Rose Team Involved in Research and Policy Advising on the Wired Economy

Economic Vulnerability and Resilience in the Wired Economy

(From left to right, Oscar Neyra, Dan Wei, Adam Rose, Dylan Coyle, Harry Zec, Jonathan Eyer, Noah Miller; Alex Anthony, not shown)

CREATE faculty affiliate Adam Rose and his research team are ramping up their research on terrorism and natural disasters affecting the Wired Economy -- a combination of the power grid and cyber infrastructure connected to it.  Most recently, they completed a study encompassing these domains for the US Geological Survey (USGS) on the economic consequences of and resilience to the HayWired Scenario, a 7.2 magnitude earthquake on the Hayward Fault along the eastern portion of San Francisco Bay that affects the electricity network of the area and extends into the Silicon Valley (Sue Wing et al., 2018).  Their work, part of a larger report involving dozens of researchers from the fields of geology, engineering, economics and public policy nationwide, as well as practitioners in government and non-profit agencies throughout the region, will be released later this Spring.

The research applied a framework for economic consequence analysis of disasters, developed by earlier versions of the research team, which estimates business interruption (BI) losses for actual and hypothetical disasters.  Innovative aspects of the framework are the inclusion of behavioral linkages and resilience (Rose, 2015).  The former, represents losses stemming from, for example, fear, such as avoidance of airline travel or aversion to places struck by terrorism (Giesecke et al., 2012).  Resilience refers to actions that dampen losses by using remaining resources more efficiently and accelerating recovery (Rose, 2017a).  The framework has been applied previously to major disasters such as the 2001 terrorist attacks on the World Trade Center and several simulated disasters including terrorist attacks on the airline industry (Chen et al., 2017) and other major earthquakes (Xie et al., 2018) in fact, the Rose Research Team has performed the economic consequence analysis for the three previous USGS disaster scenarios:   The Great Shakeout (a 7.8 magnitude earthquake on the southern San Andreas fault, Rose et al., 2011), ARkStorm (severe winter storm, Sue Wing et al., 2016), and California Tsunami (Rose et al., 2016).  More recently, the framework, based on complex computable general equilibrium modeling, has been transformed into reduced-form regression analysis that has been inserted into a decision-support system known as the Economic Consequence Analysis Tool (E-CAT) (Rose et al., 2017; Prager et al., 2018). 

Recent studies by the research team team focusing on the Wired Economy includes:

  • White papers presented at the Lawrence Berkley National Laboratory (LBNL)/DOE Workshop on        The Economics of Long Duration, Widespread Power Interruptions.  One developed a conceptual model to examine the trade-offs between mitigation to improve electricity network reliability and resilience tactics to reduce business interruption, primarily on the customer side (Eyer and Rose, 2018). The other involved macroeconomic modeling of the direct and indirect effects of electricity outages using CGE analysis (Sue Wing and Rose, 2018).
  • Incorporating cyber resilience into CGE models (Rose, 2018)
  • Analysis of the cost and effectiveness of cyber resilience tactics (Rose and Miller 2018)
  • Measuring business resilience in the aftermath of SuperStorm Sandy (Dormady et al., 2018)
  • Benefit-cost analysis of mitigation and resilience to cyber-attacks (Rose et al., 2018).
  • Economic consequences of a cyber-attack on the Detroit Automobile Industry (Rose and Chen, 2018)
  • A module for E--CAT software on Maritime cyber threats (Rose, 2017b)
  • Economic impact modeling of microgrids (Wei and Rose, 2017)
  • Economic consequence analysis of Power Grid Risk for FEMA Region X (Valdes and Rose, 2018)
  • Quality Assurance review of a RAND study of the economic sector recovery of Puerto Rico from Hurricanes Irma and Maria (Rose)

The research team has also contributed to recent major research proposals on the conversion of the City of Los Angeles electricity system to all- renewables basis (National Renewable Energy Laboratory) and, in conjunction with researchers at Purdue University and the University of California, Santa Cruz, on computational algorithms for linking electricity with other interdependent infrastructure (National Science Foundation).

The Team’s recent research on the Wired Economy has been funded by the National Science Foundation, DHS, CREATE, Critical Infrastructure Resilience Institute (CIRI), The Ohio State University Risk Institute, USGS, LBNL, New York State Energy Research and Development Authority (NYSERDA) and RAND.

Other CREATE research affiliates are working on cyber security. This includes Scott Farrow of the University of Maryland Baltimore County, who is working on microeconomic aspects of cyber-attacks (Farrow, 2016a, 2016b), the research team led by Richard John and Heather Rosoff working on information security risk management, and the Research team led by Milind Tambe on game theory approaches to cyber security

References

 

Chen, Z., A. Rose, F. Prager and S. Chatterjee. 2016. “Economic Consequences of Aviation System Disruptions:  A Reduced-Form Computable General Equilibrium Analysis,” Transportation Research A 95: 207–226.

Dormady, N., A. Rose, H. Rosoff, and A. Roa-Henriquez. 2018. Estimating the Cost-Effectiveness of Resilience to Disasters: Survey Instrument Design & Refinement of Primary Data,” in M. Ruth and S.G. Reisemann (eds). Handbook on Resilience of Socio-Technical Systems. Cheltenham:  Edward Elgar.

