Insurability of Cyber Risk: An Empirical Analysis

Christian Biener, Martin Eling and Jan Wirfs

No 1503, Working Papers on Finance from University of St. Gallen, School of Finance

Abstract: This paper discusses the adequacy of insurance for managing cyber risk. To this end, we extract 994 cases of cyber losses from an operational risk database and analyze their statistical properties. Based on the empirical results and recent literature, we investigate the insurability of cyber risk by systematically reviewing the set of criteria introduced by Berliner (1982). Our findings emphasize the distinct characteristics of cyber risks compared to other operational risks and bring to light significant problems resulting from highly interrelated losses, lack of data, and severe information asymmetries. These problems hinder the development of a sustainable cyber insurance market. We finish by discussing how cyber risk exposure may be better managed and make several suggestions for future research.

Keywords: Cyber Risk; Cyber Insurance; Operational Risk; Insurability (search for similar items in EconPapers)
Pages: 31 pages
Date: 2015-01
New Economics Papers: this item is included in nep-rmg
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Citations: View citations in EconPapers (69)

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http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1503.pdf (application/pdf)

Related works:
Journal Article: Insurability of Cyber Risk: An Empirical Analysis† (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:sfwpfi:2015:03

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