Cybersecurity Risk and Firm Investment Efficiency
Cybersecurity Risk and Firm Investment Efficiency 1. Meaning Cybersecurity risk refers to the probability of financial loss, operational disruption, reputational damage, or regulatory penalties resulting from cyberattacks, data breaches, system failures, or unauthorized access to digital systems. Firm investment efficiency refers to how effectively a company allocates its financial resources into projects that generate optimal returns. Efficient investment means firms avoid overinvestment (wasting resources on unprofitable projects) and underinvestment (missing profitable opportunities). Cybersecurity risk directly influences investment efficiency because digital threats can alter managerial decision-making, risk perception, capital allocation strategies, and overall firm performance. 2. Introduction In the digital economy, businesses increasingly depend on cloud computing, big data, AI systems, online transactions, and interconnected supply chains. While digital transf...