gray Rhinos Series is designed to raise awareness of a select group of insurance industry challenges before a major event occurs. We're increasingly hearing from cedants — as well as reinsurers — about the inherently elevated risk landscape we're operating in. In an increasingly volatile world, the ability to quickly identify and prepare for high-impact eventualities is a business imperative for us and our carrier partners.
The term “Gray Rhino” was first coined by Michele Wucker, an American policy analyst specializing in the world economy and crisis anticipation. In her 2019 TED talk, “Why we ignore obvious problems — and how to act on them”, she urged viewers to replace the idea of the "black swan" (a rare, unforeseeable, unavoidable catastrophe) with the reality of the "gray rhino" — a preventable danger that we choose to ignore.
Gray Rhinos are threats that we can see and acknowledge, yet do little about. Created originally for discussion around large policy issues, the term has become increasingly adopted by the business world — particularly when considering business process, systemic decision-making or industry trends.
This Gray Rhino article tackles cyber cat: a “cyber catastrophe” risk, or the prospect of a large-scale, systemic cyber attack. Though Cyber insurance is a rapidly growing market, it's never had to deal with such a catastrophe, which makes it difficult to model and price.
Multiple factors make cyber cat a difficult variety of catastrophe to tackle: cyber modelling remaining in its infancy, demand for Cyber insurance is increasing, and levels of uncertainty remaining high. And while exposures have been managed so far through appetite, pricing, tighter wordings and exclusions, the (re)insurance industry ultimately requires more and better data from insured clients to improve models, and thus pricing. How can the industry further enable more granular coverage? Read the article to find out.
