Digital asset valuation and cyber risk measurement : principles of cybernomics / Keyun Ruan.

Format:

Book

Author/Creator:

Ruan, Keyun, 1986- author.

Language:

English

Subjects (All):

Computer security.

Electronic commerce.

Physical Description:

1 online resource (369 pages)

Edition:

1st edition

Place of Publication:

London, England : Academic Press, 2019.

System Details:

text file

Summary:

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

Contents:

Front Cover

Digital Asset Valuation and Cyber Risk Measurement

Copyright Page

Dedication

Contents

Preface

Introduction

Chapter 1: Digital Assets as Economic Goods

Chapter 2: Digital Theory of Value

Chapter 3: Cyber Risk Management: A New Era of Enterprise Risk Management

Chapter 4: Cyber Risk Measurement in the Hyperconnected World

Chapter 5: Economic Modeling and the Implementation of Effective Mitigating Controls

Chapter 6: The Point of Diminishing Return on Cyber Risk Investment

Chapter 7: Kilogram of Cyber Risk: Introducing Bitmort and Hekla

Chapter 8: Three Views of Cybernomics: Entity View, Portfolio View, and Global View

Chapter 9: Principles of Cybernomics

Chapter 10: Case Study: Insuring the Future of Everything

1 Digital Assets as Economic Goods

1.1 Origins and Philosophical Concepts of Value

1.1.1 Subjective View Versus Objective View

1.1.2 Intrinsic Value Versus Extrinsic Value

1.2 What Is an Economic Good?

1.3 What Is an Asset?

1.3.1 Definition of Asset

1.3.2 Current Asset Valuation Methods

1.4 What Are Digital Assets?

1.4.1 Categorization of Digital Assets

1.4.1.1 (Networked) System Assets

1.4.1.2 Software Assets

1.4.1.3 Hardware Assets

1.4.1.4 Service Assets

1.4.1.5 Robotic Assets

1.4.1.6 Data Assets

1.4.1.7 Metadata Assets

1.4.1.8 Digitally Enabled Devices

1.4.2 Managing Digital Assets in an Organization

1.4.2.1 Information Resource Management

1.4.2.2 Digital Assets Management

1.5 Unique Attributes of Digital Assets

1.5.1 Characteristic 1: Digital Value Creation Does Not Decrease but Increases Through Usage

1.5.2 Characteristic 2: Duplication Does Not Increase Digital Value

1.5.3 Characteristic 3: Digital Value Production and Distribution Entails Higher Fixed Costs and Lower Variable Costs.

1.5.4 Characteristic 4: Digital Value Can Be Distributed via Multi-Sided Markets

1.5.5 Characteristic 5: Digital Value Is Limitless

1.5.5.1 Characteristic 5a: Digital Value Has Limitless Utility to the Owner

1.5.5.2 Characteristic 5b: There Are Limitless Opportunities to Distribute and Consume Digital Value

1.6 Digital Value Matrix: Categorization of Digital Assets Based on Their Economic Functions

1.6.1 Digital Asset on an Individual Level

1.6.2 Digital Asset on an Organizational Level

1.6.3 Digital Asset on a National Level

1.6.4 Digital Asset on the Global Level

1.7 Valuation of Digital Assets as Economic Goods

1.7.1 Attributes of Digital Assets Contributing to Intrinsic Digital Value Creation

1.7.1.1 Data Quality

1.7.1.2 Risk Exposure

1.7.1.3 Age

1.7.1.4 Data Volume

1.7.1.5 System Quality

1.7.1.6 Production Cost

1.7.2 Attributes of Digital Assets Contributing to Extrinsic Digital Value Creation

1.7.2.1 Exclusivity

1.7.2.2 Network Connectivity

1.7.2.3 Accessibility

1.7.2.4 Reproduction Cost

1.7.2.5 Economies of Scale

1.7.2.6 Data Format

1.7.2.7 Level of Structure

1.7.2.8 Delivery Cadence

1.7.2.9 Power Supplies

1.8 Existing Challenges for Digital Asset Valuation

1.8.1 Inherent Challenges

1.8.2 Market Challenges

1.8.3 Taxation Challenges

1.8.4 Regulatory and Standardization Challenges

1.9 Current Methods for Digital Asset Valuation

1.9.1 Intrinsic Value

1.9.2 Direct Conversion of Financial Value

1.9.3 Business and Performance Value

1.9.4 Cost-Based Models

Example: Total Cost of Ownership (TCO)

