Digital transformation and cybersecurity risks

Abstract

This study analyzes the impact of integrating cybersecurity measures on the financial performance of banks. Utilizing regression analysis with data from 100 financial institutions, the findings reveal that banks prioritizing cybersecurity perform better financially. This study demonstrates that it is the quality and strategic integration of cybersecurity measures, as revealed through disclosures, that significantly influence financial outcomes, rather than the sheer scale of investment. A subsample analysis suggests that larger banks appear more resilient to cybersecurity threats due to scale-related advantages, while smaller banks can also improve their financial performance by adopting proportionate, strategically aligned cybersecurity measures. Effective cybersecurity integration correlates with improved financial metrics such as return on assets and equity. Furthermore, the severity of cybersecurity incidents negatively impacts financial performance, emphasizing the importance of proactive risk management. This study underscores the critical role of cybersecurity in financial strategy, enabling banks to navigate digital transformation challenges effectively