Sanjith Gopalakrishna and Sriram Sankaranarayanan published an article on ‘Cooperative Security against Interdependent Risks’ in the journal called POMS (Production and Operations Management) in November 2023 (Volume 32, Issue 11). It talks about a very interesting field of data security relevant to the business landscape today, where almost all businesses are interdependent to survive and thrive.

If you are a BBA student at SMS Varanasi, we advise you to keep yourself updated about the latest trends in business and commerce. In a world where businesses are interconnected with each other in an intricate matter, they share interdependent risks and need cooperative security measures.

Let’s see what this phenomenon is about.

How interconnected are businesses today?

As you are pursuing the Bachelor of Business Administration program, you probably already understand that today’s businesses are highly interconnected. Various entities form a complex web of relationships. 

Any given business relies on its network of suppliers and vendors, manufacturers, distributors, and retailers to function. A disruption of any one of these links can have a ripple effect throughout the chain – affecting everyone’s performance in the network.

And these business networks are not concentrated in one place anymore. With cloud computing and online platforms connecting businesses worldwide, business collaborations transcend geographic boundaries and allow faster transactions.

Pros and Cons of Interconnected Businesses

Outsourcing has become popular. Businesses are entering into strategic alliances and joint ventures across borders to reduce their operational costs, expand market reach, and create stronger value propositions. They can now focus on their core competencies and outsource the rest to those who do it post.

Hence, businesses are now working on economies of scale and are prioritising efficiency, expertise, innovation, market adaptation, and knowledge sharing.

However, there are some interdependent risks we need to be aware of. Managing such complex relations requires significant coordination and it can be challenging. They need to share sensitive information which exposes businesses to security risks and potential leaks. One incident of data breach at one entity can cause cascading security threats for the entire network.

Similarly, an economic downturn in one country, a natural disaster impacting one business, and other such external disruptions can impact the performance of all businesses in the network and make them vulnerable to significant financial losses.

At SMS Varanasi, we encourage our BBA students to study this problem and think about cooperative security solutions to mitigate such risks.

Stand-Alone vs Cooperative Security Solutions

As a student of the Bachelor of Business Administration program, you must prepare yourself for the rising threats of the new-age business landscape. You need to understand the limitations of isolated security measures and how cooperative security solutions can cut down on interdependent risks in the business world.

Traditionally, businesses have been relying on stand-alone or independent security 

solutions. They fortify their own systems and data within their organisation’s boundaries. Security technologies they often employ include access controls on individual devices, intrusion detection systems, and firewalls.

Independent security solutions are easier to plan and require much less coordination. Businesses can control them completely. However, they are not effective against security threats that easily percolate through networks. When one issue faces a security threat, all the other businesses in its network are vulnerable too.

Hence, no matter how much businesses invest in independent security solutions, they are redundant in today’s world. They are wasting their precious resources. 

As BBA students at SMS Varanasi, you know how important it is to learn about the latest trends in the business world and broader security threats are one of them.

Cooperative security solutions require a more collaborative approach. In such solutions, businesses work together to develop a comprehensive security framework across the network. All the businesses in the network have to work within the framework and follow the strategies to share information and threat intelligence, make coordinated efforts, implement standardised security protocols, and conduct cyber warfare if required.

The collaborative security solutions make the entire network more resilient to attacks, allow faster identification and mitigation of security threats, and optimise resources (by avoiding duplication of efforts and using combined expertise in this field).

Need for Fair Cost-Sharing Mechanisms

Gopalakrishnan and Sankaranarayanan highlight an important point in their research paper. Such cooperative security solutions to mitigate interdependent risks necessitate the development of a fair and transparent system for distributing the financial burden. They suggest the concept of the ‘network-optimal security strategy’ as a collaborative approach to minimise the overall security costs for the entire network.

To divide the costs fairly, ‘agreeable allocation’ is suggested as the best solution. In this method:

• All the firms are advised to remain within the cooperative framework.
• Distribute costs based on how much each firm contributes to the collective security.
• Partner firms pay directly to each other keeping everything simple and straightforward.

But there’s a limitation to this method. If information about individual security investments is limited (as in the private information model), agreeable allocation is possible. But if everyone is aware of everyone else’s security measures (as in the public information model), achieving stable cost-sharing becomes trickier.

What You Can Do Now?

We advise our BBA students to consider the importance of this research in the real world. Today, when the number of cyber threats is rising and the interconnectedness of businesses is increasing, cooperative security solutions seem to be a rising trend.

Students of Bachelor of Business Administration programs can join the research efforts on security threat intelligence, ongoing development of collaborative security frameworks, and cost-sharing mechanisms of such solutions for interdependent businesses. As future business leaders, awareness and knowledge of these aspects of business can give them leverage in their chosen careers.

Besides, you can also work on your communication and negotiation skills that you can use later to make businesses aware of these threats, help them navigate information-sharing concerns, follow the best data security practices and regulations, and foster cooperation between partners. 

The security landscape is evolving. As a Business Administration student, learning emerging technologies and mastering them can help you reach new heights in your career.

To discuss more, contact us at the Centre for Entrepreneurship, Innovation, and Skill Development (CEISD).