Software Liability and Economics

Question 1

What is the liability arising out of software development and use

Answer 1

Legal responsibility may arise out of harm and damage due to software design or
development for a range of reasons including:
* Harm to an individual due to loss of privacy (personal data or behavioural privacy)
* Damage to an organisation due to disruption or loss due to software design (due to poor design, incorrect design or implementation, or errors)
* Loss of life due to similar software problems in safety-critical systems
* Reputational damage arising out of networked software (such as social media) where deliberate software design leads to bias

Question 2

Misaligned incentives and liabilities for cybersecurity

Answer 2

Liability should be assigned to the party involved that is best placed to manage the
cybersecurity risk

Question 3

Misaligned incentives and liabilities for cybersecurity (2)

Answer 3

Costs to consumers (users)
▪ cost due to damage, loss of productivity, and loss of product/service
▪ operational costs of patch management

Benefits to vendors (software industry and developers)
▪ benefit of early product (software) release
▪ benefit of lower product testing cost

Costs to vendors (software industry and developers)
▪ cost of patch development and release
▪ cost of customer reporting and support
▪ loss of reputation (costs in terms of loss of future business)
▪ legal liability