Premium Calculation for Insurance Businesses Based on Cyber Risks in IP-Based Power Substations

Abstract

Insurance is a promising risk transfer tool against switching cyberattacks on power grids that can disrupt operation and potentially lead to widespread outages. This paper emphasizes on a framework of premium calculation for cyber insurance businesses by modeling potential electronic intrusion with steadystate simulation results and its direct hypothesized impacts. The proposed actuarial framework models the operational monetary losses with the hypothesized power outages based on the cyber-reliability assessment and its expected mean time to restore power (MTTRP). The ruin probability is employed as the fundamental formula to determine the feasible insurance premium pool. Hypothesized spatial correlation studies on multiple substation contingencies associated with switching attacks have shown estimated operational losses and expected duration of power restoration, which is translated into the calculation of insurance premium. The proposed actuarial framework is validated using generalized IEEE test cases with modified parameters on substations. The potential implications of grid's hypothetical scenarios are discussed.INDEX TERMS Cyber-physical system, disruptive switching attack, enterprise risk management, insurance premium, power outages, ruin probability.

Blockchain-Based Security Mechanism for the Medical Data at Fog Computing Architecture of Internet of Things

“…Generally, risk denotes the latent potential for some event to occur, be it positive or negative. Regarding the IoT cyber risk, the researchers of [35][36][37] designed and implemented a framework of quality estimation for commercial cyber insurance. Unlike our study, which focuses on providing an efficient technique with respect to data retrieval size and key generation management, the authors modeled a prospective electronic intrusion with a steady state not considering time factors and data retrieval mechanism.…”

Cyber Insurance Against Cyberattacks on Electric Vehicle Charging Stations

“…The case studies in [25]- [27] use the synthetic IEEE Reliability Test System-96 benchmark. Similarly, using another artificial IEEE benchmark, Yang et al [28] demonstrate the effects of generator ramping rates, bus loading, and intrusion probabilities on cyber insurance premiums. The results in [28] suggest that premiums increase as the likelihood of intrusion, which nonlinearly depends on bus loading, increases.…”

“…Recent studies in [24]- [28] consider cyber insurance mechanisms for the power grids, and [29], [30] specifically focus on EVs. Maynard and Beecroft [24] study the need for cyber insurances in the U.S. power grids using the Erebos trojan attack, which can incur financial loss up to $223.8 billion.…”

Establishment of Cyber-Physical Correlation and Verification Based on Attack Scenarios in Power Substations

“…Common research purpose in 4 articles Reference [74] performs the first attempt to showcase a sound approach to derive the insurance premium for the cyber related event in the power system. On the other hand, the rest three scholarly articles more focus on advancing an idea to incentivize the grid owner for reinforcing cybersecurity.…”

“…Yang et al[74] establish a cyber insurance premium calculation framework regarding cyber risks in digital substations to establish a new cyber insurance business in the power system field. The assumed cyberattack here is substation attacks via hacking the SCADA system.…”