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Economic impacts of rules- versus risk-based cybersecurity regulations for critical infrastructure providers.

Massacci, F. (2016) 'Economic impacts of rules- versus risk-based cybersecurity regulations for critical infrastructure providers.', IEEE security & privacy., 14 (3). pp. 52-60.


What's the optimal way to regulate cybersecurity for the critical infrastructure operators in charge of electricity transmission? Should regulation follow the US style (a mostly rules-based model), the EU approach (which is mostly risk-based), or a balance of both? The authors discuss the economic issues behind making this choice and present a cybersecurity economics model for public policy in the presence of strategic attackers. They calibrated these models in the field with the support of National Grid, which operates in the UK and on the US East Coast. The model shows that optimal choices are subject to phase transitions: depending on the combination of incentives, operators will stop investing in risk assessment and only care about compliance (and vice versa). This finding suggests that different approaches might be more appropriate in different conditions and that just pushing for more rules could have unintended consequences.

Item Type:Article
Full text:(AM) Accepted Manuscript
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Publisher statement:© 2015 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works.
Date accepted:10 June 2015
Date deposited:14 May 2015
Date of first online publication:25 May 2016
Date first made open access:10 June 2015

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