scale than ever before. the malware wannacry hit 200, 000 computers in 150 countries. attacks on multinational transport companies based in europe stranded cargo at ports in india. the losses from these events are large. cyber theft cost the global economy more than $ 450 billion in 2016. lloyd ’ s of london estimates that a global - scale cyber - attack could rack up losses of $ 53 billion, similar to a catastrophic natural disaster such as u. s. superstorm sandy in 2012. unsurprisingly, risk awareness is now growing across the entire spectrum of businesses. the 2017 allianz risk barometer, which covers mainly large corporates, as well as a 2016 zurich study on smes revealed that cyber risk is topmost on businesses ’ minds. the same study showed that, in asia pacific, there are now twice as many smes that worry about cybercrime, fire, technological vulnerabilities, health and safety of customers or employees, and corruption compared to four years ago. yet, in terms of preparedness for dealing with risk events, there is a marked disparity between 1 / 4 bis central bankers'speeches large corporates, and mid - sized and smaller companies. predictably, larger companies are the ones that tend to have a structured risk mechanism in place, as well as the resources and expertise to deploy risk management tools. larger companies also tend to have better access to specialist insurance products and the resources to establish a captive. indeed, 90 % of fortune 1000 companies have a captive insurance company. smaller and mid - sized companies are a different story. most do not consider captives as a feasible risk management option. however, this is changing with innovations in captive models, such as group and rental captives and protected cell companies. it is not only possible for smaller companies to engage captives. a more compelling business case is emerging for the use of captives as small and mid - sized businesses evolve. some of the most significant small business trends in the 21st century include disaggregated business networks, shorter cycles of proprietary knowledge, and rising entrepreneurship powered by a younger digital generation. take for example, high - growth tech startups. as disruptors, their business models and risk profiles, are often unique. much of their competitive edge is derived from concepts and technologies that are new to the market. ride - sharing platforms such as uber and grab are built on seamless apps that work exactly the same whether in london, new york or kuala lumpur. from

to traditional insurance and reinsurance markets. more significantly, it recognizes the importance of applying a supervisory regime that has due regard to the specific nature, scale and complexity of various forms of captives. a primary objective of regulation for captives is promoting financial stability. in this respect, regulators will continue to be concerned with risks that may be created as a result of arbitrage and distortions to the broader insurance market. captives have an important contribution to offer. however, understanding risks relating to captives at a much deeper level, will be important to deliver regulatory outcomes that are proportionate and economically efficient. captive risks will differ from traditional insurance, and they also vary significantly between different types of captives, depending on ownership and structure, scope of business and nature of risks insured. managing these risks cannot simply be addressed at an institutional level. macroprudential 3 / 4 bis central bankers'speeches measures might have relevance in certain circumstances. for example, a pure captive insurer that merely underwrites the risks of its parent may pose low financial and consumer risks, but if the parent is an economically significant entity, with critical financial linkages, a different regulatory response and approach might be warranted. to a large extent, our ability to design suitable regulatory frameworks for captives remains constrained by the paucity of data on captives. this needs to be addressed as a matter of priority. broader measures need to be taken, both at a national and global level, to collect better data on captives to understand their nature, evolution and impact on macro - financial developments. increased efforts by governments to tackle profit shifting and tax base erosion ( beps ) have been another factor behind recent regulatory developments. significant changes have taken place affecting offshore financial centers in the past decade, shaped by heightened expectations for enhanced transparency and exchange of information between tax authorities. these winds of change are likely to pick up speed for captives. and they will change the way captives have operated in the past. very likely it would pave the way for the transformation of offshore financial centers. captives could metaphorsise from perceived brass plates models into legitimate commercial vehicles that serve a real economic purpose. perception management is pivotal for the future existence of captives. captives must be seen as supporting and contributing to the broader economic transformation and growth. these three developments ; the emergence of more diverse captive models serving a broader spectrum of companies, technological advancements and more considered regulations, are likely to foster a greater convergence between the intended economic outcomes of captives, and the required and appropriate