Article in ssrn electronic Journal · July 015 doi: 10. 2139/ssrn. 2634590 citations 32 reads 1,108 author: Some of the authors of this publication are also working on these related projects

Figure out ways — either through market mechanisms, 
state intervention or some combination of both — to 
spread out the costs of cybercrime.
As shown above, the 
Internet contributes a lot more to the global economy than is 
taken away due to the costs of cybercrime. Overall average 
organizational costs due to data breaches, for example, is 
only a few thousand dollars for every billion dollars of 
global GDP that the Internet generates. At a global level, 
the costs of cybercrime are negligible, when you see how 
much the Internet is contributing to global GDP. Yet, these 
costs can cause individual firms considerable hardship. 
Cybercrime insurance is the likely way forward. In this 
vein, market mechanisms can help protect firms from the 
costs of cybercrime via a market-driven pricing mechanism 
that focuses on the risk and potential damage of a cyber 
attack. Governments could also intervene in the market to 
19 I am grateful to Melissa E. Hathaway for suggesting this framing of 
this recommendation.

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GLOBAL COMMISSION ON INTERNET GOVERNANCE PAPER SERIES: NO. 16 — JuLy 2015 
20 • CENTRE FOR INTERNATIONAL GOVERNANCE INNOVATION • CHATHAM HOuSE
regulate the cost of cybercrime insurance and potentially 
even provide insurance themselves to help protect firms, 
possibly using a social, rather than a market, discount rate. 
In all likelihood, a combination of both market and state 
involvement in the insurance market is needed, especially 
in the short run, as the market is new and rife with 
imperfect information. The core idea is that some of the 
tremendous wealth generated by the Internet should be 
allocated toward insuring that the actual firms affected by 
data breaches are not completely destroyed by cybercrime.