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Exposure to Cyber Risk and Inadequate Cybersecurity Regulations: Evidence from Municipalities
Abstract: In this article, which is based on a related working paper, we document the adverse effects of cyberattacks on municipalities and the ineffectiveness of current state regulation to stave off future cyberattacks. In the process of providing services to their citizens, state and local governments collect and store a wide range of sensitive personal information (data). Access to personal information, sometimes combined with a lack of adequate cybersecurity (FitchRatings, 2022), makes governments attractive targets for cyberattacks, in particular data breaches. Indeed, in our sample external data breaches represent the most common source of cyber risk for governments; therefore, we focus primarily on them.
Keywords: Public economics; financial economics;
JEL Classification: H72; H74; G38;
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Bibliographic Information
Provider: Federal Reserve Bank of Chicago
Part of Series: Chicago Fed Letter
Publication Date: 2024-09
Volume: 501