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May 08, 2004 7:52 pm re: Insuring against information security risks
Richard Danielli

There are certain issues I feel that surround the concept of insuring against security breaches.

The insurance industry will only participate in situations where they have a reasonable expectation for profit. This expectation is based on costs and probability.

How would we measure the damage done by a hack, or even a simple web deface? How much monetary value can one place on intellectual property, and public opinion? How can anyone provide assurances on the probability of a wide spread security breach happening or not happening tomorrow?

So we should offer the hackers insurance against litigation, and then we move to providing the hacker targets with a real value add.

I donít see how the introduction of insurance would provide predictable costs for security infrastructure. Predictability would only be achieved through commoditization and there are too many unique circumstances to support a level of commoditization greater then we have now.

In regards to the revenue stream, I think that would only last only until the next round malware runs through the Internet. I believe it was ComDisco, the business continuity people, who tried to provide insurance for business and because of an unforeseen event on Sept 11, 2001; they ended up filling Chapter 11.

One last point, for the most part the flaws in data security are carbon based and not the found in the silicon.



Richard Danielli

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