13 April 2018 - Event: ​Knowledge Set of Attack Surface and Cybersecurity Rating for Firms in a Supply Chain, Professor Shaun Wang

NBS Forum on Risk Management and Insurance
13 Apr 2018 08.45 AM - 09.15 AM Industry Partners

Professor Wang will present economic models of cybersecurity investments by a firm, first considering the cost-benefit to the firm itself, and then to the eco-system of a supply-chain.

He introduces a concept of a firm’s security knowledge set of its attack surface, relative to the universe of threats.

He then proposes three classes of security production functions as the frontier curve of a firm’s knowledge set. Professor Wang distinguishes two types of security investments in acquiring data, information and expertise, vis-à-vis deploying defense measures and detection tools, and derives formula for optimal allocations.

He also analyzes cyber breach propagations between firms in a supply-chain, and demonstrates that large firms requiring contractors to show security ratings by third parties can be an effective way of reducing information gap in a supply chain.

Finally, he presents a model for the reliability (sharpness) of cybersecurity rating for firms, and shows how the perceived reliability of cybersecurity rating affects the incentives for firms to increase their security investments.

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