Austin InnoTech: 3 November 2004

New Risk Management Strategies for the Internet

Worms, viruses, cable cuts, routing flaps, and attacks that affect many business on the Internet yet are beyond their control require a collective response. The traditional solution to such force majeure events, or acts of God, is insurance, which pools risk. Insurance is the first of a series of financial risk management strategies, which include catastrophe bonds, performance bonds, and capital withholding. All are tried and true in other industries, and are applicable to the Internet, as are reputation systems. The talk explains and illustrates the problems and these new-to-the-Internet solutions.