Modelling of knowledge and actions in AI has advanced over the years but it is still a challenging topic due to the infamous frame problem, the inadequate formalization and the lack of automation. Some problems in cyber security such as logical vulnerability, risk assessment, policy validation etc. still require formal approach. In this paper we present the foundations of a new formal framework to address these challenges. Our approach is based on three-level formalisation: ontological, logical

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... and analytical levels. Here we are presenting the first two levels which allow to model the security policies and provide a practical solution to the frame problem by efficient utilization of parameters as side effects. Key concepts are the situations, actions, events and rules. Our framework has potential use for analysis of a wide range of transactional systems within the financial, commercial and business domains and further work will include analytical level where we can perform vulnerability analysis of the model.