A History of Cyber Risk Transfer

23 Pages Posted: 28 Jun 2023 Last revised: 30 Jan 2024

See all articles by Daniel W Woods

Daniel W Woods

University of Edinburgh

Josephine Wolff

The Fletcher School of Law and Diplomacy, Tufts University

Date Written: December 1, 2023


Cyber risk management involves balancing risk acceptance, avoidance, reduction and transfer. Yet academic researchers—under the banner of computer, information and/or cyber security—have focused predominantly on risk reduction measures. Studies of cyber risk transfer are less common, mainly centering on cyber insurance. This ignores a flowering of real-world cyber risk transfer products in the last decade. Our study describes the historical emergence of products including: warranties, cloud computing partnerships, parametric insurance, reinsurance, and cyber cat bonds. We characterize how these solutions addressed four core challenges: (1) tailoring coverage to the threat landscape; (2) maintaining profitability; (3) data collection for risk assessment; and (4) creating incentives for risk reduction. The result is an integrated history of cyber risk transfer describing how novel products and partnerships emerged to address failings in prevailing business models. Our descriptive study can help other researchers to understand problems faced in the real-world, providing a foundation for future research.

Keywords: cyber insurance, cyber risk transfer, catastrophe bonds, parametric insurance, cyber risk, cybersecurity

Suggested Citation

Woods, Daniel W and Wolff, Josephine, A History of Cyber Risk Transfer (December 1, 2023). Available at SSRN: https://ssrn.com/abstract=4493171 or http://dx.doi.org/10.2139/ssrn.4493171

Daniel W Woods (Contact Author)

University of Edinburgh ( email )

United Kingdom

Josephine Wolff

The Fletcher School of Law and Diplomacy, Tufts University ( email )

160 Packard
Medford, MA 02155
United States

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