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The WiKID Blog

Viewing posts tagged Security and Economics


On a recent trip to Mexico, our casita had a safe in it. The instructions for using it and the combination were printed on a covered sheet of paper sitting on top of the safe. As I scanned for directions on how to change the combination, I read:


Time for me to weigh in on the subject of liability for software bugs. Bruce Schneier posted about it here, and Pete Lindstrom responded here. I agree with Lindstrom. It is an incredibly bad idea. Software liability laws will increase the costs of software development so high that it will drive small firms from the market, reduce customer choice resulting in less choice, less innovation and even worse software.


Compare this Spire Security post to my previous post about hedge fund risks to see who has the better sense of humor.


There has been some excellent research done on the impact of information security breaches on the market cap of affected firms (which directly impacts their cost of capital): "The economic cost of publicly announced information security breaches: empirical evidence from the stock market Katherine Campbell, Lawrence A. Gordon, Martin P. Loeb and Lei Zhou Accounting and Information Assurance, Robert H. Smith School of Business, University of Maryland, 2003" (

This UMD study found that a firm suffering a breach of 'confidential information' saw a 5% drop in stock price while firms suffering a non-confidential breach saw no impact.


I really enjoyed a recent 'manifesto' from the ChangeThis site recently by Phil Rosenzweig called Forget Formulas . In it he points out the flaws in many management books that purport to find a formula for success based on a large quantity of mainly anecdotal evidence. The data is suspect because of the 'halo effect' (also the title of Rosenzweig's book):

The key weakness is the halo effect, a concept that was first identified by psychologist Edward Thorndike in 1920. It refers to the basic human tendency to make specific inferences on the basis of an overall impression. People tend to have an overall evaluation about someone or something, and let that evaluation shape specific features. the halo effect is found in many walks of life, including the way we evaluate job candidates—the graduate from a well-respected school tends to look good across the boards, while a graduate from an unheralded local school tends to look less attractive. Brand building, too, is based on the halo effect—companies know that consumers will attribute favorable qualities to a product from a respected company, and therefore go to great lengths to create positive associations with their brand.

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