| Date |
December 2011 |
| Vol. No. |
Vol. 21 No. 4 |
| DOI |
|
| Page |
27~43 |
| Title |
Vulnerability and Information Security Investment Under Interdependent Risks:A Theoretical Approach |
| Author |
Woohyun Shim |
| Keyword |
IS Management, Information Security Investment, Security Vulnerability, Interdependent Security Risk, Externalities, Cyber Attacks |
| Abstract |
This article explores economic models that show the optimal level of information security investment in the presence of interdependent security risks. Using particular functional forms, the analysis shows that the relationship between the levels of security vulnerability and the levels of optimal security investments is affected by externalities caused by agents??correlated security risks. This article further illustrates that, compared to security investments in the situation of independent security risks, in order to maximize the expected benefits security investments, an agent should invest a larger fraction of the expected loss a security breach in the case of negative externalities, while an agent should spend a smaller fraction of the expected loss in the case of negative externalities. |
