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Global FINEX- Cyber Update
Welcome to WTW's Global Marketplace Insights series, where our experts bring you the latest risk and insurance perspectives.
Looking ahead to 2024, we know that cyber risk and data protection issues remain high on the corporate agenda.
We saw in our Cyber D&O report which was launched in June that cyber and data protection risk issues ranked in the top three for most organizations across most industry sectors and geographies.
We also know that cyber insurance penetration globally remains relatively low, as low as 5 to 10% in some regions.
But at the same time, we have a cyber insurance market with huge aspirations for growth with predictions of 20% to 25% compound annual growth rate over the next two to three years.
So what are some of the challenges we face?
Well, systemic risk will continue to present a challenge and it's something which the insurance market has to get their arms around.
The ability for the insurance market to be able to understand, model and quantify systemic and aggregation risk issues is going to be absolutely critical in driving the market in the longer term, being able to open up the reinsurance market and also drive new forms of capital into the market.
Regulation is going to continue to play a vital role. We've seen during 2023 the SCC introduced some new rules and regulation around notifications of cyber incidents and we've also seen new rules and regulations coming in France on a similar topic.
We know that regulation is going to continue to be important and is vital in terms of driving best practice.
Finally, new technologies.
There's been a lot of talk about AI in 2023 and I think most organizations are still really getting to grips with what the opportunities are for AI and how it can help drive business operations in efficiency.
But whilst it creates opportunities, these opportunities don't come without risk and it's going to be vital to understand the extent to which AI can amplify existing risks and also create new risks, as these are risks that ultimately will need to be managed and insured.