Voluntary Reporting of Cybersecurity Incidents

Abstract

The proliferation of connected devices and technology provides consumers immeasurable amounts of convenience, but also creates great vulnerability. In recent years, we have seen explosive growth in the number of damaging cyber-attacks. 2017 alone has seen the Wanna Cry, Petya, Not Petya, Bad Rabbit, and of course the historic Equifax breach, among many others. Currently, there is no mechanism in place to facilitate understanding of these threats, or their commonalities. While information regarding the causes of major breaches may become public after the fact, what is lacking is an aggregated data set, which could be analyzed for research purposes. This research could then provide clues as to trends in both attacks and avoidable mistakes made on the part of operators, among other valuable data. One possible regime for gathering such information would be to require disclosure of events, as well as investigations into these events. Mandatory reporting and investigations would result better data collection. This regime would also cause firms to internalize, at least to some extent, the externalities of security. However, mandatory reporting faces challenges that would make this regime difficult to implement, and possibly more costly than beneficial. An alternative is a voluntary reporting scheme, modeled on the Aviation Safety Reporting System housed within NASA, and possibly combined with an incentive scheme. Under it, organizations that were the victims of hacks or “near misses” would report the incident, providing important details, to some neutral party. This database could then be used both by researchers and by industry as a whole. People could learn what does work, what does not work, and where the weak spots are.