we were awarded a contract by the European Network and Information Security Agency (ENISA) to investigate failures in the market for secure electronic communications within the European Union, and come up with policy recommendations. In the process, we spoke to a large number of stakeholders, and held a consultative meeting in December 2007 in Brussels to present draft proposals. This established that almost all of our proposals have wide stakeholder support. The formal outcome of our work was a detailed report, 'Security Economics and the Internal Market', that is due to be published by ENISA. This paper is a much abridged version (about half the length): in it, we present the recommendations we made, and then a summary of our reasoning. By way of disclaimer, we state that these recommendations are our own and do not necessarily reflect the policy of ENISA or any other European institution.The background should be familiar enough. The direct cost to Europe of electronic crime, including both losses and protective measures, is measured in billions of euros; and growing public concerns about information security hinder the development of both markets and public services, causing even greater indirect costs. For example, while we were writing this report, the UK government confessed to the loss of child-benefit records affecting 25 million citizens. Privacy concerns are stalling the development of e-health and other systems.Information security is now a mainstream political issue. An appropriate regulatory framework, which is just as important for protecting economic and other activity online as it is offline. The European Union already has a number of laws on matters from e-commerce through telecomms regulation to consumer protection and product liability that regulate online activity, but the pace of change has left a number of gaps. To close these, we make the following recommendations.
Recommendations1: There has long been a shortage of hard data about information security failures, as many of the available statistics are not only poor but are collected by parties such as security vendors or law enforcement agencies that have a vested interest in under-or over-reporting. Crime statistics are problematic enough in the traditional world, but things are harder still online because of the novelty and the lack of transparency. For example, citizens who are the victims of fraud often have difficulty finding out who is to 1 blame because the incidents that compromised their personal data may have been covered up by the responsible data controllers. These problems are now being tackled with some success in many US states with security-breach reporting laws, and Europe needs one too.We recommend that the EU introduce a comprehensive security-breach notification law.2: Our survey of the available statistics has led us to conclude that there are two particularly problematic 'black holes' where data are fragmentary or simply unavailable. These are banks and ISPs. On the banking side, only the UK publishes detailed figures...