This white paper addresses the latest (March 2025) CHEST IAB requests on Hardware/software Codesign for Fine-Grained Security Protection. Specifically, it focuses on the development of novel situational awareness algorithms, employing Graph Neural Networks (GNNs), to enhance system fault detection and risk mitigation within Internet of Things (IoT) networks, while formally verifying the security properties of the integrated hardware/software solution against security attacks. This involves creating detailed formal models, defining security policies with temporal logic, and using model checking to prove system resilience against diverse attack scenarios. We will verify hardware security features and the GNN's ability to detect malicious activities like sensor spoofing and data injection. Co-verification will demonstrate the system's robustness under active attacks. This comprehensive verification, using formal methods, simulation, and testing, improves IoT system reliability and accuracy across various applications.