Cybersecurity Insurance Pricing Model Under Scale-Free Network

With the rapid development of information technology,cyber risk has become one of the most severe risks faced by all countries in the world.Cybersecurity insurance is an insurance to reduce the losses caused by various cyber incidents.As an effective tool to transfer cybersecurity risks,it can not only guarantee the efficient operation of enterprises,but also play a role of "social stabilizer".Although from the present point of view,the cybersecurity insurance is still in the embryonic stage in China,but I believe that the future development of this product has a good prospect.This paper studies the pricing model of cybersecurity insurance under scale-free network,hoping to provide new ideas for the pricing of cybersecurity insurance in China and provide some valuable references for the development of China's cybersecurity insurance industry.Considering the current situation of cybersecurity insurance pricing in China,this paper simulates the transmission process of cyber virus based on the epidemic SIS model,the transmission process follows the markov process,and gives the loss function and standard deviation premium principle for pricing.Scale-free network can describe the network structure of some enterprises more accurately.In specific enterprises,the protection probability of different nodes,the information wealth contained in different nodes,and the recovery difficulty of different nodes may vary.In this paper,scale-free network is used to approximate the network structure of some real enterprises,the degree of nodes is included in the pricing model.The heterogeneity of different nodes is considered in the model.Compared with others,this model is more accurate and realistic.This paper also studies the one-way risk propagation problem and considers the intangible loss caused by cyber risk to the company when calculating the loss.Considering the lack of data,we used Monte Carlo simulation to simulate the total loss and study the sensitivity of parameters.The research in this paper shows that,first,the loss frequency in the network is basically negatively correlated with the node degree,which is different from the previous research conclusions.Second,the relationship between the degree of a node and the intensity of loss depends on the size of the degree.For most common nodes,the greater the degree,the greater the intensity of loss;however,when the degree of a node is large,the less the intensity of loss.The degree of a node is an important variable in the measurement of the loss of a node.Network topology is of great significance for cybersecurity insurance pricing.Third,the volatility of cybersecurity risks is very high,and the accuracy of parameter definition will have an important impact on insurance premiums.Fourth,if only considering the case of undirected graph,it may lead to overestimation of actual cyber risks.Adding the unidirectionality of the network system to the pricing model will make the results more accurate.