Cybersecurity
Cyber Attacks Are Seen Pushing Up Risk Premiums for Stocks
- Funds adjust positions on cyber riskiness, research says
- Standard deviation gain in cyber risk raises risk premium 3.4%
Photographer: Nicolas Asfouri/AFP via Getty Images
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U.S. equity investors are demanding higher risk premiums to compensate for rising cyber threats as the coronavirus pandemic pushes more businesses to move online.
That’s according to researchers at Michigan State University who found that funds adjust their positions according to the “cyber riskiness” of holdings, especially when data breaches are high. Hackers prefer larger and more visible companies with big customer bases and data sets, especially in industries including retail, services and finance, their research shows.