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Analysis of the impact of cyber events for cyber insurance

Author

Listed:
  • Kjartan Palsson

    (University of Iceland)

  • Steinn Gudmundsson

    (University of Iceland)

  • Sachin Shetty

    (Old Dominion University)

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.

Suggested Citation

  • Kjartan Palsson & Steinn Gudmundsson & Sachin Shetty, 2020. "Analysis of the impact of cyber events for cyber insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(4), pages 564-579, October.
    • Handle: RePEc:pal:gpprii:v:45:y:2020:i:4:d:10.1057_s41288-020-00171-w
    DOI: 10.1057/s41288-020-00171-w
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    References listed on IDEAS

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    Cited by:

    1. Seema Sangari & Eric Dallal & Michael Whitman, 2022. "Modeling Under-Reporting in Cyber Incidents," Risks, MDPI, vol. 10(11), pages 1-14, October.
    2. Lukáš Pavlík & Martin Ficek & Jakub Rak, 2022. "Dynamic Assessment of Cyber Threats in the Field of Insurance," Risks, MDPI, vol. 10(12), pages 1-21, November.
    3. Martin Eling & Kwangmin Jung, 2022. "Heterogeneity in cyber loss severity and its impact on cyber risk measurement," Risk Management, Palgrave Macmillan, vol. 24(4), pages 273-297, December.

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