Advancing Cyber Risk Insurance Underwriting Model Risk Management beyond VaR to Pre-Empt and Prevent the Forthcoming Global Cyber Insurance Crisis

22 Pages Posted: 7 Dec 2017 Last revised: 14 Dec 2017

See all articles by Yogesh Malhotra

Yogesh Malhotra

Global Risk Management Network, LLC

Date Written: December 7, 2017

Abstract

Mainstream insurance industry practices have adopted Value-at-Risk (VaR) from global financial industry as the pre-dominant cyber insurance model being oblivious to both distinguishing characteristics of cyber-risks as well as statistical properties of VaR. Such widespread misapplication of VaR for cyber risk insurance underwriting unless abated and corrected is expected to lead to a global cyber-insurance crisis that may dwarf the worldwide economic shock from the global financial crisis. Given worldwide high impact of increasingly global cyber-attacks, the current paper advances cyber risk insurance underwriting model risk management beyond VaR to pre-empt and prevent the forthcoming global cyber-insurance crisis.

Note: National Association of Insurance Commissioners Expert Paper: Expert Paper prepared and submitted on the request of the National Association of Insurance Commissioners on June 24, 2017 with latest revision of December 07, 2017. The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories.

Keywords: Network Security, Measurement, Methods, Models, Risk, Uncertainty, Profit, Knight, VaR, Value-at-Risk, Quantitative Finance, Cyber Insurance, Cyber Risk, Cybersecurity

Suggested Citation

Malhotra, Yogesh, Advancing Cyber Risk Insurance Underwriting Model Risk Management beyond VaR to Pre-Empt and Prevent the Forthcoming Global Cyber Insurance Crisis (December 7, 2017). Available at SSRN: https://ssrn.com/abstract=3081492 or http://dx.doi.org/10.2139/ssrn.3081492

Yogesh Malhotra (Contact Author)

Global Risk Management Network, LLC ( email )

Cornell Business and Technology Park
Ithaca, NY 14852-4892
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
235
Abstract Views
1,538
rank
136,911
PlumX Metrics