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The internet has contributed immensely to the evolution of the patterns of carrying out business practices, acquiring various information and entertainment as well as communication with people across the globe. However, it has become subject to hacking and crime which has led to massive loss of information, compromised security systems as well as unauthorized use of people’s ideas about products and business strategies (Matsuura 2008). The healthcare sector, technology companies, financial services firms and the government make the list of top targets of cyber-attacks. Breaches that result from cyber-attacks have continuously made large negative economic impacts on businesses and the society as a whole. It, therefore, calls for the establishment and development of new and useful models that capture the competitive the behavior of sellers and buyers in modern market place together with investment in cyber security.
Many theories have been established to discuss the issue of application of internet security to valuable information and products for various organizations in the world. Game theory model provides a framework for the investigation of the different people and businesses organizations that compete for exceptional business opportunities while taking into consideration, their level of cyber security investments so as to eliminate or minimize financial losses from cyber-attacks (Hubaux 2013). By-products, we talk about manufactured, commercial as well as the digital products. Buyers use the internet to participate in economic transactions, some of which could involve the use of debit and credit cards. Sellers aim at maximizing their profits while investing in cyber security and competing amongst themselves. Network security is highly beneficial to sellers in sustaining financial damages due to cyber-attacks which may, in turn, lead to the loss of seller’s reputation, identity and opportunity costs.
The engineer’s approach to security narrows down to providing the best possible internet security through the use of more specialized software, encryption, advanced data integrity checks and revised technical standards (Shetty 2009). It offers a suggestion that the aforementioned technical standards and innovations are the key elements to be considered in this approach. The homeland security view on cyber security is geared towards doing away with all illegal domestic as well as foreign activities that pose a danger to vital national interests, and that breaches the security state of private individuals and firms in the country. It further suggests that the best way to achieve security is through national borders and government intervention.
The market-based approach looks at the whole issue in the context of creating efficient economic procedures or mechanisms that are controlled by the market participants themselves, by aligning different security interests through market signaling and prices. The key elements to be given priority are the costs involved, benefits up for grabs alongside the flexibility the decentralized decision-making processes. The costs of arriving at higher levels of security will increase as the challenges associated with technology become continuously complicated as time goes by (Tatsumi 2009). Organizations have the ultimate duty of complying with two critical factors about information security namely:
Anderson, R, & Moore, T. (2006). The Economics of Information Security. Science, 314(5799), pp. 610-613.
Hauksen, K. (2006). ‘’Returns to Information Security: The Effect of Alternative Information Security Breach Functions on Optimal Investment and Sensitivity to Vulnerability.’’ Information Systems Frontiers, 8(5). pp. 338-349.
Manshei, M.H. , Alpcan, T. Basar, T. & Hubaux, J.P. (2013). ‘’ Game theory meets networks network security and privacy. ACM Computing Surveys, 45(3), 25:1-25:34, June.
Nagurney, A. (2015). ‘’A Multiproduct Network Economic Model of Cybercrime in Financial Services.’’ Service science, 7(1) pp. 70-81.
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