Modeling Under-Reporting in Cyber Incidents

Seema Sangari, Eric Dallal and Michael Whitman ()
Additional contact information
Seema Sangari: School of Data Science and Analytics, Kennesaw State University, 3391 Town Point Dr. NW, Kennesaw, GA 30144, USA
Eric Dallal: Verisk Extreme Event Solutions, Lafayette City Center, 2 Ave de Lafayette 2nd Floor, Boston, MA 02111, USA
Michael Whitman: School of Data Science and Analytics, Kennesaw State University, 3391 Town Point Dr. NW, Kennesaw, GA 30144, USA

Risks, 2022, vol. 10, issue 11, 1-14

Abstract: Under-reporting in cyber incidents is a well-established problem. Due to reputational risk and the consequent financial impact, a large proportion of incidents are never disclosed to the public, especially if they do not involve a breach of protected data. Generally, the problem of under-reporting is solved through a proportion-based approach, where the level of under-reporting in a data set is determined by comparison to data that is fully reported. In this work, cyber insurance claims data is used as the complete data set. Unlike most other work, however, our goal is to quantify under-reporting with respect to multiple dimensions: company revenue, industry, and incident categorization. The research shows that there is a dramatic difference in under-reporting—a factor of 100—as a function of these variables. Overall, it is estimated that only approximately 3% of all cyber incidents are accounted for in databases of publicly reported events. The output of this work is an under-reporting model that can be used to correct incident frequencies derived from data sets of publicly reported incidents. This diminishes the “barrier to entry” in the development of cyber risk models, making it accessible to researchers who may not have the resources to acquire closely guarded cyber insurance claims data.

Keywords: cyber insurance; cyber risk; under-reporting (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-9091/10/11/200/pdf (application/pdf)
https://www.mdpi.com/2227-9091/10/11/200/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:10:y:2022:i:11:p:200-:d:950584

Access Statistics for this article

Risks is currently edited by Mr. Claude Zhang

More articles in Risks from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().