Russell Thomas, the President of Meritology, will be giving a Tech Talk on June 1st. Here’s the abstract:

The marketplace for information security and privacy is fundamentally flawed because of perverse economic incentives, missing markets, and inadequate information. Most security and privacy problems are better explained by economic and social factors than technical factors.

Market-based solutions have the potential to fundamentally change the economics and dramatically improve efficiency and social welfare. We envisage market-based solutions for information security and privacy that, in essence, create “complete markets” where information risk can be priced, hedged, and financed (insurance, economic capital, incentive contracts, gain sharing, etc.).

This will require radical innovation – analogous to the financial engineering revolution that transformed Wall Street and fueled the derivatives markets from 1973 onward. In their “Four Grand Challenges of Trusted Computing”, the Software Research Association expresses the opportunity succinctly:

“Develop quantitative information-systems risk management to be at least as good as quantitative financial risk management within the next decade” (more)

This talk is intended to stimulate discussion and debate, and will include the following topics:

  • A summary of economic problems
  • A vision for market-based solutions and the scale of the opportunity
  • Early adopters: A survey of quantitative risk measurement in the Financial Services industry
  • Discussion of near-term opportunities for research and product/service development

Meritology is an early stage start-up company focused on modeling the economic value of information protection.