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Cyber risk management in the US banking and insurance industry: A textual and empirical analysis of determinants and value

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  • Nadine Gatzert
  • Madeline Schubert

Abstract

In this paper, we first construct a cyber risk consciousness score using a text mining algorithm, applied to annual reports of large‐ and mid‐cap US banks and insurers from 2011 to 2018. We next categorize the firms' cyber risk management based on keywords to study determinants and value‐relevance. Our results show an increasing cyber risk consciousness, regardless of the industry. In addition, for the entire sample we find that firms belonging to the banking industry, with a higher cyber risk consciousness score and a higher general risk awareness are more likely to implement cyber risk management, which also holds for both industries separately. We find the opposite in the case of profitable firms for the entire sample and the insurer subsample. Finally, we observe a significant positive relationship between cyber risk management and firm value measured by Tobin's Q for the entire sample and the subsamples of banks and insurers.

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  • Nadine Gatzert & Madeline Schubert, 2022. "Cyber risk management in the US banking and insurance industry: A textual and empirical analysis of determinants and value," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(3), pages 725-763, September.
    • Handle: RePEc:bla:jrinsu:v:89:y:2022:i:3:p:725-763
    DOI: 10.1111/jori.12381
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    Cited by:

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    2. Hyoung-Joo Lim & Dafydd Mali, 2024. "Does Market Performance (Tobin’s Q) Have A Negative Effect On Credit Ratings? Evidence From South Korea," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(1), pages 53-80, March.
    3. Dalia Hussein Elsayed & Tariq H. Ismail & Eman Adel Ahmed, 2024. "The impact of cybersecurity disclosure on banks’ performance: the moderating role of corporate governance in the MENA region," Future Business Journal, Springer, vol. 10(1), pages 1-15, December.
    4. Ben Kejwang, 2022. "Effect of cybersecurity risk management practices on performance of insurance sector: A review of literature," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(6), pages 334-340, September.
    5. Matteo Malavasi & Gareth W. Peters & Stefan Treuck & Pavel V. Shevchenko & Jiwook Jang & Georgy Sofronov, 2024. "Cyber Risk Taxonomies: Statistical Analysis of Cybersecurity Risk Classifications," Papers 2410.05297, arXiv.org.
    6. Serkan Eti & Hasan Dinçer & Hasan Meral & Serhat Yüksel & Yaşar Gökalp, 2024. "Insurtech in Europe: identifying the top investment priorities for driving innovation," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-24, December.

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