Book

LIU, MINGYAN.

EMBRACING RISK : cyber insurance as an incentive mechanism for cybersecurity.

[S.l.] : MORGAN & CLAYPOOL PUBLISH, 2021.

1 volume ; 24 cm

This book provides an introduction to the theory and practice of cyber insurance. Insurance as an economic instrument designed for risk management through risk spreading has existed for centuries. Cyber insurance is one of the newest sub-categories of this old instrument. It emerged in the 1990s in response to an increasing impact that information security started to have on business operations. For much of its existence, the practice of cyber insurance has been on how to obtain accurate actuarial information to inform specifics of a cyber insurance contract. As the cybersecurity threat landscape continues to bring about novel forms of attacks and losses, ransomware insurance being the latest example, the insurance practice is also evolving in terms of what types of losses are covered, what are excluded, and how cyber insurance intersects with traditional casualty and property insurance. The central focus, however, has continued to be risk management through risk transfer, the key functionality of insurance. The goal of this book is to shift the focus from this conventional view of using insurance as primarily a risk management mechanism to one of risk control and reduction by looking for ways to re-align the incentives. On this front we have encouraging results that suggest the validity of using insurance as an effective economic and incentive tool to control cyber risk. This book is intended for someone interested in obtaining a quantitative understanding of cyber insurance and how innovation is possible around this centuries-old financial instrument.

Computer insurance.

Risk management.

Computer security.

1. Introduction : what is insurance and what is cyber insurance? -- 1.1. What is an insurance contract? -- 1.2. What is unique about cyber insurance? -- 1.3. Security as a public good and insurance as risk control -- 1.4. Voluntary participation -- 1.5. Related literature -- 1.6. Roadmap -- 1.7. Intended audience

2. A basic cyber insurance contract model -- 2.1. A single-agent, single-period model -- 2.2. A single-agent, multi-period model -- 2.3. Numerical results -- 2.4. Chapter summary -- 2.5. Table of notations used in this chapter -- 2.6. Appendix

3. Insuring clients with dependent risks -- 3.1. A model of two agents -- 3.2. Two risk-neutral agents -- 3.3. Two risk-averse agents -- 3.4. Multiple agents, correlated losses, and the insurer's risk aversion -- 3.5. Numerical results -- 3.6. Chapter summary -- 3.7. Tables of notations used in this chapter -- 3.8. Appendix

4. A practical underwriting process -- 4.1. Computing premiums using base rates -- 4.2. The insurance policy model and analysis -- 4.3. Numerical examples -- 4.4. Discussions -- 4.5. Chapter summary -- 4.6. Table of notations used in this chapter -- 4.7. Appendix

5. How to pre-screen : risk assessment using data analytics -- 5.1. Predictive power of measurement data -- 5.2. Cyber incident forecast -- 5.3. Fine-grained prediction -- 5.4. Bringing technology to market -- 5.5. Chapter summary -- 6. Open problems and closing thoughts.

016.368

1636391400

9781636391403

9781636391427

1636391427

781839

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