DP13324 | Some Principles for Regulating Cyber Risk

Publication Date

11/17/2018

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Abstract

We explain why cyber risk differs from other operational risks in the financial sector. The form of cyber shocks differs because of their intent, probability of success, possibility of a hidden phase and evolving form of the risks. The impact differs because problems can spread quickly and because uncertainty over the possibility of a hidden phase can impact responses. We explain why private incentives to attend to these risks may differ from societies’ preferences and develop six (micro- and macroprudential) regulatory principles to deal with cyber risk.