Modeling the Impact of Risk on Cybersecurity Investment Projects

Information technologies

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Investment decision-making under ambiguity is a complex process, which becomes more compound in terms of the stochastic nature of cyber environment. Therefore, development of robust models is needed to address the dynamic nature of cyber threats and various types of risks existing in cybersecurity investment projects. The recent research in cybersecurity investments shows, that the most frequently used model targeted at analysing investments is the Gordon-Loeb investment model. The article presents a model for cybersecurity investment decision-making under ambiguity by the extension of the Gordon-Loeb investment model based on real options. In this paper, under deep uncertainty and various types of risks in cyber environment, cybersecurity threats are modeled as stochastic processes under ambiguity using the Choquet-Brownian motions. Given the ambiguity existing in cyber environment, it is drastically important to consider the impact of risks on the cybersecurity investment projects. The aim of our research is to analyze the possible scenarios, regarding the impact of risks and ambiguity on the cybersecurity investment projects. Our work has led us to conclude, that considering the compound interconnections between risks and uncertainty will give decisionmakers an opportunity to effectively address the stochastic nature of cybersecurity investments and make optimal decisions.