Do geopolitical risks induce a butterfly effect on cybersecurity?

Abstract

Cyberspace war is a new domain that complements conventional warfare as a means of dominating opponents in resource management and international relations. The geopolitical rivalry has extended into cyberspace, with states engaging in cyberattacks to influence international relations. Consequently, countries have increasingly viewed cybersecurity as an arms race, developing cyber capabilities. This study examines the relationship between geopolitical risks and cybersecurity during 2005:01-2023:12 using wavelet analysis. The results indicate that geopolitical risks and cybersecurity are correlated across several sub-sample periods. Furthermore, the findings show that cyber risk is primarily influenced by geopolitical risks during periods of geopolitical turmoil, when strategic competition, and cyberattacks on critical infrastructure. It is noted, however, that introducing energy security into the relationship impacts geopolitical risks in the medium to long run, which indicates that the relationship is more likely to be established permanently. Geopolitical risks and cybersecurity, with a particular focus on energy infrastructure, should be monitored and evaluated by policymakers.