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Cyber contagion: impact of the network structure on the losses of an insurance portfolio

Author

Listed:
  • Caroline Hillairet

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

  • Olivier Lopez

    (LPSM (UMR_8001) - Laboratoire de Probabilités, Statistique et Modélisation - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité)

  • Louise d'Oultremont
  • Brieuc Spoorenberg

Abstract

In this paper, we provide a model that aims to describe the impact of a massive cyber attack on an insurance portfolio, taking into account the structure of the network. Due to the contagion, such an event can rapidly generate consequent damages, and mutualization of the losses may not hold anymore. The composition of the portfolio should therefore be diversified enough to prevent or reduce the impact of such events, with the difficulty that the relationships between actor is difficult to assess. Our approach consists in introducing a multi-group epidemiological model which, apart from its ability to describe the intensity of connections between actors, can be calibrated from a relatively small amount of data, and through fast numerical procedures. We show how this model can be used to generate reasonable scenarios of cyber events, and investigate the response to different types of attacks or behavior of the actors, allowing to quantify the benefit of an efficient prevention policy.

Suggested Citation

  • Caroline Hillairet & Olivier Lopez & Louise d'Oultremont & Brieuc Spoorenberg, 2022. "Cyber contagion: impact of the network structure on the losses of an insurance portfolio," Post-Print hal-03388840, HAL.
    • Handle: RePEc:hal:journl:hal-03388840
    Note: View the original document on HAL open archive server: https://hal.sorbonne-universite.fr/hal-03388840v1
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    File URL: https://hal.sorbonne-universite.fr/hal-03388840v1/document
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    References listed on IDEAS

    as
    1. Fahrenwaldt, Matthias A. & Weber, Stefan & Weske, Kerstin, 2018. "Pricing Of Cyber Insurance Contracts In A Network Model," ASTIN Bulletin, Cambridge University Press, vol. 48(3), pages 1175-1218, September.
    2. Kshetri, Nir, 2020. "The evolution of cyber-insurance industry and market: An institutional analysis," Telecommunications Policy, Elsevier, vol. 44(8).
    3. Caroline Hillairet & Olivier Lopez, 2021. "Propagation of cyber incidents in an insurance portfolio: counting processes combined with compartmental epidemiological models," Post-Print hal-02564462, HAL.
    4. Xiaoying Xie & Charles Lee & Martin Eling, 2020. "Cyber insurance offering and performance: an analysis of the U.S. cyber insurance market," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(4), pages 690-736, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cyber insurance; cyber risk; compartmental models; multi-SIR; network structures;
    All these keywords.

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