The concentration risk problem the market already knows
Take away the central-bank language and Bailey is describing something UK cyber underwriters have been dealing with for a while: aggregation risk. If a small number of cloud, identity and AI-model providers sit underneath a large share of policyholders, a single compromised provider can produce correlated losses across an entire book rather than one insured at a time. Speaking earlier this year about AI-driven aggregation, Sam Cheshire, head of cyber (UK retail) at Gallagher, argued the picture isn’t as bleak as it sounds, pointing out that AI is being used on both the offensive and defensive sides of the equation.
