Expected losses, insurability, and benefits from reducing vulnerability to attacks.

A model of malicious attacks against an infrastructure system is developed that uses a network representation of the system structure together with a Hidden Markov Model of an attack at a node of that system and a Markov Decision Process model of attacker strategy across the system as a whole. We use information systems as an illustration, but the analytic structure developed can also apply to attacks against physical facilities or other systems that provide services to customers. This structure provides an explicit mechanism to evaluate expected losses from malicious attacks, and to evaluate changes in those losses that would result from system hardening. Thus, we provide a basis for evaluating the benefits of system hardening. The model also allows investigation of the potential for the purchase of an insurance contract to cover the potential losses when safeguards are breached and the system fails