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Some Principles for Regulating Cyber Risk

Anil K Kashyap and Anne Wetherilt

No 13324, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explain why cyber risk differs from other operational risks in the financial sector. The form of cyber shocks differs because of their intent, probability of success, possibility of a hidden phase and evolving form of the risks. The impact differs because problems can spread quickly and because uncertainty over the possibility of a hidden phase can impact responses. We explain why private incentives to attend to these risks may differ from societies' preferences and develop six (micro- and macroprudential) regulatory principles to deal with cyber risk.

Keywords: cyber risk; macroprudential regulation; stress test (search for similar items in EconPapers)
JEL-codes: G18 G28 L51 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-rmg
Date: 2018-11
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