1.9.5 Market-Based Models

Example: Market for Personal Data

1.9.6 Income-Based Models

1.9.7 Option Models

2 Digital Theory of Value

2.1 The Search for a Value Theory Supporting the Fourth Industrial Revolution.

2.1.1 Digitization of Everything

2.1.2 The Fourth Industrial Revolution

2.1.2.1 Characteristic 1: Velocity

2.1.2.2 Characteristic 2: Cross-Jurisdictional Economies of Scale Without Mass

2.1.2.3 Characteristic 3: Heavy Reliance on Intangible Assets, Especially Intellectual Property

2.1.2.4 Characteristic 4: The Importance of Data, User Participation, and Their Synergies With Intellectual Property

2.1.2.5 Characteristic 5: Fusion of Technologies

2.1.2.6 Characteristic 6: Consumption Externality

2.1.2.7 Characteristic 7: Indirect Network Effects

2.1.2.8 Characteristic 8: Lock-In Effects and Competition

2.2 Models for Digital Asset Valuation

2.2.1 Method 1: Intrinsic Value

2.2.1.1 1a: Intrinsic Cost of Production

2.2.1.2 1b: Direct Financial Conversion

2.2.2 Method 2: Extrinsic Value

2.2.2.1 2a: Market Value

2.2.2.2 2b: Usage Value

2.2.3 Method 3: Subjective Value

2.2.4 Method 4: Opportunity Value

2.3 Measuring the Digital Economy

2.3.1 Measuring Rate of Digitalization of Traditional Industries: The Enabler and Multiplier

2.3.2 Measuring Digital-Native Industries: The "Smarter," More Intelligent Disrupter

Example: Platform Revolution

2.3.3 Measuring the Invisible Economy: The Opportunity Value

2.4 Digital Theory of Value

2.4.1 Law of Machine Time

2.4.1.1 Phenomenon 1a: The Underlying Exponential Function

2.4.1.2 Phenomenon 1b: The Future Cannot Be Projected From the Past using Current Statistical Methods

2.4.1.3 Principle 1a: Progress of Digital Economy Should Be Measured Against Machine Time

2.4.1.4 Principle 1b: Sensemaking Is a Universal Challenge and a Value Driver

2.4.1.5 Principle 1c: Risk Management Is an Island of Stability in the Sea of Change

2.4.2 Law of Recombination

2.4.2.1 Phenomenon 2a: Quality Data Is the New Oil.

2.4.2.2 Phenomenon 2b: The Fusion of Technologies Is the Fuel for Innovative Breakthroughs

2.4.2.3 Principle 2: Recombination Is an Engine for Growth

2.4.3 Law of Hyperconnectivity

2.4.3.1 Phenomenon 3a: New Era of Globalized Societies

2.4.3.2 Phenomenon 3b: New Era of Complexity Economics

2.4.3.3 Principle 3a: Hyperconnectivity Is an Engine for Growth

2.4.3.4 Principle 3b: The Gravity of Value Creation will be Increasingly in the Virtual Space where Value Creation is Locat...

2.4.3.5 Principle 3c: Nontechnical Barriers Such As Geopolitical, Regulations, and Legal Frameworks Are Limiting Factors

2.4.4 Law of Subjectivity

2.4.4.1 Phenomenon 4a: The Need to Be Entertained

2.4.4.2 Phenomenon 4b: The Demand for Customization

2.4.4.3 Principle 4: A Greater Component of Value Is Increasingly Subjective, Reflecting Only in an Entity's Willingness-to-Pay

2.4.5 Law of Abundance

2.4.5.1 Phenomenon 5: Once Intrinsic Digital Value is Created, There are Limitless Ways to Multiply it with Extrinsic Digit...

2.4.5.2 Principle 5a: The Digitally Empowered Entity has Limitless Economic Potential

2.4.5.3 Principle 5b: Consumer Reception and Power Supply Are Limiting Factors

2.4.5.4 Principle 5c: The Attention of a Consumer Is the New Scarce Resource

2.4.6 Law of New Division of Labor

2.4.6.1 Phenomenon 6a: Labor Is Increasingly a Less Important Factor in Value Production

2.4.6.2 Phenomenon 6b: New Necessities and the Barrier to Entry in a Digitized Society

2.4.6.3 Phenomenon 6c: Deep Learning and Machine Intelligence Are Still Inherently Limited

2.4.6.4 Phenomenon 6d: Accuracy Is Not the Truth

2.4.6.5 Principle 6a: The Digital Economy Is Creating a New Social Divide Based on the New Labor Value Chain.

2.4.6.6 Principle 6b: The Optimal Path to Intrinsic Value Creation Is a Combination of Human and Machine Intelligence

3 Cyber Risk Management: A New Era of Enterprise Risk Management

3.1 History and Definitions of Risk

3.1.1 History of Risk

3.1.2 Definitions of Risk as a Multidimensional Concept

3.1.3 Risk in Computer Science and Engineering

3.1.4 Risk Can Only Be Relatively Objective

3.1.5 Decision Theory and Acceptable Risk

3.2 Enterprise Risk Management

3.2.1 The Discipline of Enterprise Risk Management

3.2.2 Cyber Risk Management: A New Era of Enterprise Risk Management

3.3 Risk Analysis

3.4 Risk Management

3.4.1 Risk Assessment

3.4.1.1 Define the Risk Assessment Process

3.4.1.2 System Characterization

3.4.1.3 Risk Classification

3.4.1.4 Threat Identification

3.4.1.4.1 STRIDE

3.4.1.4.2 Process for Attack Simulation and Threat Analysis

3.4.1.4.3 Trike

3.4.1.4.4 Visual, Agile, and Simple Threat (VAST) Modelling

3.4.1.5 Vulnerability Assessment

3.4.1.5.1 The Common Vulnerability Scoring System

3.4.1.5.2 The Open Web Application Security Project Top 10

3.4.1.5.3 The Open Web Application Security Project 2017

3.4.1.6 Likelihood Determination

3.4.1.7 Impact Analysis

3.4.1.8 Risk Determination

3.4.2 Risk Mitigation

3.4.3 Effectiveness Assessment

3.4.4 Continuous Monitoring

3.5 Risk Models

3.5.1 Qualitative and Quantitative Models

3.5.2 Quantitative Assessment

3.5.3 Qualitative Assessment

3.5.4 Other Models

3.5.4.1 Perspective: Asset-driven, Service-driven, or Business driven

3.5.4.2 Resource Valuation: Vertical or Horizontal

3.5.4.3 Risk Measurement: Propagated or Nonpropagated

4 Cyber Risk Measurement in the Hyperconnected World

4.1 Cyber Risk as a Critical Business Risk

4.2 The Uniqueness of Cyber Risk.

4.3 The Need for Cyber Risk Measurement and Current Challenges.

Notes:

Includes bibliographical references and index.

Description based on print version record.

ISBN:

9780128123287

0128123281

OCLC:

1123220589