In this paper we review the emerging role of cyber insurance for Cyber-Physical Systems (CPSs) and discuss the obstacles, the needs, and the avenues forward. Specifically we focus on the unique characteristics and challenges that cyber-physical systems provide to the cyber-insurance industry (compared to classical information technology risks) and show how they change the incentives for security investments.

The smart grid refers to the modernization of the power grid infrastructure with new technologies, enabling a more intelligently networked automated system with the goal of improving efficiency, reliability, and security, while providing more transparency and choices to electricity customers. A key technology being widely deployed on the consumption side of the grid is advanced metering infrastructure (AMI).