Valuing Data Security and Privacy Using Cyber Insurance
Posted: 10 Sep 2015
Date Written: January 22, 2015
Abstract
What should be the minimum value of data security or privacy to a customer? We reason that at a minimum this value should be equal to the premium charged by an insurer for cyber insurance that compensates the customer for the claims resulting from the data security and privacy breaches. We calculate the premium for cyber insurance and the percentage coverage availed by a customer using Monte Carlo simulations.
Keywords: Cyber insurance pricing, data security, data privacy, utility principle, operational risk, value at risk, Basel regulations, pricing of contingent claims in incomplete markets, Monte Carlo simulations
JEL Classification: C15, D82, G13, G21, G22, G28
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