Negative Externalities

When software is insecure, the harm rarely stops at the software manufacturer.

Customers lose data. Hospitals cancel procedures. Schools shut down. Critical infrastructure gets disrupted. The manufacturer is often untouched — shielded by EULAs and the lack of legal consequences.

This is a classic negative externality: a manufacturer creates risk with societal impact.

Until we align responsibility with consequences, customers and society will keep paying the price.

Discussion prompts

• What negative externalities from insecure software have you seen in your sector or community?
• Who in your organization is accountable for the external costs your software might create?
• What policy or legal change would most effectively align manufacturer incentives with customer safety?