Evaluating Behavioral Context for Interpretable IAM Policy Risk Scoring in Cloud Environments

Modern security environments generate fragmented signals across cloud resources, identities, configurations, and third-party security tools. Although AI-native security assistants improve access to this data, they remain largely reactive: users must ask the right questions and interpret disconnected findings. This does not scale in enterprise environments, where signal importance depends on exposure, exploitability, dependencies, and business context. Repeated AI queries may therefore produce unstable prioritization without a structured basis for comparing assets. This paper introduces AI-native asset intelligence, a framework that transforms heterogeneous security data into a structured intelligence layer for consistent, contextual, and proactive asset-level reasoning. The framework combines a modeling layer, representing assets, identities, relationships, controls, attack vectors, and blast-radius patterns, with a scoring layer that converts fragmented signals into a normalized measure of asset importance. The scoring system separates intrinsic exposure, based on misconfigurations and attack-vector evidence, from contextual importance, based on anomaly, blast radius, business criticality, and data criticality. AI contextualization refines severity and business/data classifications, while deterministic aggregation preserves consistency. We evaluate the scoring system on a production snapshot with 131,625 resources across 15 vendors and 178 asset types. Sensitivity analyses and ablations show that severity mappings control finding sensitivity, AI severity adjustment refines prioritization, attack-vector scoring responds to rare exploitability evidence, and contextual modulation selectively modifies exposed resources based on business or data importance. The results support AI-native asset intelligence as a foundation for stable prioritization and proactive security-posture reasoning.

Finding severity is the main driver of how security teams prioritize remediation. For third-party cloud security findings, that severity is static: the rule that raised the finding assigns it before the rule meets any environment, so it reflects the risk of the condition in general rather than the risk the finding poses to the concrete environment where it lives. Scoring standards define where environment-specific context belongs. How far that context changes finding severities in production, where the deciding evidence lies, and whether it holds against the live environment have not been measured. We address this gap with contextualization, re-deriving each finding's severity from evidence in the environment where the finding lives. A deep research agent over a precomputed cross-signal asset graph investigates each finding against the resource's state, its graph neighborhood, and other products' signals, and returns an adjusted severity with an evidence trace. We evaluate it in a production field study of 9,967 vendor HIGH findings from two commercial cloud security platforms across eight real production environments, on three criteria: the faithfulness of the facts behind each verdict to the live environment, the dependence of each decision on context beyond the flagged resource, and the regularity of the reasoning. Three in four findings are re-graded, mostly downward, and the same rule often moves in opposite directions inside a single environment. About half of the decisive evidence lies beyond the flagged resource, and read-only probes of live infrastructure confirm the decisive fact for 99.4% of decided findings.

Decision rules that enterprise experts apply tacitly -- in auditing, compliance, and contract review -- can be systematically recovered and improved through iterative error analysis. We present \textbf{Trace2Policy}, whose core mechanism -- \textbf{EISR} (\textbf{E}rror-driven \textbf{I}terative \textbf{S}kill \textbf{R}efinement) -- maintains a human-readable rule document as its optimization target: each round executes the rules on a validation set, clusters errors by root cause into MISSING, WRONG, or CONFLICT types, applies targeted patches, and commits only those that pass a regression gate. \textbf{For this class of compliance-sensitive, skewed-base-rate decision tasks, we identify rule quality -- not model capability -- as the dominant performance lever}: across five LLMs, one-shot distillation plateaus near $\sim$70% on the deployed pool, while eight EISR rounds lift the same rules to 79.6% when compiled into deterministic Python -- zero LLM calls at inference. \textbf{Execution form compounds the gain: in production, the same EISR-refined content runs 9.8~pp higher as compiled Python than as an LLM prompt, a form-and-engineering bundle the 22-day deployment matured together.} Deployed for 22 days at a major logistics carrier (3,349 audit cases), the compiled pipeline outperforms the pure-LLM baseline it replaced (72.7%); on these calibrated, skewed-base-rate workloads, re-enabling LLM fallback monotonically degrades accuracy. An LLM-driven variant, \textbf{Auto-EISR}, reproduces this refinement at $5--$10 per cycle versus $\sim$70 expert-hours, and transfers to four public benchmarks spanning legal reasoning (LegalBench) and process-mining decisions (BPIC 2012) without re-engineering.