Is securing your network worth the money?

Workshop on the Economics of Information Security uncovers startling deficiencies in corporate security

"The Countervailing Incentive of Restricted Patch Distribution: Economic and Policy Implications"

Three Purdue researchers took a look at what difference it makes to software vendors and customers, as well as the government, if a software vendor restricts distribution of patches to only those with legal copies of its software (such as with Microsoft's Windows Genuine Program). Issues include whether restricting the patches actually does more harm than good in that this leaves lots of vulnerable software implementations out there.

The researchers conclude in their paper that: "If the cost of the patch quality is high, then in the presence of intense anti-piracy action the vendor does not benefit from vertically differentiating between the legal and the pirated versions." Also: "If the population is less likely to pirate, intense anti-piracy enforcement should be complemented with the decision to restrict the patch. However, we notice that there exists a level of anti-piracy effort by the government above which vertically differentiating the legitimate copy from the pirated copy is not optimal."

"Optimally securing interconnected information systems and assets"

A threesome of Carnegie Mellon University researchers address this long and involved question: "How should a multi-divisional enterprise optimally deploy security countermeasures in the context of heterogeneous information systems possessed by its divisions and in response to different kinds of damages that threats can cause to the enterprise's information systems and assets?"

The upshot of the work is that "there are strategic issues in information security decision making and that the distortion due to incomplete knowledge of information systems by the CIO has to be weighed against incentive problems when division managers make decisions." The team looks at threats to network availability and confidentiality (personal info), and finds that dealing with availability losses is easier "since the deployment decisions involving protection countermeasures at each division are strategically independent."

"Interdependence of Reliability and Security"

This paper studies incentives for vendors to invest in solidifying the reliability and security of their software. The authors, from the University of Michigan, University of California at Berkeley and HEC Montreal, find that users typically can't see the difference between whether a failure happens because of a security or reliability shortcoming and trace "reliability and security failures to the same source -- software bugs."

"Measuring Security Investment Benefit for Off the Shelf Software Systems -- A Stakeholder Value Driven Approach"

USC researchers presented a method for quantifying security threats that is designed to help organizations determine how much to spend on off-the-shelf security technologies to address their security needs. Their paper presents a case study of one large organization using the methodology. "Compared to traditional security risk management approaches," the authors write, "T-MAP (Threat Modeling method based on Attacking Path Analysis) does not require accurate values of probabilities, frequencies and size of loss which are usually very difficult to estimate in practice."

"Cyber-Insurance: Copula Pricing Framework and Implications for Risk Management"

This study by University of Buffalo and Brock University researchers looks at pricing for insurance policies to cover computer security breaches in light of massive losses cited by organizations that have been affected. The researchers develop a model for pricing cyber-insurance but acknowledge doing so had its limitations in that there is limited data on cybercrimes to work with. The researchers urge IT managers to collect good data on security breaches to help themselves when it comes to negotiating insurance premiums.

"Mental Models of Computer Security Risks"

Indiana University researchers explore the difference in perceptions of security risk by experts and non-experts, and how organizations can benefit by communicating with end users about risk based on "mental models" used by the non-experts. (See their paper.)

"Economics of User Segmentation, Profiling and Detection in Security"

The pros and cons of profiling users to ferret out hackers is explored in this research out of the University of Texas at Dallas and Northwestern State University in Louisiana. Among the issues: Hackers faking their profiles to skirt the system. However, they argue that profiling can be beneficial, even if some legitimate users need to jump through a few extra hoops now and then.

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