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comments-on-pete-lindstroms-rosi-post

Posted by: admin 17 years, 1 month ago
I'm short on time, but I did want to do a quick post about Pete Lindstrom's post on ROSI. He makes a good point about effieciencies. But there are three ways a company creates value:
  • Reduce costs faster than reducing revenue
  • Increase revenues
  • Reduce your weighted average cost of capital.
    So, to add to Pete's list of ways to justify investment in security, I add:

    4. You agree that projects that are riskier are worth less than projects that are not, all other iterms being equal and thus it makes sense to invest more in a project to reduce the risk.

    In general, this is why I prefer EVA or NPV to ROI measures: they do a better job of including the drivers of value.

    Past posts about ROI, economics and information security are here.
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