The Economic Impact of Extreme Cyber Risk Scenarios

Martin Eling, Mauro Elvedi and Greg Falco

North American Actuarial Journal, 2023, vol. 27, issue 3, 429-443

Abstract: Numerous industry studies discuss the economic effects of potentially extreme cyber incidents, with considerable variation in the applied methodology and estimated costs. We implement a dynamic inoperability input–output model that allows a consistent analysis and comparison of the economic impacts resulting from six widely discussed cyber risk scenarios. Our model accounts for the frequently omitted qualitative context of the scenarios to be considered as part of the economic projection. Overall, our loss estimations remain in an insurable range from US$0.7 to 35 billion. To our knowledge, this is the first effort to develop a standardized evaluation framework that allows for a consistent assessment of cyber risk scenarios, thereby enabling comparability.

Date: 2023
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DOI: 10.1080/10920277.2022.2034507

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