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Cyber Risk Management for Critical Infrastructure: A Risk Analysis Model and Three Case Studies

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  • M.‐Elisabeth Paté‐Cornell
  • Marshall Kuypers
  • Matthew Smith
  • Philip Keller

Abstract

Managing cyber security in an organization involves allocating the protection budget across a spectrum of possible options. This requires assessing the benefits and the costs of these options. The risk analyses presented here are statistical when relevant data are available, and system‐based for high‐consequence events that have not happened yet. This article presents, first, a general probabilistic risk analysis framework for cyber security in an organization to be specified. It then describes three examples of forward‐looking analyses motivated by recent cyber attacks. The first one is the statistical analysis of an actual database, extended at the upper end of the loss distribution by a Bayesian analysis of possible, high‐consequence attack scenarios that may happen in the future. The second is a systems analysis of cyber risks for a smart, connected electric grid, showing that there is an optimal level of connectivity. The third is an analysis of sequential decisions to upgrade the software of an existing cyber security system or to adopt a new one to stay ahead of adversaries trying to find their way in. The results are distributions of losses to cyber attacks, with and without some considered countermeasures in support of risk management decisions based both on past data and anticipated incidents.

Suggested Citation

  • M.‐Elisabeth Paté‐Cornell & Marshall Kuypers & Matthew Smith & Philip Keller, 2018. "Cyber Risk Management for Critical Infrastructure: A Risk Analysis Model and Three Case Studies," Risk Analysis, John Wiley & Sons, vol. 38(2), pages 226-241, February.
    • Handle: RePEc:wly:riskan:v:38:y:2018:i:2:p:226-241
    DOI: 10.1111/risa.12844
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    1. Gregory S. Parnell & Rudolph E. Butler & Stephen J. Wichmann & Mike Tedeschi & David Merritt, 2015. "Air Force Cyberspace Investment Analysis," Decision Analysis, INFORMS, vol. 12(2), pages 81-95, June.
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    1. Gabriel Kuper & Fabio Massacci & Woohyun Shim & Julian Williams, 2020. "Who Should Pay for Interdependent Risk? Policy Implications for Security Interdependence Among Airports," Risk Analysis, John Wiley & Sons, vol. 40(5), pages 1001-1019, May.
    2. Daniel Woods & Mustafa Abdallah & Saurabh Bagchi & Shreyas Sundaram & Timothy Cason, 2022. "Network defense and behavioral biases: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 254-286, February.
    3. Todor Tagarev & Valeri Ratchev, 2020. "A Taxonomy of Crisis Management Functions," Sustainability, MDPI, vol. 12(12), pages 1-34, June.
    4. Maria Polorecka & Jozef Kubas & Pavel Danihelka & Katarina Petrlova & Katarina Repkova Stofkova & Katarina Buganova, 2021. "Use of Software on Modeling Hazardous Substance Release as a Support Tool for Crisis Management," Sustainability, MDPI, vol. 13(1), pages 1-15, January.
    5. Chatzis, Petros & Stavrou, Eliana, 2022. "Cyber-threat landscape of border control infrastructures," International Journal of Critical Infrastructure Protection, Elsevier, vol. 36(C).
    6. Stright, Jim & Cheetham, Peter & Konstantinou, Charalambos, 2022. "Defensive cost–benefit analysis of smart grid digital functionalities," International Journal of Critical Infrastructure Protection, Elsevier, vol. 36(C).
    7. Loretta Mastroeni & Alessandro Mazzoccoli & Maurizio Naldi, 2022. "Pricing Cat Bonds for Cloud Service Failures," JRFM, MDPI, vol. 15(10), pages 1-18, October.
    8. Natalie M. Scala & Allison C. Reilly & Paul L. Goethals & Michel Cukier, 2019. "Risk and the Five Hard Problems of Cybersecurity," Risk Analysis, John Wiley & Sons, vol. 39(10), pages 2119-2126, October.
    9. Frank Cremer & Barry Sheehan & Michael Fortmann & Arash N. Kia & Martin Mullins & Finbarr Murphy & Stefan Materne, 2022. "Cyber risk and cybersecurity: a systematic review of data availability," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(3), pages 698-736, July.
    10. Mark Bentley & Alec Stephenson & Peter Toscas & Zili Zhu, 2020. "A Multivariate Model to Quantify and Mitigate Cybersecurity Risk," Risks, MDPI, vol. 8(2), pages 1-21, June.
    11. Alessandro Mazzoccoli & Maurizio Naldi, 2022. "An Overview of Security Breach Probability Models," Risks, MDPI, vol. 10(11), pages 1-29, November.
    12. Alessandro Mazzoccoli, 2023. "Optimal Cyber Security Investment in a Mixed Risk Management Framework: Examining the Role of Cyber Insurance and Expenditure Analysis," Risks, MDPI, vol. 11(9), pages 1-14, August.
    13. Zhao, Yunfei & Huang, Linan & Smidts, Carol & Zhu, Quanyan, 2020. "Finite-horizon semi-Markov game for time-sensitive attack response and probabilistic risk assessment in nuclear power plants," Reliability Engineering and System Safety, Elsevier, vol. 201(C).
    14. Suo, Weilan & Wang, Lin & Li, Jianping, 2021. "Probabilistic risk assessment for interdependent critical infrastructures: A scenario-driven dynamic stochastic model," Reliability Engineering and System Safety, Elsevier, vol. 214(C).

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