Digital Asset Valuation and Cyber Risk Measurement

Digital Asset Valuation and Cyber Risk Measurement

by Keyun Ruan
Released May 2019
Publisher(s): Academic Press
ISBN: 9780128123287

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Book description

Digital Asset Valuation and Cyber Risk Measurement: Principles of Cybernomics is a book about the future of risk and the future of value. It examines the indispensable role of economic modeling in the future of digitization, thus providing industry professionals with the tools they need to optimize the management of financial risks associated with this megatrend. The book addresses three problem areas: the valuation of digital assets, measurement of risk exposures of digital valuables, and economic modeling for the management of such risks. Employing a pair of novel cyber risk measurement units, bitmort and hekla, the book covers areas of value, risk, control, and return, each of which are viewed from the perspective of entity (e.g., individual, organization, business), portfolio (e.g., industry sector, nation-state), and global ramifications. Establishing adequate, holistic, and statistically robust data points on the entity, portfolio, and global levels for the development of a cybernomics databank is essential for the resilience of our shared digital future. This book also argues existing economic value theories no longer apply to the digital era due to the unique characteristics of digital assets. It introduces six laws of digital theory of value, with the aim to adapt economic value theories to the digital and machine era.
  • Comprehensive literature review on existing digital asset valuation models, cyber risk management methods, security control frameworks, and economics of information security
  • Discusses the implication of classical economic theories under the context of digitization, as well as the impact of rapid digitization on the future of value
  • Analyzes the fundamental attributes and measurable characteristics of digital assets as economic goods
  • Discusses the scope and measurement of digital economy
  • Highlights cutting-edge risk measurement practices regarding cybersecurity risk management
  • Introduces novel concepts, models, and theories, including opportunity value, Digital Valuation Model, six laws of digital theory of value, Cyber Risk Quadrant, and most importantly, cyber risk measures hekla and bitmort
  • Introduces cybernomics, that is, the integration of cyber risk management and economics to study the requirements of a databank in order to improve risk analytics solutions for (1) the valuation of digital assets, (2) the measurement of risk exposure of digital assets, and (3) the capital optimization for managing residual cyber risK
  • Provides a case study on cyber insurance

