A Fundamental Approach to Cyber Risk Analysis

By Rainer Bohme, Stefan Laube, Markus Riek

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This paper provides a framework actuaries can use to think about cyber risk. We propose a differentiated view of cyber versus conventional risk by separating the nature of risk arrival from the target exposed to risk. Our review synthesizes the literature on cyber risk analysis from various disciplines, including computer and network engineering, economics, and actuarial sciences. As a result, we identify possible ways forward to improve rigorous modeling of cyber risk, including its driving factors. This is a prerequisite for establishing a deep and stable market for cyber risk insurance.

Keywords: Cyber risk, information technology, networks, economic modeling


Bohme, Rainer, Stefan Laube, and Markus Riek, "A Fundamental Approach to Cyber Risk Analysis," Variance 12:2, 2019, pp. 161-185.

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Mission Statement

Variance (ISSN 1940-6452) is a peer-reviewed journal published by the Casualty Actuarial Society to disseminate work of interest to casualty actuaries worldwide. The focus of Variance is original practical and theoretical research in casualty actuarial science. Significant survey or similar articles are also considered for publication. Membership in the Casualty Actuarial Society is not a prerequisite for submitting papers to the journal and submissions by non-CAS members is encouraged.