1. The Security State Ross Anderson Cambridge University

2. UEL June 19th 2008 Economics of Security Economics and security used to be intertwined but drifted apart after WW2 Economics and security used to be intertwined but drifted apart after WW2 Since about 2000, we started to apply economic analysis to IT security and dependability Since about 2000, we started to apply economic analysis to IT security and dependability It explains many failures better! Systems often fail because the people who guard them don’t suffer all the costs of attacks (e.g. medical record systems are bought by medical directors or civil servants, not patients) It explains many failures better! Systems often fail because the people who guard them don’t suffer all the costs of attacks (e.g. medical record systems are bought by medical directors or civil servants, not patients) There are now over 100 researchers doing security economics There are now over 100 researchers doing security economics

3. UEL June 19th 2008 Economics of Security (2) There are many institutional effects! For example, big organizations spend too much on security, and small ones too little There are many institutional effects! For example, big organizations spend too much on security, and small ones too little About 30% of private-sector systems projects fail, but – despite greater risk aversion – only 30% of public-sector projects succeed! About 30% of private-sector systems projects fail, but – despite greater risk aversion – only 30% of public-sector projects succeed! We observed during the crypto wars of the 1990s that GCHQ was much more interested in attacking foreigners than defending Brits. Why? We observed during the crypto wars of the 1990s that GCHQ was much more interested in attacking foreigners than defending Brits. Why?

4. UEL June 19th 2008 Offence or Defence? If you are DirNSA and have a nice new hack on XP and Vista, do you tell Bill? If you are DirNSA and have a nice new hack on XP and Vista, do you tell Bill? Tell – protect 300m Americans Tell – protect 300m Americans Don’t tell – be able to hack 400m Europeans, 1000m Chinese,… Don’t tell – be able to hack 400m Europeans, 1000m Chinese,… If the Chinese hack US systems, they keep quiet. If you hack their systems, you can brag about it to the President If the Chinese hack US systems, they keep quiet. If you hack their systems, you can brag about it to the President So offence may be favoured over defence So offence may be favoured over defence

5. UEL June 19th 2008 Security Theatre Most ‘security’ for show rather than effect Most ‘security’ for show rather than effect For example, US government spent $14bn since 9/11 on harassing airline passengers – but failed to finish a $500m project to reinforce all cockpit doors! For example, US government spent $14bn since 9/11 on harassing airline passengers – but failed to finish a $500m project to reinforce all cockpit doors! Where threats are greatly overblown, a theatrical response may be appropriate Where threats are greatly overblown, a theatrical response may be appropriate But the ones in current use are way too expensive! But the ones in current use are way too expensive!

6. UEL June 19th 2008 Psychology and Security Security psychology research is also starting to get going Security psychology research is also starting to get going Many interesting problems, including the privacy gap (why most people say they value privacy but act otherwise) Many interesting problems, including the privacy gap (why most people say they value privacy but act otherwise) But one of the biggest issues is fearmongering! But one of the biggest issues is fearmongering! Are modern societies structurally vulnerable to terrorism? Are modern societies structurally vulnerable to terrorism?

7. UEL June 19th 2008 Psychology and Security (2) Why does terrorism work? Why does terrorism work? Mortality salience (Pyszczynski et al) Mortality salience (Pyszczynski et al) Heuristics and biases (Kahneman and Tversky) – availability heuristic; anchoring; loss aversion Heuristics and biases (Kahneman and Tversky) – availability heuristic; anchoring; loss aversion Also: wariness of hostile intent; violation of moral sentiments; credence given to images; reaction against out-group; sensitivity to change Also: wariness of hostile intent; violation of moral sentiments; credence given to images; reaction against out-group; sensitivity to change Gilbert ‘If only gay sex caused global warming’ Gilbert ‘If only gay sex caused global warming’ The good news: biases affect novel events more, and so can be largely overcome by experience The good news: biases affect novel events more, and so can be largely overcome by experience

8. UEL June 19th 2008 Leadership Matters! Compare Thatcher’s response to the Brighton bombing with Blair’s to 7/7 Compare Thatcher’s response to the Brighton bombing with Blair’s to 7/7 For a systematic analysis, see John Mueller’s ‘Overblown’, which explores how politicians can hype national security threats, aided by suppliers and the media For a systematic analysis, see John Mueller’s ‘Overblown’, which explores how politicians can hype national security threats, aided by suppliers and the media But it’s not inevitable: Kennedy, Johnson, Nixon and Ford ignored terrorism But it’s not inevitable: Kennedy, Johnson, Nixon and Ford ignored terrorism It doesn’t always work: Bush got reelected but Carter didn’t It doesn’t always work: Bush got reelected but Carter didn’t

9. UEL June 19th 2008 Historical Precedents Cambridge University was founded in 1209 by monks fleeing Oxford Cambridge University was founded in 1209 by monks fleeing Oxford See Moore, ‘The Formation of a Persecuting Society’ for the background See Moore, ‘The Formation of a Persecuting Society’ for the background In late 12th century, the church started to exert power by cracking down on gays, lepers, Jews, married priests,… In late 12th century, the church started to exert power by cracking down on gays, lepers, Jews, married priests,… This swung back and forth for centuries! This swung back and forth for centuries!

10. UEL June 19th 2008 Summing Up There’s nothing mysterious, or even new, about the security state There’s nothing mysterious, or even new, about the security state Lots of interests – armed forces, spooks, cops, suppliers, media – are happy to help a national leader scare up the vote Lots of interests – armed forces, spooks, cops, suppliers, media – are happy to help a national leader scare up the vote They will gleefully spend too much, badly, on the wrong things They will gleefully spend too much, badly, on the wrong things ‘Politics as a branch of showbusiness’ may have made us more vulnerable to this, for a while ‘Politics as a branch of showbusiness’ may have made us more vulnerable to this, for a while But the voters eventually wise up! But the voters eventually wise up!

11. UEL June 19th 2008 More … See www.ross-anderson.com for a survey article and my security economics resource page See www.ross-anderson.com for a survey article and my security economics resource pagewww.ross-anderson.com See also the chapters on psychology and on terrorism from my book ‘Security Engineering’ (2nd edition) See also the chapters on psychology and on terrorism from my book ‘Security Engineering’ (2nd edition) WEIS – Annual Workshop on Economics and Information Security – Dartmouth, June 25–7 2008 WEIS – Annual Workshop on Economics and Information Security – Dartmouth, June 25–7 2008

12. UEL June 19th 2008