Table of contents

  1. Cover image
  2. Title page
  3. Table of Contents
  4. Copyright
  5. Dedication
  6. Preface
  7. Introduction
    1. Chapter 1: Digital Assets as Economic Goods
    2. Chapter 2: Digital Theory of Value
    3. Chapter 3: Cyber Risk Management: A New Era of Enterprise Risk Management
    4. Chapter 4: Cyber Risk Measurement in the Hyperconnected World
    5. Chapter 5: Economic Modeling and the Implementation of Effective Mitigating Controls
    6. Chapter 6: The Point of Diminishing Return on Cyber Risk Investment
    7. Chapter 7: Kilogram of Cyber Risk: Introducing Bitmort and Hekla
    8. Chapter 8: Three Views of Cybernomics: Entity View, Portfolio View, and Global View
    9. Chapter 9: Principles of Cybernomics
    10. Chapter 10: Case Study: Insuring the Future of Everything
  8. Chapter 1. Digital Assets as Economic Goods
    1. Abstract
    2. 1.1 Origins and Philosophical Concepts of Value
    3. 1.2 What Is an Economic Good?
    4. 1.3 What Is an Asset?
    5. 1.4 What Are Digital Assets?
    6. 1.5 Unique Attributes of Digital Assets
    7. 1.6 Digital Value Matrix: Categorization of Digital Assets Based on Their Economic Functions
    8. 1.7 Valuation of Digital Assets as Economic Goods
    9. 1.8 Existing Challenges for Digital Asset Valuation
    10. 1.9 Current Methods for Digital Asset Valuation
  9. Chapter 2. Digital Theory of Value
    1. Abstract
    2. 2.1 The Search for a Value Theory Supporting the Fourth Industrial Revolution
    3. 2.2 Models for Digital Asset Valuation
    4. 2.3 Measuring the Digital Economy
    5. 2.4 Digital Theory of Value
  10. Chapter 3. Cyber Risk Management: A New Era of Enterprise Risk Management
    1. Abstract
    2. 3.1 History and Definitions of Risk
    3. 3.2 Enterprise Risk Management
    4. 3.3 Risk Analysis
    5. 3.4 Risk Management
    6. 3.5 Risk Models
  11. Chapter 4. Cyber Risk Measurement in the Hyperconnected World
    1. Abstract
    2. 4.1 Cyber Risk as a Critical Business Risk
    3. 4.2 The Uniqueness of Cyber Risk
    4. 4.3 The Need for Cyber Risk Measurement and Current Challenges
    5. 4.4 Cost Models for Incidents and Losses
    6. 4.5 Methods for Cyber Risk Measurement
    7. 4.6 Introducing Cyber Risk Quadrant: Applying Medical Risk Measurement to Cyber
  12. Chapter 5. Economic Modeling and the Implementation of Effective Mitigating Controls
    1. Abstract
    2. 5.1 Definition of Control and Types of Controls
    3. 5.2 Prioritizing Cost-Effective Controls
    4. 5.3 Measuring Cost of Controls
    5. 5.4 Measuring Benefits of Controls
  13. Chapter 6. The Point of Diminishing Return on Cyber Risk Investment
    1. Abstract
    2. 6.1 Economics of Information Security
    3. 6.2 Current Information Security/Risk Management Budget
    4. 6.3 Challenges for Cyber Risk Management Cost Optimization
    5. 6.4 Current Models for Cyber Risk Cost Optimization
    6. 6.5 Cost of Security Configurations
    7. 6.6 Decision Model for Optimal Risk Management Strategies
  14. Chapter 7. Kilogram of Cyber Risk: Introducing Bitmort and Hekla
    1. Abstract
    2. 7.1 Risk Metrology
    3. 7.2 Micromort
    4. 7.3 Value-at-Risk
    5. 7.4 Introducing Bitmort and Hekla
    6. 7.5 Risk Calculations
  15. Chapter 8. Three Views of Cybernomics: Entity View, Portfolio View, and Global View
    1. Abstract
    2. 8.1 Cybernomics
    3. 8.2 Portfolio Level
    4. 8.3 Global Level
    5. 8.4 Three Views of Cybernomics
  16. Chapter 9. Principles of Cybernomics
    1. Abstract
    2. 9.1 Unique Attributes of Digital Assets
    3. 9.2 Digital Value Matrix: Categorization of Digital Assets Based on Their Economic Functions
    4. 9.3 Characteristics of the Fourth Industrial Revolution
    5. 9.4 Models for Digital Asset Valuation
    6. 9.5 Measuring the Digital Economy
    7. 9.6 Digital Theory of Value
    8. 9.7 Cyber Risk Quadrant: Applying Medical Risk Measurement to Cyber
    9. 9.8 Introducing Bitmort and Hekla
    10. 9.9 Risk Calculations
    11. 9.10 Three Views of Cybernomics
    12. 9.11 Discussions and Limitations
  17. Chapter 10. Case Study: Insuring the Future of Everything
    1. Abstract
    2. 10.1 History and Context of Cyber Insurance
    3. 10.2 Current Offerings, Coverage, and Policy Limits
    4. 10.3 Underwriting and Assessment Process
    5. 10.4 Claim Study
    6. 10.5 Current Challenges in the Cyber Insurance Market
    7. 10.6 Cybernomics and the Future Growth of the Cyber Insurance Market
  18. References
    1. Further Reading
  19. Index

Product information

  • Title: Digital Asset Valuation and Cyber Risk Measurement
  • Author(s): Keyun Ruan
  • Release date: May 2019
  • Publisher(s): Academic Press
  • ISBN: 9780128123287