Digitalization front-runners are more vulnerable to cyberattacks
For many business leaders, digitalization is associated with promises of greater efficiency and productivity. However, a new study by professor of accounting Jukka Sihvonen from the University of Vaasa, Finland, suggests that increasing digitalization may also raise a company's risk of falling victim to a successful cyberattack. The study has been published in the journal British Journal of…
New research reveals that companies that embrace digitalization more aggressively may be at a higher risk of experiencing cyberattacks. Professor Jukka Sihvonen of the University of Vaasa, Finland, found that firms leading in digitalization are up to 10 percentage points more likely to fall victim to a successful cyberattack compared to their less digitally advanced peers.
Published in the British Journal of Management, the study analyzed data from over 9,600 publicly listed U.S. companies between 2006 and 2023, including 543 documented data breaches and other cyber incidents.
While many executives view digitalization as a means to enhance cyber resilience, Sihvonen's findings suggest that the relationship is not as straightforward. The increased risk is not solely driven by the technologies themselves but rather by how these digital technologies are implemented within organizations and integrated into their business models and processes. Traditional monitoring and control mechanisms, such as external auditing, are not enough to protect highly digitalized firms from cyber threats.
The study emphasizes that cybersecurity management should be viewed as a strategic issue. As companies become more digitalized, it becomes increasingly important to ensure that cybersecurity expertise is represented in top management and on the board of directors. The findings challenge the assumption that digitalization automatically strengthens a company's cybersecurity.
At the same time, they provide practical insights for business leaders during a period when organizations are heavily investing in artificial intelligence and other new digital technologies.
Interestingly, the study also reveals that investors often do not fully recognize the link between digitalization and cyber risk. Although stock markets typically react to cyberattacks with a delay, the market response can be significant once the implications become apparent. In conclusion, Sihvonen stresses the need for a more balanced discussion about the benefits of digitalization and the risks that accompany it, highlighting the importance of understanding both sides of the equation.
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