Cyber Risk: A Big Challenge in Developed and Emerging Markets

Cyber Risk: A Big Challenge in Developed and Emerging Markets

Maria Cristina Arcuri (University of Modena and Reggio Emilia, Italy), Marina Brogi (University of Roma “La Sapienza”, Italy) and Gino Gandolfi (University of Parma, Italy)
Copyright: © 2017 |Pages: 16
DOI: 10.4018/978-1-5225-0808-3.ch014
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Abstract

The dependence on cyberspace has considerably increased over time, as such, people look at risk associated with cyber technology. This chapter focuses on the cyber risk issue. The authors aim to describe the global state of the art and point out the potential negative consequences of this type of systemic risk. Cyber risk increasingly affects both public and private institutions. Some of the risks that entities face are the following: computer security breaches, cyber theft, cyber terrorism, cyber espionage. Developed nations but also emerging markets suffer from cyber risk. It is therefore important to examine the different security regulation implemented across different markets. Moreover, cyber risk is a concern for all economic sectors. In particular, it is a crucial issue in banking sector because of the negative effects of cyber attacks, among others, the financial losses and the reputational risk. However, the awareness is increasing and cyber insurance is growing.
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Information Security: A Growing Challenge

In the last years, digital technology has revolutionised economic and social interaction. Internet has often improved the way to conduct business. Nevertheless, widespread interconnectivity has increased the vulnerability of the critical infrastructures to information security breaches.

A 2013 PwC survey demonstrates that more than 90% of large organisations recently suffered a security breach. Moreover, a 2013 ACE survey conducted of 650 executives across a range of industries and 15 countries all over the world shows that businesses expect cyber risk will have significant financial impact in the next two years. It follows that cyber risk has become a very debated issue.

Some of the risks that entities face in this realm include:

  • Legal liability;

  • Computer security breaches;

  • Privacy breaches;

  • Cyber theft;

  • Cyber espionage (it is the use of computer networks to gain illicit access to confidential information, held by a government or other organization);

  • Cyber spying (it is a form of cybercrime in which hackers target computer networks in order to gain access to profitable information);

  • Cyber extortion (it is an attack, or threat of attack, against an enterprise, coupled with a demand for money to avert/stop the attack);

  • Cyber terrorism (according to the U.S. Federal Bureau of Investigation, it is a “premeditated, politically motivated attack against information, computer systems, computer programs, and data which results in violence against non-combatant targets by sub-national groups or clandestine agents);

  • Loss of revenue;

  • Recovery of costs;

  • Reputational damage;

  • Business continuity/supply chain disruptions;

  • Cyber threats to infrastructure.

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