Cyber attacks: Does physical boundary matter?

Information security issues are characterized with interdependence. Particularly, cyber criminals can easily cross national boundaries and exploit jurisdictional limitations between countries. Thus, whether cyber attacks are spatially autocorrelated is a strategic issue for government authorities and a tactic issue for insurance companies. Through an empirical study of cyber attacks across 62 countries during the period 2003-2007, we find little evidence on the spatial autocorrelation of cyber attacks at any week. However, after considering economic opportunity, IT infrastructure, international collaboration in enforcement and conventional crimes, we find strong evidence that cyber attacks were indeed spatially autocorrelated as they moved over time. The policy and managerial implication is that physical boundary should be an important factor in addressing strategic cyber attacks and their potential risks.