The future of cyber risk management: AI and DLT for automated cyber risk modelling, decision making, and risk transfer
Pankaj Kumar Pandey, Sokratis K. Katsikas · Edward Elgar Publishing eBooks · 2023
Blockchain-based smart contract technology has the potential to facilitate and accelerate the contract management process of cyber risk transfer (derivatives) contracts. Each validated derivative contract on an openly shared infrastructure would contain data and self-executable codes inherent to that contract. When an underlying event occurs, which meets the prespecified conditions, a blockchain-based smart derivative would pick up the predefined data sources of all participants, and then automatically activate and determine pay-outs to or from the contract parties. We propose an AI-driven, DLT-based smart contract system for secured sharing of threat intelligence, risk modelling, structuring of risk transfer instruments, and automated settlement process. To this end, an architecture for automation of decision-making process for cyber risk mitigation and transfer of residual risks with AI-driven DLT-based smart contracts is proposed, and a qualitative assessment of the same is presented.