The Security Cost of Intelligence: AI Capability, Cyber Risk, and Deployment Paradox

ArXi:2604.23058v1 Announce Type: cross Firms are deploying capable AI systems, but organizational controls often have not kept pace. These systems can generate greater productivity gains, but high-value uses require broader authority exposure -- data access, workflow integration, and delegated authority -- when governance controls have not yet decoupled capability from authority exposure. We develop an analytical model in which a firm jointly chooses AI deployment and cybersecurity investment under this governance-capability gap.