Aggregate Cyber-Risk Management in the IoT Age: Cautionary Statistics for (Re)Insurers and Likes

Jon Crowcroft; Mingyan Liu; Nishanth Sastry; Ranjan Pal; Sasu Tarkoma; Sergey Lototsky; Swades De; Xinlong Yin; Ziyuan Huang

Aggregate Cyber-Risk Management in the IoT Age: Cautionary Statistics for (Re)Insurers and Likes

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arxiv 2105.01792 v1 pith:AIWZKHWS submitted 2021-05-04 cs.PF cs.SYeess.SYq-fin.RM

Ranjan Pal , Ziyuan Huang , Xinlong Yin , Sergey Lototsky , Swades De , Sasu Tarkoma , Mingyan Liu , Jon Crowcroft

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Nishanth Sastry

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classification cs.PFcs.SYeess.SYq-fin.RM

keywords cyber-riskaggregatemanagementtheorygeneralalongsideassumingbest

verification ladder T0 review T1 audit T2 compute T3 formal

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In this paper, we provide (i) a rigorous general theory to elicit conditions on (tail-dependent) heavy-tailed cyber-risk distributions under which a risk management firm might find it (non)sustainable to provide aggregate cyber-risk coverage services for smart societies, and (ii)a real-data driven numerical study to validate claims made in theory assuming boundedly rational cyber-risk managers, alongside providing ideas to boost markets that aggregate dependent cyber-risks with heavy-tails.To the best of our knowledge, this is the only complete general theory till date on the feasibility of aggregate cyber-risk management.

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