With the rise of digital economy, cyber risk has become a major concern for all customer segments. Although the development of “physical” protection strategies against cyber attacks is fundamental, no protection is perfect and insurers are intended to play a crucial role in providing financial protection. The cyber-insurance market is increasingly developing but with important uncertainties on the real value of the guarantees, due to the nature of the risk itself. The emerging and evolving nature of cyber-risk and its potential systemic component make it one of the most important social and economic risks, and questions its insurability.
After an introduction to the specificities on cyber-risk, this session gives first steps towards a better understanding of cyber risk, by providing mathematical models and actuarial analysis. For a better quantification of cyber risk, we propose innovative models, both for the severity component (size of the claims) and the frequency component (accumulation risk and clustering features) of the risk. Some practical applications of the concepts and the algorithms will also be provided.
After completing this course, you will be able to
- Identify the specificities of cyber risk
- Identify the factors that may jeopardize the mutualisation of cyber risk
- Identify extreme events and convey a risk segmentation
- Construct accumulation scenarii on a cyber portfolio
- Quantify the impact of protection measures on the risk of saturation in the insurer response capacity
- Handle numerical tools and practical applications