An Approach of Cyber Security Challenges and Cyber Insurance

An increasing number of firms rely on highly interconnected information networks. In such environments, defense against cyber attacks is complicated by residual risks caused by the interdependence of information security decisions of firms. IT security is affected not only by a firm¿s own management strategies but also by those of others. This dissertation investigates the effects of interdependent IT security risks on two widely used security risk management tools ¿ investment in self-protection and cyber insurance. An economic perspective is utilized that permits a systematic exploration of managerial and policy implications of interdependent risk and of possible responses that can help improve information security.