Media coverage

IPE shares Michael Stahel’s views on cyber risk cat bonds

4 July 2024

IPE writes that catastrophe bonds covering cyber risk have made their debut as insurers seek to offload risk. In this article, Michael Stahel, Partner at LGT Capital Partners, explains his concerns about risk modeling in this field and why investors should be cautious.

The IPE article cites the views of several experts, including Michael Stahel from LGT Capital Partners. He points out that the risk assessment of cyber cat bonds is still at a very early stage and that the risk models are untested. In particular, he warns that the market has limited experience of severe cyber events, unlike hurricane or earthquake cat bonds, which have gone through actual stress tests in the past.

Although cyber cat bonds increase diversification within an ILS portfolio, a massive cyber cat event will likely negatively affect financial markers, leading to a payout in the case of cyber ILS deals – a rather undesirable correlation, according to Michael Stahel.

Find out more here (article behind paywall).