A cyber backstop is unnecessary because firms conduct online activity regardless of whether insurance is available. Worryingly, a backstop could undermine insurers in incentivizing improved cybersecurity.
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The heart of the challenge facing insurers is not necessarily the quantum of loss that might arise from cyber events, but rather the uncertainty that attaches to it.
Markets have been slow to adjust to the multidimensional perils of cyber risk.
Want to see cyber attribution and deterrence in action? In August, a hacker pulled the names of US military personnel and others out of a corporate network and passed them to ISIL. British jihadist Junaid Hussain exulted when ISIL released the names. “They have us on their ‘hit list,’ and we have them on ours too…,” he tweeted. On the whole, I’d rather be on theirs.