The Economics of Cyber Risk
Description
Cyber incidents impose measurable economic and financial costs through operational disruption, litigation, valuation effects, and systemic spillovers. Understanding these costs requires that someone at the institution can connect technical vulnerabilities to market behavior and institutional responses. This volume provides guidance on cyber risk and financial stability, examining such costs from a markets-and-institutions perspective and linking incident outcomes to firm value, insurability, and policy.
Contributed chapters explore market reactions to data breaches and class actions, risk quantification and mitigation (models, firm practices, and insurance), and sectoral cases in banking, construction, and power generation. Chapter authors synthesize frameworks and tools across BCBS operational risk and resilience principles, FSB incident response/lexicon, IMF macro-financial guidance, OECD digital security, and EU instruments (DORA, NIS2, EU-SCICF), alongside NIST CSF and FFIEC materials. The volume explores how policy and institutional design translate into incentives, incident reporting, resilience, and information sharing.
Providing empirical evidence, financial-econometrics methods (abnormal returns/event studies), policy mapping, and risk-transfer analyses for cyber insurance, the book helps readers evaluate costs at the firm and system levels, interpret regulatory signals for financial institutions, and design governance and investment responses. It serves academics in finance/economics, policymakers, and practitioners seeking structured guidance on cyber risk and financial stability.
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Persons
Thomas Walker is Professor of Finance and Tier 1 Concordia University Research Chair in Emerging Risk Management; Director of the Jacques Ménard/BMO Center for Capital Markets and the Emerging Risks Information Centre (ERIC) at Concordia University. His research spans emerging risk management, corporate finance, fintech, governance, and sustainability; he has published over 70 articles and edited books and leads grants from SSHRC, AMF, and the Global Risk Institute.
Marcus Glenn Walker is Partner and Co-CEO of Dragon Data Solutions (Germany). He is an expert in AI, cybersecurity, and transportation systems, leading a German government-funded research program to develop AI solutions that improve trucking efficiency and reduce emissions.
Victoria Kelly is Research Associate at Concordia University. With a BSc in Biology and MA in History, she contributes to ERIC projects on sustainability, climate change, cybersecurity, and urban development, and is pursuing PhD research on Canada's eugenics movement.
Rajesh Kumar Tharumar is Research Associate for the Emerging Risks Information Centre (ERIC) of John Molson School of Business at Concordia University.
Content
Part I: Introduction.- Chapter 1: The Economic Cost of Cybersecurity: An Introduction and Overview.- Part II: Operational and Market Impacts.- Chapter 2: Cyber-Attacks and Corporate Stability: Financial Consequences and Risk Management.- Chapter 3: Financial Costs of Data Breaches Around Class Action Lawsuits.- Chapter 4: The Impact of Fintech Innovations and Financial Inclusion on Banks' Operational Risk.- Chapter 5: Cyber Risks, Service Disruption, and Cyber-Resilience in Financial Markets: Evidence from Real-World Cases.- Part III: Cyber Risk Modelling and Mitigation.- Chapter 6: Cyber Risk Quantification and the Role of Markets.- Chapter 7: Cybersecurity Risk Management.- Chapter 8: Cyber Insurance and its Economic Footprint: Mitigating Cyber-Doom.- Chapter 9: Cybersecurity and Risk Management in the Construction Industry.- Chapter 10: Global Cybersecurity Policy Development.- Chapter 11: Economic Incentives of Cybersecurity Risk Assessment for Power Generation Plant.