[Paper Review] Economic impact of IoT cyber risk -- Analysing past and present to predict the future developments in IoT risk analysis and IoT cyber insurance

Petar Radanliev|SSRN Electronic Journal|Oct 13, 2018

Digital Transformation in Industry8 citations

TL;DR

This paper proposes a novel impact assessment model for IoT cyber risk in Industry 4.0 by synthesizing academic literature and 14 I4.0 frameworks using grounded theory. It identifies gaps in current cyber risk models and integrates standards and governance to advance economic impact assessment and IoT cyber insurance frameworks, offering a foundation for future risk-informed decision-making in industrial IoT environments.

ABSTRACT

This paper is focused on mapping the current evolution of Internet of Things (IoT) and its associated cyber risks for the Industry 4.0 (I4.0) sector. We report the results of a qualitative empirical study that correlates academic literature with 14 - I4.0 frameworks and initiatives. We apply the grounded theory approach to synthesise the findings from our literature review, to compare the cyber security frameworks and cyber security quantitative impact assessment models, with the world leading I4.0 technological trends. From the findings, we build a new impact assessment model of IoT cyber risk in Industry 4.0. We therefore advance the efforts of integrating standards and governance into Industry 4.0 and offer a better understanding of economics impact assessment models for I4.0.

Motivation & Objective

• To analyze the evolving landscape of IoT cyber risks within Industry 4.0 environments.
• To identify limitations in existing cyber security frameworks and quantitative impact assessment models for IoT.
• To bridge the gap between cyber risk standards, governance, and economic impact modeling in industrial IoT.
• To develop a new, integrated impact assessment model for IoT cyber risk tailored to Industry 4.0.

Proposed method

• Conducting a qualitative empirical study through a grounded theory approach to analyze academic literature and 14 I4.0 frameworks.
• Synthesizing findings from literature reviews to compare existing cyber security frameworks and quantitative impact assessment models.
• Mapping technological trends in Industry 4.0 to identify alignment or misalignment with current cyber risk governance standards.
• Developing a new impact assessment model by integrating standards, governance, and economic impact considerations.
• Validating the model's relevance through comparative analysis with world-leading I4.0 initiatives and frameworks.
• Focusing on economic impact assessment to support the development of IoT cyber insurance mechanisms.

Experimental results

Research questions

• RQ1 How do current cyber security frameworks for IoT in Industry 4.0 align with emerging technological trends?
• RQ2 What are the key gaps in existing quantitative cyber risk impact assessment models for industrial IoT?
• RQ3 How can standards and governance be better integrated into economic impact models for IoT cyber risk?
• RQ4 What role does economic impact assessment play in shaping the future of IoT cyber insurance?
• RQ5 How can a unified model for IoT cyber risk assessment be developed by synthesizing academic and industrial frameworks?

Key findings

• The study identifies significant inconsistencies between existing cyber security frameworks and the evolving technological demands of Industry 4.0.
• Many current cyber risk assessment models lack integration with industrial standards and governance mechanisms, limiting their practical applicability.
• A new impact assessment model was developed that synthesizes standards, governance, and economic impact considerations for IoT in Industry 4.0.
• The model advances the integration of cyber risk analysis with cyber insurance frameworks, offering a pathway for risk-informed decision-making.
• The research highlights the urgent need for unified, economically grounded models to support scalable IoT cyber insurance solutions.
• The study reveals that existing frameworks often overlook long-term economic consequences of cyber incidents in industrial IoT systems.