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Some Principles for Regulating Cyber Risk

Author

Listed:
  • Anil K. Kashyap
  • Anne Wetherilt

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.

Suggested Citation

  • Anil K. Kashyap & Anne Wetherilt, 2019. "Some Principles for Regulating Cyber Risk," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 482-487, May.
    • Handle: RePEc:aea:apandp:v:109:y:2019:p:482-87
    Note: DOI: 10.1257/pandp.20191058
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    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • K24 - Law and Economics - - Regulation and Business Law - - - Cyber Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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