Could financial instruments be better used to mitigate global cyber warfare? Wired’s security correspondent Nathan Bruschi believes so by developing what he calls Cyber Bonds. Taking inspiration from the catastrophe bonds which came in the wake of Hurricane Andrew, these bonds would securitize the risk involved with cyber attacks and spread it globally to act as a deterrent for countries like Russia and China, which have actively used and encouraged the use of cyber attacks for political and economic goals. Companies and facilities that are deemed critical to the economy would pay premiums into a national insurance pool from which damage claims for cyber attacks would be drawn.

Each country would then securitize its insurance pool on the private market, creating country-specific Cyber Bonds and then agree to buy an untradeable basket of each other’s Cyber Bonds which would be held in their sovereign wealth funds. With every cyber attack and insurance payout, the value of a target country’s bonds will depreciate and make a dent in the country sponsoring the attack’s budget since it holds some of these, incentivising them to actively end these attacks. Why would these countries agree to this? Bruschi suggests that by protecting large institutions such as Deutsche Bank and Citigroup, major banks in other countries would want in. Excess Cyber Bonds could also be made available for investors to buy and trade on the secondary markets.