No ratings yet.

Would you pay more for a phone if the company behind it promises to spy on your personal data less? People already do, just think of Apple and how it markets itself as a privacy respecting company. But can privacy be a fundamental source of competitive advantage?

What is Competitive Advantage?

Porter (1985) defines a competitive advantage as: The ability to generate greater value for your customers, this can be done either through offering a value proposition at a lower cost or by offering a higher value at a justified higher price. Privacy might just fit the second description if a company can correctly position itself to ask a higher cost.

How do Companies use Privacy Strategically?

We already see some industry examples where companies successfully leverage privacy as part of their value proposition. Think of DuckDuckGo and Google, DuckDuckGo offers a privacy centred alternative search engine to the Google search engine. DuckDuckGo offers a search tracking blocker by third parties, less cookies, and no filter bubble.

The Strategic Benefits of Privacy

There are many strategic benefits, including a greater customer trust and loyalty, John et al. (2018) shows that clearly stating how the company uses its customers data drastically increases its ads revenue. Bhatnagar further explains how customer data gathering has negative effects on how customers interact with brands, further making a case for a privacy centric strategy, he adds that by leveraging transparency companies can improve customer retention rates.

The Downsides

Let’s go back to DuckDuckGo vs Google example. The first downside that is discussed by Hsieh (2022) is that it is hard for DuckDuckGo to track who is using their services, since there is little data available about their user base. This could be a strategic hurdle since it is harder to measure how to improve services.

The second downside becomes clear when alternating Google as a search engine and DuckDuckGo users might notice strong differences in terms of personalization. The DuckDuckGo search results feel much more static and much less personalized than the search results from Google. Akbar et al. (2022) confirms this by highlighting that google tends to personalize 40% of search engine results where DuckDuckGo only personalizes 20%. They further highlight that personalization improves performance, focus and user experience for search engines. So, are you ready to trade a better user experience for more privacy?

Strategic Balance?

Privacy is no longer just something to comply with. It is a strategic tool to manage customer brand loyalty. Ultimately companies should leverage privacy build stronger customer relationships and add a broader strategic advantage. By effectively balancing user experience with privacy, it can indeed be a powerful strategic tool.

Sources:

Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.

Akbar, A., Karpathi, K., Singh, N., & Brohi, S. N. (2022). Personalised filter bias with Google and DuckDuckGo. Springer. https://doi.org/10.1007/978-3-031-08809-0_5

Hsieh, A. (2022, November). Alternative business model: DuckDuckGo [Summary report]. Yale Tobin Center. https://tobin.yale.edu/sites/default/files/2022-11/DuckDuckGo.pdf

John, L. K., Kim, T., & Barasz, K. (2018, January–February). Ads that don’t overstep: How to make sure you don’t take personalization too far. Harvard Business Review. https://hbr.org/2018/01/ads-that-dont-overstep

Bhatnagar, A. (2022). Exploring privacy as a competitive advantage. Forbes. https://www.forbes.com/councils/forbestechcouncil/2022/09/23/exploring-privacy-as-a-competitive-advantage/

No ratings yet.

The question is not if you will be attacked, the question is what will the consequences be? Cyber insurance has become a hot topic in digital business. Over the years it has grown from simply insurance to a diverse toolkit ready to tackle any attack. A strategic Swiss army knife?

More than just insurance

Cyber insurance policies are meant to cover cyber-attacks of all sorts and to different individual limits, but the real strategic value lies in its extras. The common extras found in modern cyber insurance policies include fines from data protection authorities and offering help to firms in absorbing compliance failure, Chubb (2025). Some cyber policies go as far as covering media liability and brand protection in the event of a major crisis. This coverage essentially extends cyber policies from just cyber insurance to a much broader brand recovery tool. Insurance firms even offer broader third-party liability insurance if your breach or attack exposes customer data or if suppliers hold you accountable for interruptions.

Barriers and Risks

Cyber insurance is not an easy fix, insurers expect their clients to have strong security in place including authentication and encryption. While these standards strengthen the organisations, it is also a barrier to entry for many smaller firms. Abramovsky & Kochenburger (2016) add that insurance companies themselves may pose privacy risks, emphasizing that insurers are potential threats for misuse of data and data breaches. Khalili et al. (2017) further discuss moral hazard because of cyber insurance. Insurance policies are closed on a yearly basis and only beforehand insured companies are screened on their current security measures. Once the insurance is effective, insured parties might drop their security efforts. This makes the insured companies only more prone to cyber-attacks. The cyber insurance industry is developing fast and insurance companies are exploring various ways to mitigate these moral hazard risks.

The rising costs

Lastly, rising costs are affecting the insurance industry in recent years. According to the US Government Accountability Office (2021) cyber-attack costs have doubled between 2016 and 2019. Which has led to an increase in premium for cyber insurance making it much more expensive.

So is it worth it?

Cyber-insurance can be a highly effective strategic tool for companies, but the added value does depend on the company’s size, industry, and level of exposure. For some it might not be necessary, for others it’s a fundamental part of its risk management.

Cyber insurance won’t stop attacks from happening, but it does soften the pain and it helps companies recover faster. 

References:

GAO. (2021, May 20). Rising cyberthreats increase cyber insurance premiums while reducing availability. U.S. Government Accountability Office. https://www.gao.gov/blog/rising-cyberthreats-increase-cyber-insurance-premiums-while-reducing-availability

Kanavas, A. (2023). Cyberinsurance as a risk management tool. University of Piraeus Digital Repository.https://dione.lib.unipi.gr/xmlui/bitstream/handle/unipi/16095/Kanavas_MTE2011.pdf?sequence=1

Chubb. (2025). Cyber ERM policy conditions v2.1 [PDF]. Chubb. https://www.chubb.com/content/dam/chubb-sites/chubb-com/international/netherlands/PolisvoorwaardenCyberChubbERMv2.1.pdf

Abramovsky, A., & Kochenburger, P. (2016). Insurance online: Regulation and consumer protection in a cyber world. In M. Ericson, K. Kreimer, & L. P. Stasiak (Eds.), The “dematerialized” insurance (pp. 117–142). Springer. https://doi.org/10.1007/978-3-319-28410-1_5

Khalili, M.M., Naghizadeh, P., Liu, M. (2017). Designing Cyber Insurance Policies: Mitigating Moral Hazard Through Security Pre-Screening. In: Duan, L., Sanjab, A., Li, H., Chen, X., Materassi, D., Elazouzi, R. (eds) Game Theory for Networks. GameNets 2017. Lecture Notes of the Institute for Computer Sciences, Social Informatics and Telecommunications Engineering, vol 212. Springer, Cham. https://doi.org/10.1007/978-3-319-67540-4_6