The strategic impact of cybersecurity investments on organizations

Abstract

More complex and expanding IT environments have increased exposure to cyber threats. Yet cybersecurity investments are often treated as compliance-based acquisitions. The study examines whether investments in advanced secure communications provide a sustainable competitive advantage. The study uses a resource-based view and dynamic capabilities frameworks. Financial impact is examined using risk modelling. This is underpinned by annualized loss expectation (ALE) and return on investment. The empirical study consists of nine semi-structured interviews. The interviews are supplemented with secondary data, industry reports, and individual cyber incidents. The results show that ASC technologies do not in themselves provide competitive advantage. However, they can provide strategic advantages if they are well integrated into organizational processes. In addition to reducing expected annual losses, ASC can also improve decision-making speed, collaboration with external partners, and resilience.

The study examines situations where ASC investments are net positive. The economic justification arises when the risk exposure, regulatory environment and operational dependence on secure communications are sufficiently high. The study presents a cybersecurity investment calculation tool that uses an ALE-based model to support management decision-making. The results move cybersecurity from an IT expense to a strategic capability that, when embedded in the strategy, promotes competitive advantage.