Economic barriers to better IT security

Academics are calling for comprehensive security-breach notification in Europe and sanctions against ISPs which fail to clean up botnets as part of a series of measures designed to make insecure systems unprofitable. A paper commissioned by the European Network and Information Security Agency (ENISA) attempts to apply methodologies from the field of economics to the world of software vulnerabilities, exploits, and hacker attacks. John Leyden writes in the Register that a theoretical framework for a discussion of the economics of security has been a hot topic in academic circles since the turn of the century. Among those looking closely at the problem is Ross Anderson of the University of Cambridge Computer Lab, one of the four authors of ENISA’s paper.

In the real world, investment in risk avoidance may not be profitable. Security failures often arise due to perverse incentives rather than the lack of suitable technology. For example, credit card firms can rely on business models that push the cost of fraud onto merchants and consumers rather than investing in reducing the problem themselves. This is because such investments would place them at a commercial disadvantage to their competitors. Establishing economic incentives for IT suppliers to produce more secure products is arguably an even greater problem because software publishers are not held liable for the shortcomings of their products. These shortcomings may damage consumer faith in e-commerce but fail to effect sales, so a market-based solution in absence of regulatory pressure is difficult to imagine. An absence of trustworthy statistics on the extent of cyber crime further muddies the waters.

The paper, “Security Economics and the Internal Market,” aims to inform the development of European e-commerce policy. It identifies economic barriers for improving e-commerce security in Europe, assesses the impact of these barriers, and suggests incentives (regulatory, non-regulatory, technical, educational, etc.) to remove these obstacles. The report concludes with a number of recommendations to both government and industry on policy options and initiatives, including a comprehensive security-breach notification law for the EU, the establishment of an agency independent of the police and industry to assess the impact of cyber crime, and fines or other sanctions against ISPs that fail to act on reports on compromised machines. The researchers also want to develop EU standards so that network connected equipment is secure by default and vendors are automatically responsible for unpatched software, which will speed up the patch-creating process.

Anderson (who wrote a useful primer on the economic of security) worked with Richard Clayton and Tyler Moore of Cambridge University as well as Rainer Böhme of the technical University in Dresden in drawing up the paper, which they hope will spark a debate on the topic. ENISA has launched a public consultation on its report, inviting comments from interested parties before the end of April. Leyden correctly notes that the last few years have seen growing interest in applying methodologies from social science to issues in information security. Security maven Bruce Schneier, for example, has published a number of articles on the psychology of security.