Application of the Gordon Loeb model to security investment metrics: a proposal
Cyber risk is a significant concern for all types of businesses. The consequences of a cyber attack can be quite severe. Investing in security to mitigate the impact of such risks is a crucial task, both in terms of the frequency and the severity of cyber incidents. In this paper, we propose a pract...
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| Format: | Article |
| Language: | English |
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AIMS Press
2024-12-01
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| Series: | Data Science in Finance and Economics |
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| Online Access: | https://www.aimspress.com/article/doi/10.3934/DSFE.2024025 |
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| _version_ | 1832590368181321728 |
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| author | Maria Francesca Carfora Albina Orlando |
| author_facet | Maria Francesca Carfora Albina Orlando |
| author_sort | Maria Francesca Carfora |
| collection | DOAJ |
| description | Cyber risk is a significant concern for all types of businesses. The consequences of a cyber attack can be quite severe. Investing in security to mitigate the impact of such risks is a crucial task, both in terms of the frequency and the severity of cyber incidents. In this paper, we propose a practical application of the Gordon and Loeb model, thereby suggesting a methodology to estimate risk exposure and reconsidering some investment evaluation metrics. Our findings strongly support the claim that maximizing the expected net benefit of an investment solely at the optimal level is not sufficient for sound decision-making. On the contrary, incorporating metrics that evaluate the benefit in relation to risk and consider worst-case scenarios offers deeper insights. |
| format | Article |
| id | doaj-art-f7c65a01710f4ea982051f554074d942 |
| institution | Kabale University |
| issn | 2769-2140 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | AIMS Press |
| record_format | Article |
| series | Data Science in Finance and Economics |
| spelling | doaj-art-f7c65a01710f4ea982051f554074d9422025-01-24T01:03:03ZengAIMS PressData Science in Finance and Economics2769-21402024-12-014460161410.3934/DSFE.2024025Application of the Gordon Loeb model to security investment metrics: a proposalMaria Francesca Carfora0Albina Orlando1Istituto per le Applicazioni del Calcolo "Mauro Picone" - Consiglio Nazionale delle Ricerche, ItalyIstituto per le Applicazioni del Calcolo "Mauro Picone" - Consiglio Nazionale delle Ricerche, ItalyCyber risk is a significant concern for all types of businesses. The consequences of a cyber attack can be quite severe. Investing in security to mitigate the impact of such risks is a crucial task, both in terms of the frequency and the severity of cyber incidents. In this paper, we propose a practical application of the Gordon and Loeb model, thereby suggesting a methodology to estimate risk exposure and reconsidering some investment evaluation metrics. Our findings strongly support the claim that maximizing the expected net benefit of an investment solely at the optimal level is not sufficient for sound decision-making. On the contrary, incorporating metrics that evaluate the benefit in relation to risk and consider worst-case scenarios offers deeper insights.https://www.aimspress.com/article/doi/10.3934/DSFE.2024025cyber risksecurity economicssecurity investmentsrisk exposuregordon-loeb model |
| spellingShingle | Maria Francesca Carfora Albina Orlando Application of the Gordon Loeb model to security investment metrics: a proposal Data Science in Finance and Economics cyber risk security economics security investments risk exposure gordon-loeb model |
| title | Application of the Gordon Loeb model to security investment metrics: a proposal |
| title_full | Application of the Gordon Loeb model to security investment metrics: a proposal |
| title_fullStr | Application of the Gordon Loeb model to security investment metrics: a proposal |
| title_full_unstemmed | Application of the Gordon Loeb model to security investment metrics: a proposal |
| title_short | Application of the Gordon Loeb model to security investment metrics: a proposal |
| title_sort | application of the gordon loeb model to security investment metrics a proposal |
| topic | cyber risk security economics security investments risk exposure gordon-loeb model |
| url | https://www.aimspress.com/article/doi/10.3934/DSFE.2024025 |
| work_keys_str_mv | AT mariafrancescacarfora applicationofthegordonloebmodeltosecurityinvestmentmetricsaproposal AT albinaorlando applicationofthegordonloebmodeltosecurityinvestmentmetricsaproposal |