Cyber Risk: Quantification, Stress Scenarios, Mitigation, and Insurance

Measuring the impact of risk factors or characteristics on policyholders is part of standard actuarial methodologies. The context of cyber risk is quite specific, due to its novelty, its fast evolution, and the significant amount of the risk exposures typically at stake.

In the presentation, we wish to present how to adapt the actuarial toolbox to these specificities, with a particular focus on the combination of historical data and expert judgment, as well as on the way to use these sources of information in order to build risk transfer solutions with technical methods that can help go beyond the identification of risk factors, by providing a quantitative evaluation of their economic impact on insurance contracts.

The presentation will be structured as the following :

1) Overview broad overview of the main complications in defining cyber risk, classifying its different types, modeling it, and quantifying it.

2) Presentation of the main mathematical framework used in modeling the frequency of cyber risk events.

4) Discussion of the potential risk transfer solutions and parametric cyber risk insurance products, as well as the role that prevention can play in cyber risk management.

Also presentation of how our proposed framework can be used to generate stress scenarios for cyber risk. co-authored with: Olivier Lopez, Michel Denuit, Mario Ghossoub, Julien Trufin, Hugo Rapior