In the past, risk management in insurance primarily revolved around physical risks—property damage, liability claims, and natural disasters. These risks, though severe, were often predictable and could be assessed using established models. Insurers had clear metrics for evaluating the probability of damage to a building or the likelihood of a liability claim. However, the digital age has introduced a new category of risks that are far more complex and less conventional.

Take cyberattacks, for example. In 2023 alone, according to Statista, cybercrime cost the global economy over US$ 8 trillion. As businesses rapidly digitise their operations, they have become more vulnerable to threats like hacking, ransomware, and data breaches.

Traditional risk management approaches, designed for physical risks, fall short when managing these evolving digital threats. A policy designed to cover fire damage, for instance, does little to address the far-reaching consequences of a data breach that could affect thousands of clients in an instant.

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