Analysing the risk of global cyberattacks
Another key area of research is the risk around cybersecurity. The World Economic Forum identifies systemic cyber risk as one of the most likely and impactful risks for firms: in the decade from 2011 to 2020, research shows that major institutions lost nearly $500 billion from operational risk events that were predominantly due to cyberattacks.
This explains why cyber-security ranks as the most challenging risk for firms, second only to political risk, in surveys of financial-market participants, and cyber-attacks pose particularly serious threats to trading and banking systems, as attacks on individual firms can develop into systemic crises if unchecked.
Co-authored with LBS’s Hélène Rey and Rustam Jamilov of the University of Oxford, ‘The anatomy of cyber risk’ uses data from more than 12,000 firms in 85 countries over the past 20 years to construct measures of firm-level cyber risk.
The study again uses the breakthrough methodology in the NL Analytics approach; namely, finding a way to capture the impact of messy, seemingly haphazard events by collating information from text transcripts. The research used quarterly earnings calls of firms and ‘sorted’ each cyber-related reference into category topics to capture sentiment, monetary loss, country names, and so on.
And it is not merely a diagnostic tool, as Dr Tahoun reveals, “Cyber-risk exposure has significant direct and contagion effects on stock returns. The research documents new facts concerning the worldwide rise of cyber risk and its industrial and geographical composition. The tool can characterise those firms most affected by cyber risk. We also believe our indices can predict future cyber-attacks.”
The research findings had such immediate significance for policymakers and corporates that the study soon found itself on the front page of The Economist .
Measuring disruptive technology
The NL Analytics tool has been developed and refined such that it has many broader applications in academia and industry.
The 2021 paper ‘The diffusion of disruptive technologies’, co-authored with Nicholas Bloom, Tarek Alexander Hassan, Aakash Kalyani and Josh Lerner, used the tool to try to quantify the impact of new technologies in the US.
Here, the ‘text-as-data’ methodology was used to track firms’ patents, job postings and earnings calls regarding disruptive technologies such as artificial intelligence.
The analysis enabled the team to document not only the development and spread of novel technologies, but also to illustrate the speed at which they spread across regions, firms, and industries – key elements in pinpointing economic growth, entrepreneurship and firm dynamics, but also crucial in helping to highlight economic inequality.
If the nature and complexity of Dr Tahoun’s work creates the impression of a solemn, data-driven academic who lives in the world of facts and figures, feedback from the students who attend his classes quickly dispels this illusion.
“Dr Tahoun injects humour, energy and real-world examples into what is a pretty dry subject,” attested one student.
“Exceptionally vibrant and a breath of fresh air,” declared another.
In a testament to the practical impact his classes often have, another said, “Since I started running my own business, I understand the value of a lot of things taught so passionately by Dr Tahoun.”
Student feedback also bears witness to an always-grounded approach: “Dr Tahoun provides simple messages that will stay with me for the rest of my career and have changed my perspective on how I view business operations and structures.”
Such acclaim helps explain why, among his many professional achievements to date, he cites his 2018 nomination in the Poets&Quants list of Top 40 Business Professors Under 40 as his proudest.