Actuarial study on quantifying cyber risk in critical infrastructure and evaluating cyber insurance viability
Goal
DeNexus’ Data and Modeling experts led by Romy R. Ravines, and actuarial experts from Universidad Carlos III de Madrid (UC3M) - Alejandro Balbás and Irene ALbarrán -, collaborated to explore the state of the art in cyber risk quantification for industrial infrastructure. The project aimed to identify current methodologies, assess their limitations, and evaluate how DeNexus’ proprietary platform, DeRISK, addresses key challenges in the field.
The team conducted a comprehensive review of existing approaches to cyber risk modeling, focusing on both theoretical frameworks and practical implementations. One of the core outcomes was a recommendation for a hybrid modeling strategy: using vine copulas to capture frequency dependencies among correlated assets, while assuming independence for larger, more diverse portfolios where dependency modeling becomes computationally intensive and less impactful.This hybrid approach balances statistical rigor with scalability, offering a pragmatic solution for industrial cyber risk accumulation
_ Keywords_: Cyber Risk, Cyber Risk Accumulation and Cyber Insurance.
Read more about the project here.