Farrow, S. and J. Szanton. 2016b. “Cybersecurity Investment Guidance: Extensions of the Gordon and Loeb Model,”,Journal of Information Security 7: 15-28.  10.4236/jis.2016.75023 

Geisecke, J., W. Burns, A. Barrett, E. Bayrak, A. Rose, P. Slovic and M. Suher. 2012. "Assessment of the Regional Economic Impacts of Catastrophic Events:  A CGE Analysis of Resource Loss and Behavioral Effects of a Radiological Dispersion Device Attack Scenario," Risk Analysis 32: 583-600. 

Nguyen, K., Rosoff, H., and John, R. S. (2017). “Valuing Information Security from a Phishing Attack,” Journal of Cybersecurity 3(3): 159–171.

Prager, F. Z. Chen and A. Rose. 2018. “Estimating and Comparing Economic Consequences of Multiple Threats:  A Reduced-Form Computable General Equilibrium Approach,” submitted to the International Journal of Disaster Risk Reduction, electronic view. https://doi.org/10.1016/j.ijdrr.2018.02.014

Rose, A. 2015. “Macroeconomic Consequences of Terrorist Attacks:  Estimation for the Analysis of Policies and Rules," in C. Mansfield and V.K. Smith (eds.), Benefit Transfer for the Analysis of DHS Policies and Rules, Cheltenham, UK:  Edward Elgar.

Rose, A. 2017a. “Benefit-Cost Analysis of Economic Resilience Actions,” in S. Cutter (ed.) Oxford Research Encyclopedia of Natural Hazard Science, New York: Oxford. http://naturalhazardscience.oxfordre.com/view/10.1093/acrefore/978019938...

Rose, A. 2017b. “Economic Consequence Analysis of Maritime Cyber Threats,” in F. Roberts et al. (eds.), Maritime Cyber Security, Westphalia Press.

Rose, A. 2018. “Incorporating Cyber Resilience into Computable General Equilibrium Models,” in Y. Okuyama and A. Rose (eds.), Modeling Spatial and Economic Impacts of Disasters, Heidelberg, Springer, forthcoming.

Rose, A. and Z. Chen. 2018.  “Resilience to a Cyber-Attack on the Detroit Automobile Industry: A Computable General Equilibrium Approach,” in P. Nijkamp, E. Glaeser and K. Kourtit (eds.), Urban Empires, Heidelberg:  Springer, forthcoming. 

Rose, A. and N. Miller. 2018. “Measurement of Cyber Resilience from an Economic Perspective,” in S. Chatterjee, R. Brigantic and A.  Waterworth (eds.) Applied Risk Analysis for Guiding Homeland Security Policy and Decision.  Heidelberg:  Springer, forthcoming.

Rose, A., D. Wei and A. Wein. "Economic Impacts of the ShakeOut Scenario,” Earthquake Spectra:  Special Issue on the ShakeOut Earthquake Scenario 27(2): 539-57.

Rose, A., N. Miller, J. Eyer and J. Banks.  2018. “Economic Mitigation of and Resilience to Cyber Threats,” in A. Kott and I. Linkov and (eds.), Cyber Resilience of Systems and Networks. Heidelberg:  Springer, forthcoming.

Rose, A., G. Oladosu, B. Lee and G. Beeler Asay. 2009. "The Economic Impacts of the 2001 Terrorist Attacks on the World Trade Center:  A Computable General Equilibrium Analysis," Peace Economics, Peace Science, and Public Policy 15: Article 6.

Rose, A., F. Prager, Z. Chen and S. Chatterjee. 2017. Economic Consequence Analysis of Disasters (The E-CAT Software Tool). Singapore: Springer. http://www.springer.com/series/13465?detailsPage=titles

Rose, A., I. Sue Wing, D. Wei and A. Wein. 2016. “Economic Impacts of a California Tsunami,” Natural Hazards Review 17(2): 04016002.

Ryutov, T., Sintov, N., Zhao, M., and John, R. S. (2017). Predicting information security policy compliance intention and behavior for six employee-based risks,” Journal of Information Privacy and Security 13(4): 260-81. https://www.tandfonline.com/doi/full/10.1080/15536548.2017.1418632?scroll=top&needAccess=true 

Sue Wing, I., A. Rose, and A. Wein. 2016. “Economic Consequence Analysis of the ARkStorm Scenario,” Natural Hazards Review 17(4): A4015002-1.

Sue Wing, I. D. Wei, A. Rose and A. Wein. 2018. Economic Impacts of the HayWired Earthquake Scenario, in the HayWired  Earthquake Scenario, US Geological Survey, Scientific Investigation Report,  Menlo Park, CA, forthcoming.

Xie, W., A. Rose, S. Li, J. He., N. Li, T. Ali, T., and W. Wei.  2018. “Dynamic Economic Resilience and Economic Recovery from Disasters:  A Quantitative Assessment,” Risk Analysis, electronic early view.