One of the biggest questions in cybersecurity now has an answer… and the implications are significant for investors, policymakers, corporate executives, and cybersecurity professionals alike.
In recent years, various researchers have demonstrated that significant cybersecurity breaches cause material, short term declines in stock price and market share. These analyses are based on reviewing publicly disclosed breaches and tracking stock price post-breach. But while these “event-driven” studies uncovered a critical link between data breach and stock price, a different question remained unanswered: is there a relationship between “ongoing” cybersecurity performance and financial performance? In other words -- would investing in companies with strong cybersecurity produce greater investment returns?
We now know that the answer to this question is a definitive “yes.”
BitSight and Solactive, a German index engineering firm, released new research demonstrating that a company’s ongoing, strong cybersecurity performance is an indicator of business performance. Analysis shows well-performing BitSight rated companies actually outperform the benchmark index by approximately 1% to 2% with lower volatility. For certain sectors, such as U.S. Technology, well-rated companies outperform the benchmark by 7%. The findings are an endorsement for the introduction of the Solactive BitSight Cyber Risk Index, a financial index that will enable investors to invest in companies who are top cybersecurity performers as measured by BitSight.
The findings from this research will have significant implications for the global marketplace of investors, policymakers, and companies themselves:
We believe that these findings are not only market-shaping… they firmly establish the value of BitSight’s measurements and analytics to the global marketplace. This is yet another independent, statistical validation of BitSight’s market-leading Security Ratings, further cementing the reason why the global marketplace -- investors, insurers, governments, and businesses -- trusts and uses the BitSight platform.
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