Calculating Business Interruption Losses

Insurance broker Beecher Carlson has launched a cloud-based application called CyberSelect BI Vision to help educate policyholders on their exposure to business interruption losses from cyber risk.

The app is a cyber business interruption calculator that helps companies analyze and calculate the possible business interruption costs they would face if a cyber event took out their network or multiple networks.

According to Christopher Keegan, national Cyber practice leader at Beecher Carlson, the idea is to give companies a mechanism to dig deeper into their cyber business interruption exposure without having to commit to an expensive or invasive method of doing so. The risk valuation tool allows companies to project maximum foreseeable loss to business income at one or more key locations, by network or division, in the event of a cyber-disaster.

The proprietary calculator collects certain financial information and creates an estimated business income exposure specific to an organization’s locations and applications.

CyberSelect BI Vision can also capture expenses faced by companies when they are the target of a cyber attack. These expenses include replacing hardware and software as a result of damage from wiper viruses such as Shamoon, which destroyed more than 30,000 servers.

The process focuses on the revenue flows and costs at each particular entity, allowing companies to look at the impact on individual networks, technology applications and company divisions. The calculator combines those numbers to estimate an overall company impact. Additionally, companies can adjust estimates based upon levels of reliance on technology and work-arounds that may exist to reduce the impact of a cyber-loss.

Keegan says companies can use it to determine the risk management procedures they should take and what coverages they should buy.

“One of the problems we have had over the years in advising companies on cyber coverage, especially manufacturing companies, is on what limits to buy. It is hard to determine what that number should be and estimate the business interruption loss you would have if a cyber attack happens,” he said.