It's not hard to predict what will happen. The private firms will start cutting corners and it will build up until they are actually foisting lots of risk on the rest of us. Then there will be a catastrophic failure. It's always the same story. And no, businesses "thinking long-term" isn't a solution. Businesses are not capable of that, because there's always going to be a couple of short-term, get-rich-quick strivers who will set the industry standards (i.e. lower to compete on price). If Bear Stearns and Lehman Brothers couldn't think long-term enough to avoid sudden insolvency, what makes anyone think a security contractor would do the same.
The private sector is good at providing services with a risk of failure, and so for situations were failure is acceptable, the private sector is fine. Google has created a lot of useful tech. They also created Google Glasses, a huge misfire. Eh, nobody died from Google Glasses. Not a problem.
But when failure isn't an option, the government needs to step in. Because the complaint about government made by libertarians -- lack of profit motive! -- is also what makes the government generally reliable. The government will not cut corners, unless idiots in Congress try to mandate it.
This isn't just applicable in the security context. Why does housing construction generally need to get approval from city inspectors? When I got a new furnace, I had to get the city's sign-off. Same with my solar panels. Why? Because there's no room for mistakes. It would be really bad if my ceiling crashed in on my head, or my house filled with carbon monoxide. There's no second chance for such things. You don't let the people who profit from shoddy work be the ones to inspect that work.