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

Frontier AI governance often centres on the model-level governance paradigm, which assumes that a model's capability profile is primarily a function of the compute and data used during training. This position paper argues that model-level governance becomes less effective when capability progress is increasingly driven by "non-model gains"--improvements that are independent from advances in the base model. We formalise the concept of non-model gains and provide a taxonomy of three distinct vectors of capability gain: inference gain (scaling compute at test-time), systems gain (post-training enhancements such as scaffolds), and asset gain (enhancing a model with restricted assets). We demonstrate how these vectors--alongside potential future impacts from embodiment, continual learning, and AI diffusion--may undermine risk management strategies that hinge mostly on pre-deployment evaluation and mitigation. We provide an overview of governance approaches that go beyond the model level: system, entity, agent, and cloud governance. Finally, we emphasise the importance of societal resilience as a complement to these governance layers.

The intersection of artificial intelligence adoption, cybersecurity governance, and public sector institutional constraints has not been examined as a unified analytical problem in the existing literature. Studies address AI cybersecurity risks generically, public sector governance independently, and framework adequacy separately. Existing studies have not integrated these three streams to explain specifically how AI adoption causes cybersecurity governance failure in government organizations, nor test existing governance instruments against AI-specific public sector failure causes. This paper ad-dresses that gap. It proposes a seven-domain typology identifying ten specific AI-driven cyber governance failure causes grounded in public sector institutional analysis. It presents a three-pathway failure model showing how accountability failure, opera-tional resilience failure, and compliance failure interact and reinforce each other. It de-livers a structured coverage matrix testing five major governance frameworks (NIST CSF 2.0, ISO/IEC 27001, COBIT, NIST AI RMF, and ISO/IEC 42001) against the typology, finding that no instrument addresses Shadow AI, speed asymmetry, or gov-ernance vacuum at the operational specificity required for public sector application. The paper introduces speed asymmetry as a named structural construct with a specified mechanism. The framework provides the design specification for an AI-enabled cyber-security maturity model for government organizations.

The growing integration of AI into cybersecurity is reshaping the balance between attackers and defenders. When access to advanced AI-enabled defence tools is uneven, resource-limited defenders may be unable to adopt effective protection, creating persistent system vulnerabilities. We study the impact of differential AI access using an evolutionary game-theoretic model in a finite population. We first show that when high-capability defence is costly, the population is driven toward low-cost, weak-defence behaviour, sustaining attacks and weakening long-run security. To address this problem, we introduce differential access to AI defence tools by allowing defenders to choose between low- and high-capability protection based on their resources. We then examine the role of a small group of committed defenders who always adopt strong defence and influence others through social learning. Although commitment increases the prevalence of strong defence, it alone cannot stabilise secure outcomes due to high defence costs. We therefore incorporate a targeted subsidy to remove the cost disadvantage from committed defenders. Our analysis shows that subsidised commitment significantly increases strong defence adoption, suppresses successful attacks, and improves overall system resilience. Simulations across a broad parameter space confirm that subsidies consistently outperform commitment alone. In addition, social-welfare analysis shows improved defender outcomes while keeping attacker gains low. These findings suggest that targeted support for key defenders can be an effective mechanism for stabilising cybersecurity in AI-driven environments and provide a theoretical bridge between cybersecurity policy, AI governance, and strategic allocation of defensive AI capabilities.