The Economics of Cyber Insurance for Indian SMEs: A Strategic Risk Management Approach

This paper investigates the strategic necessity and economic viability of cyber insurance for Indian Small and Medium Enterprises (SMEs). As SMEs are increasingly targeted and lack extensive cybersecurity budgets, a single cyber incident can be catastrophic. The study argues that cyber insurance serves as a vital risk transfer mechanism, covering critical first-party costs (e.g., forensics, business interruption, extortion) and third-party liabilities (e.g., regulatory fines, legal fees). Crucially, the approach emphasizes that insurance is effective only when integrated with proactive cybersecurity hygiene as part of a holistic risk management strategy.