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REPORT

Managing Cyber Risk in the Age of Stakeholder Capitalism

Cybersecurity investment has historically been viewed as a necessary evil that creates a drag on profitability in exchange for managing operational risk. In response to continual data breaches, geopolitical instability, and the evolving nature of threats in the modern era, governments and international regulators are prioritizing cybersecurity for enhanced regulation. A traditional model of financial investment and returns fails to capture dynamic trends toward improved governance in cyberspace.

Stakeholder capitalism and environmental, social, and corporate governance (ESG) provide a new lens for calculating cybersecurity investment. Proactively focusing on social and governance standards creates a competitive advantage, specifically in operational risk management, due to a full accounting of stakeholders in an increasingly aggressive regulatory environment.

To illustrate the value of proactive cyber risk management, we dissect over 400 public cybersecurity failure events over 7 years that resulted in a range of financial losses. We highlight instructive case studies and further illuminate patterns in loss types — namely, that a breach does incur an extended period of financial loss (even if relatively minor), but the loss is only a microcosm of the larger harm that companies experience. Finally, we discuss the future of good cyber governance and best practices in proactive risk management as the regulatory landscape continues to accelerate and evolve.

Read this new report to learn:

  • Why traditional financial models fail to capture the ROI of cyber risk mitigation investments
  • How viewing security investments through ESG and regulatory lenses alters the return on investment
  • What good cyber governance and proactive risk management looks like in an evolving threat and regulatory landscape

Featured Authors

levi-gundert

LEVI GUNDERT

Levi Gundert is the Senior Vice President of Global Intelligence at Recorded Future, where he leads the continuous effort to measurably decrease operational risk for clients. Levi has spent the past 20 years in both the public and private sector, defending networks, arresting international criminals, and uncovering nation-state adversaries. He’s held senior information security leadership positions across technology and financial startups and enterprises. He is a trusted risk advisor to Fortune-500 companies, and a prolific speaker, blogger, and columnist.

anna-iskenderian

ANNA ISKENDERIAN

Anna Iskenderian is a Threat Intelligence Analyst on Insikt Group's Subscriptions and Periodicals team at Recorded Future. She earned her Bachelors of Arts in International Relations at American University, and lives in Boston, Massachusetts.

jesse-nuese

JESSE NUESE

Jesse Nuese served as an infantryman and a paratrooper in the US Army for four years, before separating from the service to pursue an education. He completed one year at Community College of Denver before transferring to
Columbia University, which he graduated from in 2021 with a BA in International Affairs and a focus on US-China relations. He is currently a graduate student at the Fletcher School of Law and Diplomacy of Tufts University, where he studies International Business with an emphasis on Strategic Management, Finance, and Cybersecurity. He also serves as a Senior Business Fellow with the Warrior Scholar Project.

jakob-wolk

JAKOB WOLK

Jakob Wolk is a graduate student at New York University, pursuing a Master of Science in Global Affairs with a concentration in Transnational Security. He graduated magna cum laude from Arizona State University with a B.S.
in Political Science.