Analysis of the impact of cyber events for cyber insurance

Kjartan Palsson, Steinn Gudmundsson and Sachin Shetty ()
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Kjartan Palsson: University of Iceland
Steinn Gudmundsson: University of Iceland
Sachin Shetty: Old Dominion University

The Geneva Papers on Risk and Insurance - Issues and Practice, 2020, vol. 45, issue 4, No 2, 564-579

Abstract: Abstract The mass adoption of cyber insurance will be predicated on the ability to conduct quantitative cyber risk assessment. This capability is crucial for not only providing insight into the cost of targeted threats but also providing incentives for insured enterprises to invest in protection aimed at preventing exploitation of targeted threats. Research indicates that asymmetric information, correlated loss and interdependent security issues make this difficult if insurers cannot monitor the cybersecurity efforts of the insured enterprises. In this paper, we present an analysis of cyber impacts based on cyber incidents reported in the Advisen cyber loss data feed. We show: (i) how exposure to cyber incidents varies between corporate sectors; (ii) how the type of incident relates to the number of entities and individuals affected by it; (iii) how the type of incident relates to the eventual financial cost; (iv) what type of information is most frequently compromised; (v) a breakdown of the main actors behind cyber incidents; and (vi) how tree-based classifiers can be used to gain insight into cyber risk indicators affecting the cost of incidents.

Keywords: Cyber risk modelling; Cyber risk assessment; Cyber insurance; Random forests classifier (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1057/s41288-020-00171-w

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