WILL CYBER- IMPROVE NETWORK SECURITY? A MARKET ANALYSIS

Sri Vasavi College, Erode Self-Finance Wing 3rd February 2017 National Conference on Computer and Communication NCCC’17

Format: Volume 5, Issue 1, No 2, 2017

Copyright: All Rights Reserved ©2017

Year of Publication: 2017

Author: Ms.V.Saranya, Mrs.S.Sudha

Reference:IJCS-163

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Abstract

Ranjan Pal University of Southern California Leana Golubchik and Konstantis Psounis University of Southern California {leana, Pan Hui HKUST, and T-Labs - Germany Abstract Recent work in security has illustrated that solutions aimed at detection and elimination of security threats alone are unlikely to result in a robust cyberspace. As an orthogonal approach to mitigating security problems, some have pursued the use of cyber-insurance as a suitable risk management technique. Such an approach has the potential to jointly align with the incentives of security vendors (e.g., Symantec, Microsoft, etc., cyber-insurers (e.g., ISPs, cloud providers, security vendors, etc., regulatory agencies (e.g., government, and network users (individuals and organizations, in turn paving the way for comprehensive and robust cyber-security mechanisms. To this end, in this work, we are motivated by the following important question: can cyber-insurance really improve the security in a network? To address this question, we adopt a market-based approach. Specifically, we analyze regulated mopolistic and competitive cyber-insurance markets, the market elements consist of risk-averse cyber-insurers, risk-averse network users, a regulatory agency, and security vendors. Our results show that (i without contract discrimination amongst users, there always exists a unique market equilibrium for both market types, but the equilibrium is inefficient and does t improve network security, and (ii in mopoly markets, contract discrimination amongst users results in a unique market equilibrium that is efficient, which in turn results in network security improvement - however, the cyber-insurer can make zero expected profits. The latter fact is often sufficient to de-incentivize the insurer to be a part of a market, and will eventually lead to its collapse. This fact also emphasizes the need for designing mechanisms that incentivize the insurer to permanently be part of the market.

References

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Keywords

security, cyber-insurance, market, equilibrium.

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