• Corpus ID: 14172008

Modeling Cyber-Insurance: Towards a Unifying Framework

@inproceedings{Bhme2010ModelingCT,
  title={Modeling Cyber-Insurance: Towards a Unifying Framework},
  author={Rainer B{\"o}hme and Galina Schwartz},
  booktitle={Workshop on the Economics of Information Security},
  year={2010}
}
We propose a comprehensive formal framework to classify all market models of cyber-insurance we are aware of. The framework features a common terminology and deals with the specific properties of cyber-risk in a unified way: interdependent security, correlated risk, and information asymmetries. A survey of existing models, tabulated according to our framework, reveals a discrepancy between informal arguments in favor of cyber-insurance as a tool to align incentives for better network security… 
View Paper
econinfosec.org
205 Citations
Highly Influential Citations
24
Background Citations
115
Methods Citations
21
Results Citations
2

Figures and Tables from this paper

205 Citations

A Coalitional Cyber-Insurance Framework for a Common Platform

This work proposes a synergistic insurance framework, where organizations collaboratively insure a common platform instead of themselves, and studies how such a system can improve the social welfare by leveraging cyber-insurance as a motivation for organizations to cooperate on the cybersecurity investment and information sharing.

Modeling and Pricing Cyber Insurance – A Survey

The paper provides a comprehensive overview of modeling and pricing cyber insurance and includes clear and easily understandable explanations of the underlying mathematical concepts. We distinguish…

Cyber Insurance and Security Interdependence: Friends or Foes?

This study investigates how security interdependence affects the incentive of agents to invest in self-protection with/without cyber insurance available to them and compares the investments with and without insurance available for agents when the degree of interDependence changes.

Voluntary Participation in Cyber-insurance Markets

The study of cyber-insurance, both as a method for transferring residual cyber-security risks, and as an incentive mechanism for internalizing the externalities of security investments in…

Improving Cyber-Security via Profitable Insurance Markets

A non-regulatory mechanism to allow monopoly cyber-insurers to make strictly positive profit in expectation and to investigate the general effectiveness of this mechanism beyond a monopoly setting with full coverage.

Cyber-insurance framework for large scale interdependent networks

A framework for managing cyber-risks in large-scale interdependent networks where cyber insurers are strategic players is presented, and the case against cyber-insurance as the means of improving security is supported.

A model to analyze the challenge of using cyber insurance

It is demonstrated that the optimal purchase decision depends on the mix of the types of cyber breaches that a firm faces, and a model is built to capture the impact of secondary loss in structuring the use of cyber insurance.

A model to analyze the challenge of using cyber insurance

It is demonstrated that the optimal purchase decision depends on the mix of the types of cyber breaches that a firm faces, and a model is built to capture the impact of secondary loss in structuring the use of cyber insurance.

Will cyber-insurance improve network security? A market analysis

This work analyzes regulated monopolistic and competitive cyber-insurance markets, where the market elements consist of risk-averse cyber- Insurers, risk- averse network users, a regulatory agency, and security vendors, and shows that without contract discrimination amongst users, there always exists a unique market equilibrium for both market types, but the equilibrium is inefficient and does not improve network security.

Improving Network Security Via Cyber-Insurance A Market Analysis

This work analyzes regulated monopolistic and competitive cyber-insurance markets, and proposes a non-regulatory mechanism to allow monopoly cyber- insurers to make strictly positive profit.
...

References

SHOWING 1-10 OF 72 REFERENCES

Cyber-Insurance Revisited

An indemnity insurance model is referred to to evaluate the conditions under which coverage for cyber-risks can be granted despite monocultures of installed platforms, acting as a counterweight to the market leader’s strong economies of scale and fostering a more balanced market structure.

Cyber-Insurance: Copula Pricing Framework and Implication for Risk Management

Pricing of cyber-insurance products is investigated using the emerging copula methodology for modeling dependent risks from an actuarial approach which is different to the process approaches of Bohme and Kataria (2006) and Mukhopadhyay et al. (2006).

The Evolution of Cyberinsurance

It is found that increasing Internet security risk in combination with the need for compliance with recent corporate legislation has contributed significantly to the demand for cyberinsurance.

Competitive Cyber-Insurance and Internet Security

Although cyber-insurance improves user welfare, in general, competitive cyber- Insurers fail to improve network security.

Cyber-Insurance: Missing Market Driven by User Heterogeneity

It is demonstrated, in a general setting, a failure of cyber-insurance market to underwrite contracts conditioning user premium on user security, and it is proved that no matter how small the fraction of malicious users is, equilibrium contract that specifies use r security does not exist.

Software Diversity for Information Security

This paper analyzes a software diversification-based strategy to achieve information security and shows that diversification can not only reduce loss variance but also minimize expected loss.

Models and Measures for Correlation in Cyber-Insurance

This paper introduces a new classification of correlation properties of cyber-risks based on a twin-tier approach and addresses technical, managerial and policy choices influencing the correlation at both steps and the business implications thereof.

A Comparison of Market Approaches to Software Vulnerability Disclosure

This paper provides a first attempt to structure the field by proposing a terminology for distinct concepts and defining criteria to allow for a better comparability between different approaches.

The economics of information security investment

An economic model is presented that determines the optimal amount to invest to protect a given set of information and takes into account the vulnerability of the information to a security breach and the potential loss should such a breach occur.

Interdependent Security

Do firms have adequate incentives to invest in protection against a risk whose magnitude depends on the actions of others? This paper characterizes the Nash equilibria for this type of interaction…
...