1. The Economics of Cybersecurity Allan Friedman Research Director, Center for Technology Innovation Fellow, Governance Studies Brookings Institution http://www.brookings.edu/techinnovation.aspx

2. 1 Uh oh…

3. 2 http://www.brookings.edu/techinnovation.aspx 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 topic Economist, July 1 2010

4. 3 http://www.brookings.edu/techinnovation.aspx “cybersecurity”

5. 4 http://www.brookings.edu/techinnovation.aspx “cybersecurity”

6. 5 http://www.brookings.edu/techinnovation.aspx “cybersecurity”

7. 6 http://www.brookings.edu/techinnovation.aspx “cybersecurity”

8. 7 http://www.brookings.edu/techinnovation.aspx Need to disambiguate

9. 8 http://www.brookings.edu/techinnovation.aspx Scale

10. 9 http://www.brookings.edu/techinnovation.aspx Urgency

11. 10 http://www.brookings.edu/techinnovation.aspx Risk Evaluation

12. 11 http://www.brookings.edu/techinnovation.aspx Framing Matters

13. 12 http://www.brookings.edu/techinnovation.aspx

14. 13 http://www.brookings.edu/techinnovation.aspx

15. 14 http://www.brookings.edu/techinnovation.aspx Who pays?

16. 15 http://www.brookings.edu/techinnovation.aspx Asymmetric Information

17. 16 http://www.brookings.edu/techinnovation.aspx Externalitie s

18. 17 http://www.brookings.edu/techinnovation.aspx Insurance

19. 18 http://www.brookings.edu/techinnovation.aspx Market demand for transparency “…not aware that investors have asked for more disclosure in this area”

20. 19 http://www.brookings.edu/techinnovation.aspx Transparency vs. Accountability

21. 20 http://www.brookings.edu/techinnovation.aspx Data Breaches

22. 21 http://www.brookings.edu/techinnovation.aspx Network Effects

23. 22 http://www.brookings.edu/techinnovation.aspx “Cloud computing”

24. 23 http://www.brookings.edu/techinnovation.aspx The weakest link

25. 24 http://www.brookings.edu/techinnovation.aspx Risk

26. Questions? Comments? Allan Friedman afriedman@brookings.edu http://www.brookings.edu/techinnovation.aspx

27. 26 http://www.brookings.edu/techinnovation.aspx Regulatio n Regulatory Spectrum Laissez Faire Mandated Standards Liability Standards & Practices Purchasin g Power