The Economics of Cybersecurity

Allan Friedman

Research Director, Center for Technology Innovation

Fellow, Governance Studies

Brookings Institution

http://www.brookings.edu/techinnovation.aspx

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Uh oh…

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Topics discussed in Economist cover article

Critical Infrastructure

Economic Espionage

Intelligence Community

Cyber Terrorism

Cyber Crime

Military Strategy

US Law & Policy

International Law & Policy

Technology Issues

Distribution of paragraph by topicEconomist, July 1 2010

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“cybersecurity”

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“cybersecurity”

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“cybersecurity”

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“cybersecurity”

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Need to disambiguate

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Scale

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Urgency

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Risk Evaluation

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Framing Matters

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Who pays?

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Asymmetric Information

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Externalities

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Insurance

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Market demand for transparency

“…not aware that investors have asked for more disclosure in this area”

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Transparency vs.

Accountability

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Data Breaches

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Network Effects

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“Cloud computing”

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The weakest link

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Risk

Questions?

Comments?

Allan Friedman

afriedman@brookings.edu

http://www.brookings.edu/techinnovation.aspx

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Regulation

Regulatory Spectrum

Laissez Faire

Mandated Standards

Liability Standards & Practices

Purchasing Power