What is a Cyber Cat Bond?
An ILS instrument that transfers peak cyber risk to capital market investors, structured similarly to natural catastrophe bonds.
Cyber Cat Bond
An ILS instrument that transfers peak cyber risk to capital market investors, structured similarly to natural catastrophe bonds.
How it works in practice
An insurer with a large book of cyber policies sponsors a $75 million cat bond to protect against a systemic cyber event. The bond triggers if a single malware outbreak causes insured losses exceeding $300 million across the sponsor's portfolio within a 72-hour window. Investors accept the risk of a correlated cyber event in exchange for a coupon well above what traditional cat bonds offer.
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