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Interdependent cyber risk and the role of insurers
KTH, School of Electrical Engineering and Computer Science (EECS), Human Centered Technology, Media Technology and Interaction Design, MID. Swedish Defence University, SE-115 93, Stockholm, Sweden; RISE Research Institutes of Sweden, SE-164 29 Kista, Sweden.ORCID iD: 0000-0003-2017-7914
CNR Consiglio Nazionale delle Ricerche, Istituto per le Applicazioni del calcolo, Via P. Castellino, 111, 80131, Naples, Italy, Via P. Castellino, 111.
2025 (English)In: Research in Economics, ISSN 1090-9443, E-ISSN 1090-9451, Vol. 79, no 3, article id 101059Article in journal (Refereed) Published
Abstract [en]

Increasing use of new digital services offers tremendous opportunities for modern society, but also entails new risks. One tool for managing cyber risk is cyber insurance. While cyber insurance has attracted much attention and optimism, interdependent cyber risks and lack of actuarial data have prompted some insurers to adopt a more proactive role, not only insuring losses but also assisting clients with preventive work such as managed detection and response solutions, i.e., investments in their own cybersecurity. The purpose of this paper is to propose and theoretically investigate yet a further extension of this role, where insurers facilitate security investments between interdependent firms, which get the opportunity to invest a share of their insurance premiums to improve the security of each other. It is demonstrated that if insurers can facilitate such investments, then under common theoretical assumptions this can make a positive contribution to overall welfare. The paper is concluded by a discussion of the relevance and applicability of this theoretical contribution in practice.

Place, publisher, year, edition, pages
Elsevier BV , 2025. Vol. 79, no 3, article id 101059
Keywords [en]
Cyber insurance, Cybersecurity investment, Interdependent cyber risk
National Category
Economic History
Identifiers
URN: urn:nbn:se:kth:diva-362233DOI: 10.1016/j.rie.2025.101059ISI: 001458704800001Scopus ID: 2-s2.0-105001107893OAI: oai:DiVA.org:kth-362233DiVA, id: diva2:1951027
Note

QC 20250415

Available from: 2025-04-09 Created: 2025-04-09 Last updated: 2025-04-15Bibliographically approved

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Franke, Ulrik

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CiteExportLink to record
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