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Real Option Applications to Information Security

Author

Listed:
  • Pythagoras PETRATOS

    (Visiting Fellow, University of Buckingham)

Abstract

Real options present advantages over the standard discounting methods. In this paper we analyze them briefly and examine their potential applications on information security. The applications of real options on valuation of information assets, information security investment and capital budgeting provide considerable benefits. Finally portfolios of real options and other financial products can reduce information security risk.

Suggested Citation

  • Pythagoras PETRATOS, 2008. "Real Option Applications to Information Security," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(70), pages 15-26, 2nd quart.
  • Handle: RePEc:idt:journl:cs7001
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    File URL: http://repec.idate.org/RePEc/idt/journl/CS7001/CS70_PETRATOS.pdf
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    More about this item

    Keywords

    Real options; information security; valuation; information security investment; capital budgeting; portfolio theory; information security risk.;

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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