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Cyberattacks on critical infrastructure: An economic perspective

Author

Listed:
  • Lis Piotr

    (School of Economics, Finance & Accounting, Coventry University, Coventry, CV1 5FB, United Kingdom)

  • Mendel Jacob

    (The Hogeg Blockchain Research Institute, Coller School of Management, Tel-Aviv University.)

Abstract

The aim of this article is to analyze the economic aspects of cybersecurity of critical infrastructure defined as physical or virtual systems and assets that are vital to a country’s functioning and whose incapacitation or destruction would have a debilitating impact on national, economic, military and public security. The functioning of modern states, firms and individuals increasingly relies on digital or cyber technologies and this trend has also materialized in various facets of critical infrastructure. Critical infrastructure presents a new cybersecurity area of attacks and threats that requires the attention of regulators and service providers. Deploying critical infrastructure systems without suitable cybersecurity might make them vulnerable to intrinsic failures or malicious attacks and result in serious negative consequences. In this article a fuller view of costs and losses associated with cyberattacks that includes both private and external (social) costs is proposed. An application of the cost-benefit analysis or the Return on Security Investment (ROSI) indicator is presented to evaluate the worthiness of cybersecurity efforts and analyze the costs associated with some major cyberattacks in recent years. The “Identify, Protect, Detect, Respond and Recover” (IPDRR) framework of organizing cybersecurity efforts is also proposed as well as an illustration as to how the blockchain technology could be utilized to improve security and efficiency within a critical infrastructure.

Suggested Citation

  • Lis Piotr & Mendel Jacob, 2019. "Cyberattacks on critical infrastructure: An economic perspective," Economics and Business Review, Sciendo, vol. 5(2), pages 24-47, June.
  • Handle: RePEc:vrs:ecobur:v:5:y:2019:i:2:p:24-47:n:2
    DOI: 10.18559/ebr.2019.2.2
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    References listed on IDEAS

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    1. Sikorski, Janusz J. & Haughton, Joy & Kraft, Markus, 2017. "Blockchain technology in the chemical industry: Machine-to-machine electricity market," Applied Energy, Elsevier, vol. 195(C), pages 234-246.
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    3. Kshetri, Nir, 2017. "Blockchain's roles in strengthening cybersecurity and protecting privacy," Telecommunications Policy, Elsevier, vol. 41(10), pages 1027-1038.
    4. Igor Bernik & Kaja Prislan, 2016. "Measuring Information Security Performance with 10 by 10 Model for Holistic State Evaluation," PLOS ONE, Public Library of Science, vol. 11(9), pages 1-33, September.
    5. Jentzsch, Nicola, 2016. "State-of-the-Art of the Economics of Cyber-Security and Privacy," EconStor Research Reports 126223, ZBW - Leibniz Information Centre for Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Cichowicz Ewa & Iwanicz-Drozdowska Małgorzata & Kurowski Łukasz, 2021. "“Every knock is a boost”. Cyber risk behaviour among Poles," Economics and Business Review, Sciendo, vol. 7(4), pages 94-120, December.
    2. Malavasi, Matteo & Peters, Gareth W. & Shevchenko, Pavel V. & Trück, Stefan & Jang, Jiwook & Sofronov, Georgy, 2022. "Cyber risk frequency, severity and insurance viability," Insurance: Mathematics and Economics, Elsevier, vol. 106(C), pages 90-114.
    3. Matteo Malavasi & Gareth W. Peters & Pavel V. Shevchenko & Stefan Truck & Jiwook Jang & Georgy Sofronov, 2021. "Cyber Risk Frequency, Severity and Insurance Viability," Papers 2111.03366, arXiv.org, revised Mar 2022.
    4. Stephen Sullivan & Diana Garza, 2021. "Supply Chain Risks, Cybersecurity and C-TPAT, a Literature Review," RAIS Conference Proceedings 2021 0082, Research Association for Interdisciplinary Studies.

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    More about this item

    Keywords

    critical infrastructure; economics of cybersecurity; blockchain; globalized economy; smart grid;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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