Entity-Specific Cyber Risk Assessment using InsurTech Empowered Risk Factors
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arXiv
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| Format: | Preprint |
| Published: |
2025
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| _version_ | 1866912973256130560 |
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| author | Guo, Jiayi Quan, Zhiyu Zhang, Linfeng |
| author_facet | Guo, Jiayi Quan, Zhiyu Zhang, Linfeng |
| contents | The lack of high-quality public cyber incident data limits empirical research and predictive modeling for cyber risk assessment. This challenge persists due to the reluctance of companies to disclose incidents that could damage their reputation or investor confidence. Therefore, from an actuarial perspective, potential resolutions conclude two aspects: the enhancement of existing cyber incident datasets and the implementation of advanced modeling techniques to optimize the use of the available data. A review of existing data-driven methods highlights a significant lack of entity-specific organizational features in publicly available datasets. To address this gap, we propose a novel InsurTech framework that enriches cyber incident data with entity-specific attributes. We develop various machine learning (ML) models: a multilabel classification model to predict the occurrence of cyber incident types (e.g., Privacy Violation, Data Breach, Fraud and Extortion, IT Error, and Others) and a multioutput regression model to estimate their annual frequencies. While classifier and regressor chains are implemented to explore dependencies among cyber incident types as well, no significant correlations are observed in our datasets. Besides, we apply multiple interpretable ML techniques to identify and cross-validate potential risk factors developed by InsurTech across ML models. We find that InsurTech empowered features enhance prediction occurrence and frequency estimation robustness compared to only using conventional risk factors. The framework generates transparent, entity-specific cyber risk profiles, supporting customized underwriting and proactive cyber risk mitigation. It provides insurers and organizations with data-driven insights to support decision-making and compliance planning. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2507_08193 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Entity-Specific Cyber Risk Assessment using InsurTech Empowered Risk Factors Guo, Jiayi Quan, Zhiyu Zhang, Linfeng Risk Management Machine Learning The lack of high-quality public cyber incident data limits empirical research and predictive modeling for cyber risk assessment. This challenge persists due to the reluctance of companies to disclose incidents that could damage their reputation or investor confidence. Therefore, from an actuarial perspective, potential resolutions conclude two aspects: the enhancement of existing cyber incident datasets and the implementation of advanced modeling techniques to optimize the use of the available data. A review of existing data-driven methods highlights a significant lack of entity-specific organizational features in publicly available datasets. To address this gap, we propose a novel InsurTech framework that enriches cyber incident data with entity-specific attributes. We develop various machine learning (ML) models: a multilabel classification model to predict the occurrence of cyber incident types (e.g., Privacy Violation, Data Breach, Fraud and Extortion, IT Error, and Others) and a multioutput regression model to estimate their annual frequencies. While classifier and regressor chains are implemented to explore dependencies among cyber incident types as well, no significant correlations are observed in our datasets. Besides, we apply multiple interpretable ML techniques to identify and cross-validate potential risk factors developed by InsurTech across ML models. We find that InsurTech empowered features enhance prediction occurrence and frequency estimation robustness compared to only using conventional risk factors. The framework generates transparent, entity-specific cyber risk profiles, supporting customized underwriting and proactive cyber risk mitigation. It provides insurers and organizations with data-driven insights to support decision-making and compliance planning. |
| title | Entity-Specific Cyber Risk Assessment using InsurTech Empowered Risk Factors |
| topic | Risk Management Machine Learning |
| url | https://arxiv.org/abs/2507.08193 |