The Interconnected Frontier of Systemic Risk: Integrating Cost-Benefit Analysis, Cybersecurity Governance, and Corporate Valuation in the Modern Regulatory Landscape
Abstract
This research article investigates the increasingly complex intersection of cyber risk, environmental policy, and corporate governance within the global financial system. As firms navigate a landscape characterized by "pirates without borders," the propagation of cyberattacks through supply chains presents a systemic threat that transcends individual corporate boundaries. By synthesizing traditional economic tools, such as cost-benefit analysis (CBA), with contemporary risk-based policy frameworks, this study explores how regulatory mandates-ranging from the Sarbanes-Oxley Act to modern cybersecurity governance protocols-influence firm value, innovation efficiency, and market liquidity. The analysis delves into the theoretical underpinnings of decision-making under deep uncertainty, particularly in the context of major industrial and digital risks. It further examines the role of social cost-benefit analysis in societal decision-making, arguing for a paradigm shift from reactive mitigation to proactive, pre-mortem risk management. Key findings suggest that while disclosure requirements and ESG performance metrics drive green investment and transparency, they also expose firms to vulnerabilities regarding trade secrets and information security. The article concludes by proposing a strategic, risk-based policy framework that aligns institutional management of risk with the preservation of firm value and systemic stability.
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