About the Authors ix Acknowledgments xi CHAPTER 1 Counting the Costs of Cyber Attacks 1 1.1 Anatomy of a Data Exfiltration Attack 1 1.2 A Modern Scourge 7 1.3 Cyber Catastrophes 12 1.4 Societal Cyber Threats 19 1.5 Cyber Risk 21 1.6 How Much Does Cyber Risk Cost Our Society? 24 Endnotes 30 CHAPTER 2 Preparing for Cyber Attacks 33 2.1 Cyber Loss Processes 33 2.2 Data Exfiltration 34 2.3 Contagious Malware Infection 41 2.4 Denial of Service Attacks 56 2.5 Financial Theft 63 2.6 Failures of Counterparties or Suppliers 68 Endnotes 78 CHAPTER 3 Cyber Enters the Physical World 81 3.1 A Brief History of Cyber-physical Interactions 81 3.2 Hacking Attacks on Cyber-physical Systems 83 3.3 Components of Cyber-physical Systems 86 3.4 How to Subvert Cyber-physical Systems 88 3.5 How to Cause Damage Remotely 91 3.6 Using Compromises to Take Control 92 3.7 Operating Compromised Systems 93 3.8 Expect the Unexpected 95 3.9 Smart Devices and the Internet of Things 99 Endnotes 101 CHAPTER 4 Ghosts in the Code 103 4.1 All Software Has Errors 103 4.2 Vulnerabilities, Exploits, and Zero Days 104 4.3 Counting Vulnerabilities 108 4.4 Vulnerability Management 113 4.5 International Cyber Response and Defense 118 Endnotes 122 CHAPTER 5 Know Your Enemy 125 5.1 Hackers 125 5.2 Taxonomy of Threat Actors 127 5.3 The Insider Threat 143 5.4 Threat Actors and Cyber Risk 145 5.5 Hackonomics 147 Endnotes 151 CHAPTER 6 Measuring the Cyber Threat 153 6.1 Measurement and Management 153 6.2 Cyber Threat Metrics 158 6.3 Measuring the Threat for an Organization 162 6.4 The Likelihood of Major Cyber Attacks 170 Endnotes 182 CHAPTER 7 Rules, Regulations, and Law Enforcement 183 7.1 Cyber Laws 183 7.2 US Cyber Laws 186 7.3 EU General Data Protection Regulation (GDPR) 190 7.4 Regulation of Cyber Insurance 192 7.5 A Changing Legal Landscape 194 7.6 Compliance and Law Enforcement 196 7.7 Law Enforcement and Cyber Crime 199 Endnotes 205 CHAPTER 8 The Cyber-Resilient Organization 207 8.1 Changing Approaches to Risk Management 207 8.2 Incident Response and Crisis Management 208 8.3 Resilience Engineering 212 8.4 Attributes of a Cyber-resilient Organization 214 8.5 Incident Response Planning 218 8.6 Resilient Security Solutions 219 8.7 Financial Resilience 225 Endnotes 234 CHAPTER 9 Cyber Insurance 235 9.1 Buying Cyber Insurance 235 9.2 The Cyber Insurance Market 244 9.3 Cyber Catastrophe Risk 248 9.4 Managing Portfolios of Cyber Insurance 251 9.5 Cyber Insurance Underwriting 258 9.6 Cyber Insurance and Risk Management 263 Endnotes 264 CHAPTER 10 Security Economics and Strategies 267 10.1 Cost-Effectiveness of Security Enhancements 267 10.2 Cyber Security Budgets 271 10.3 Security Strategies for Society 276 10.4 Strategies of Cyber Attack 283 10.5 Strategies of National Cyber Defense 289 Endnotes 294 CHAPTER 11 Ten Cyber Problems 295 11.1 Setting Problems 295 1 The Canal Safety Decision Problem 298 2 The Software Dependency Problem 300 3 The Vulnerability Inheritance Problem 301 4 The Vulnerability Count Problem 302 5 The Malware Overlap Problem 303 6 The Vulnerability Lifespan Problem 304 7 The Binary Similarity Problem 304 8 The Virus Modification Problem 306 9 The Cyber Criminal’s Dilemma Problem 306 10 The Security Verification Problem 307 Endnotes 308 CHAPTER 12 Cyber Future 309 12.1 Cybergeddon 309 12.2 Cybertopia 315 12.3 Future Technology Trends 321 12.4 Getting the Cyber Risk Future We Want 328 Endnotes 331 References 333 Index 355

THE ONE BOOK HACKERS DON'T WANT YOU TO READ Solving Cyber Risk enables you to accurately assess cyber risk at your organization and develop a cost-appropriate plan for top- tier cybersecurity. From the leading-edge minds behind the most popular cyber risk model in the insurance industry, this authoritative work shares the wisdom mined from a decade's worth of research into the culture, psychology, and profit models of hackers. Through a powerful, scalable framework, any size organization can effectively manage the likelihood and consequences of cyber attacks within any size budget. Step-by-step guidance to data-backed approaches and techniques empower you to: Measure and assess the five most expensive and damaging causes of cyber lossUnderstand the motivations, capabilities, and techniques behind the seven most common types of hackersApply the same due diligence and expertise to defending against cyber attacks as the best in the business Whether you need to update your cyber risk protocols or create a cutting-edge security plan from scratch, Solving Cyber Risk is your complete blueprint to protecting your digital assets from criminals.

“Solving Cyber Risk brings a technical subject to life using entertaining and poignant parallels to historical warfare. It also makes a compelling argument for the use of counterfactual analysis of past cyber events, to help us protect the digital economy from the cyber aggressors of the future.  The authors make the case for cyber resilience and give business leaders practical advice to embed cyber-aware culture in their organisation.”-Domenico del Re, Director, PricewaterhouseCoopers“Before we can begin to address the serious risks that accompany the modern world's increasing dependence on networked computer systems we have to understand them, and this is the key achievement of Solving Cyber Risk. Anyone reading the book will come away better able to assess, quantify, and reduce the risks faced by their business.”-Bill Thompson, Technology writer and BBC presenter“Is your organisation cyber-resilient? Are your services? Are you? Starting from practical assessments of how a security breach could damage the organisation, this comprehensive review of the current risk landscape will tell you why it matters, how to assess your own performance, and how to improve it.”-Andrew Cormack, Former Computer Security Incident Response Team (CSIRT) manager"The essential handbook for anyone that wants to understand the cyber risks facing their business.  The authors draw on decades of experience in cyber, insurance and modelling to provide the essential context for the range of potential threats and losses, today and in the future, providing real life case studies and practical advice for assessing and managing the risks.”-Matthew Grant, Founder and Executive Director, Abernite Ltd."Whoever feels overwhelmed by the sheer amount of unsorted information - around cyber risk, the uncertainties of managing this risk and its questioned insurability (which I do not share) - should read this book. It helps to ringfence the key issues by classifying, weighting and prioritizing cyber related decisions. It is good for IT security professionals to get familiar with risk management framework and it is equally helpful for risk management professionals to break down the complexity of 'cyber' and focus on the essentials."-Simon Dejung, Senior Underwriter, SCOR