An Empirical Investigation of the Economic Value of Information Security Management System Standards

Within the modern and globally connected business landscape, the information assets of organizations are constantly under attack. As a consequence, protection of these assets is a major challenge. The complexities and vulnerabilities of information systems (ISs) and the increasing risks of failure combined with a growing number of security incidents, prompts these entities to seek guidance from information security management standards. The International Organization of Standardization (ISO) Information Security Management System (ISMS) standard specifies the requirements for establishing, operating, monitoring, and improving an information security management system within the context of an organization\u27s overall business risks. Importantly, this standard is designed to ensure the selection of adequate information security controls for the protection of an organization\u27s information assets and is the only auditable international standard for information security management. The adoption of, and certification against the ISO ISMS standard is a complex process which impacts many different security aspects of organizations and requires significant investments in information security. Although many benefits are associated with the adoption of an information security management standard, organizations are increasingly employing economic measures to evaluate and justify their information security investments. With the growing emphasis on the importance of understanding the economic aspects of information security, this study investigated the economic value of the ISO ISMS standard adoption and certification. The principles of the efficient market hypothesis and the event study methodology were employed to establish whether organizations realized economic gains from obtaining certification against the ISO ISMS standard. The results of this research showed that capital markets did not react to the ISO ISMS certification announcements. Furthermore, the capital market reaction to information security breaches was not different between ISO ISMS certified and non-certified firms. It was concluded that the ISO ISMS certification did not create economic value for the certified firm