The Drivers of Cyber Risk

44 Pages Posted: 28 May 2020 Last revised: 1 Jun 2020

See all articles by Iñaki Aldasoro

Iñaki Aldasoro

Bank for International Settlements (BIS)

Leonardo Gambacorta

Bank for International Settlements (BIS); Centre for Economic Policy Research (CEPR)

Paolo Giudici

University of Pavia

Thomas Leach

University of Pavia - Department of Economics and Management

Multiple version iconThere are 2 versions of this paper

Date Written: May 2020

Abstract

Cyber incidents are becoming more sophisticated and their costs difficult to quantify. Using a unique database of more than 100,000 cyber events across sectors, we document the characteristics of cyber incidents. Cyber costs are higher for larger firms and for incidents that impact several organisations simultaneously. The financial sector is exposed to a larger number of cyber attacks but suffers lower costs, on average, thanks to proportionately greater investment in information technology (IT) security. The use of cloud services is associated with lower costs, especially when cyber incidents are relatively small. As cloud providers become systemically important, cloud dependence is likely to increase tail risks. Crypto-related activities, which are largely unregulated, are particularly vulnerable to cyber attacks.

Keywords: Bitcoin, cloud services, cryptocurrencies, cyber cost, cyber regulation, cyber risk, financial institutions

JEL Classification: D5, D62, D82, G2, H41

Suggested Citation

Aldasoro, Iñaki and Gambacorta, Leonardo and Giudici, Paolo and Leach, Thomas, The Drivers of Cyber Risk (May 2020). CEPR Discussion Paper No. DP14805, Available at SSRN: https://ssrn.com/abstract=3612874

Iñaki Aldasoro (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Leonardo Gambacorta

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Paolo Giudici

University of Pavia ( email )

Corso Strada Nuova, 65
27100 Pavia, 27100
Italy

Thomas Leach

University of Pavia - Department of Economics and Management ( email )

Strada Nuova, 65
Pavia, 27100
Italy

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