March 7, 2005—The Congressional Budget Office (CBO) has published a report called Homeland Security and the Private Sector, which discusses the reasons why business might not provide adequate security as well as the ways in which the government might induce better behavior on the part of private companies. For example, it notes that businesses only have the incentive—and duty to shareholders—to secure their assets and limit losses, not to protect society at large.
Closing the gap between private and social interests may require tweaking national policies, according to the report, which discusses three broad strategies. One policy would establish new rules or incentives to force industry to face the full costs of possible losses. A second would use programs to “socialize the costs of security” by having the government and taxpayers implement or finance security measures for businesses. A third set of programs would educate the private sector with information on the risk of attacks, potential losses, and opportunities to mitigate losses.
Find the full report at the Security Management Web site.
