Concerns about catastrophic cyber risk have prompted questions about the long-term viability of cyber insurance. Born out of insufficient data and improper risk modeling, this uncertainty represents a fundamental misunderstanding of how cyber risk works.

In reality, cyber risk is one of the most knowable risks in the modern world due to the vast amount of digital data. The key to modeling cyber risk aggregation is connecting cyber events to businesses and their technologies — but it requires a different approach.

To better understand and assess cyber risk aggregation, we developed Coalition’s Active Cyber Risk Model. Our model provides a framework for systematically monitoring and quantifying the financial impacts of a catastrophic cyber event. But rather than relying on the outdated methods and models of traditional insurance, we built our model from the ground up to leverage data from the businesses we help protect daily.

In this report, we explore:

• The critical distinctions between natural and cyber catastrophes
• Why shared technologies provide a window into cyber risk aggregation
• How Active Insurance can proactively mitigate the potential for widespread loss
• Why Coalition’s approach to cyber risk aggregation can unlock more sustainable underwriting models and bring stability to the cyber insurance industry