Coalition Releases New Method for Modeling Aggregate Cyber Risk, Demonstrating Cyber is Insurable

New Active Cyber Risk Model simulates aggregate risk for 5,000 companies, extrapolated to an estimated $29.8 billion in total losses to the U.S. economy

SAN FRANCISCO — March 20, 2023 — Coalition, the world's first Active Insurance provider designed to prevent digital risk before it strikes, today released the all-new Active Cyber Risk Model, a practical framework for understanding cyber risk aggregation that provides an ongoing view into organizations’ cyber risks and identifies preventive measures to protect against new threats. The model – which simulates how a singular cyber risk event can trigger a chain reaction resulting in substantial economic losses – illustrated the possibility of nearly $30 billion in total insured losses if an aggregated cyber event occurred.

“As the industry continues to dwell on catastrophic cyber events and how best to offer coverage, if at all, one thing remains abundantly clear: cyber risk is insurable,” said Joshua Motta, Chief Executive Officer and co-founder at Coalition. “The insurance industry is uniquely positioned and capable of mitigating and protecting organizations from emerging cyber risks, and we are committed to protecting the hundreds of thousands of customers we serve.”

Built on Coalition's proprietary data collection platform and knowledge graph, which captures 48 trillion monthly events, the Active Cyber Risk Model offers a more accurate picture of cyber risk for organizations and the broader economy. In a simulation modeled against a sampling of 5,000 American companies, Coalition found that a one-in-250-year cyber event could cost more than $370 million in losses. When extrapolated across the entire U.S. economy, a catastrophic cyber event could cost an estimated $29.8 billion in total losses.

The Active Cyber Risk Model leverages Coalition’s technology platform that actively monitors both the internet and the ever-changing landscape of vulnerabilities and attack vectors across hundreds of thousands of companies. 

“More data exists on cyber than any other risk. Using the right tools and systems to measure this risk can dramatically reduce potential impact,” said Shawn Ram, Coalition’s Head of Insurance. “Unfortunately, we cannot prevent a catastrophic cyber event, but we can measure and contain catastrophic loss. For insurers, mapping cyber events to policyholders and the technologies they use are key to modeling aggregate risk. For businesses, the key to preparing for a catastrophic event is adopting proactive measures, like Coalition’s Active Insurance, and building a thoughtful response plan.”

Coalition monitors the digital technologies and third-party vendors that its policyholders use to inform its model. These shared technology dependencies, which Coalition calls “aggregation technologies and vendors (ATVs),” create aggregate cyber risk. Coalition uses its ATV data to track and measure the interconnectedness of technologies and identify where cyber risk aggregates. Going forward, Coalition will use its model to determine which companies in its portfolio could be impacted by a cyber event.

To learn more about Coalition’s Active Cyber Risk Model, please download the report: https://info.coalitioninc.com/download-active-cyber-risk-model-2023-03-21.html.

About Coalition

Coalition is the world's first Active Insurance provider designed to help prevent digital risk before it strikes. By combining comprehensive insurance coverage and cybersecurity tools, Coalition helps businesses manage and mitigate digital risks. Coalition offers its Active Insurance products in the U.S., U.K., and Canada through relationships with leading global insurers, as well as cyber capacity through its own carrier, Coalition Insurance Company. Coalition's Active Risk Platform provides automated security alerts, threat intelligence, expert guidance, and cybersecurity tools to help businesses worldwide remain resilient against cyber attacks. Headquartered in San Francisco, Coalition is a distributed company with a global workforce that collaborates digitally and in office hubs.