Cybersecurity Update: Q3 2018 in Review

As we head into the last quarter of 2018, cybersecurity has become imperative for individuals, companies and governments thanks to a rise in data breaches.

A report by Cisco (NASDAQ:CSCO) highlights that the cost of data breaches is no longer a “hypothetical number.” The firm revealed that each data breaches cost companies between US$1 to US$5 million.

Cisco obtained those figures from a study it conducted in the Asia Pacific region with 33 percent of the respondents revealed the above number (US$1 to US$5 million). Further, 14 percent of the respondents told the firm that data breaches cost them more than US$5 million. Cisco said that the figure represents costs from lost revenue, loss of customers and out of pocket expenses.

The firm also said that companies receive up to 10,000 threats a day, which translates to six threats a minute.

With that in mind, the Investing News Network (INN) takes a look back at Q3 as to what the biggest trends have been in the space and things to look forward in the upcoming quarter.

Cybersecurity Q3 2018: Trends and takeaways

Steve Morgan, editor-in-chief at Cybersecurity Ventures, told INN he is expecting the US to invest more into cybersecurity as states seek ways to counter the cybercrime epidemic that is set to sweep the world.

According to a report from Cybersecurity Ventures, cybercrimes are expected to cost the world US$6 trillion annually by 2021.

In a email statement to INN, Morgan said that in the last three months two US states invested generously into cybersecurity.

“We’ve seen two US states, Georgia and New York, invest approximately $100 million each into local cyber centers to help generate new cybersecurity jobs, provide resources and office space to startups, and build up their cybersecurity ecosystems,” Morgan said.

Case in point — cybersecurity has slowly become a focal point of the US as the country adopted its National Defense Authorization Act in May, which puts more emphasis on cybersecurity. The policy lets US to respond to malicious cyber activities targeting the country.

The sentiment to invest has also been the same at a global scale. For example India’s central bank, the Reserve Bank of India, has put a focus on cybersecurity for 2019 thanks to the increased popularity of digital payments in the country.

In terms of companies in action in this space, Facebook (NASDAQ:FB) launched more cybersecurity tools ahead of midterm elections which is aimed at protecting the political campaigns.

It was also revealed over the course of the quarter that Canadian companies have increased their cybersecurity coverage while US lagged behind. The report from Fico said that 40 percent in Canada had cybersecurity insurance while only 32 percent of the companies in the US had coverage against data breaches.

Beyond Q3 2018: Insiders are growing threats to organizations

Morgan believes that competition in the insider threat space is “heating up,” and said that there are a number of companies in this area with technology including identity and access management (IAM) and privileged access management (PAM).

Morgan explained that the term insiders include employees and contractors who pose a threat to all sorts of organizations globally.

The companies working to solve these problems let an organization create additional permissions and additional security layers to ensure data breaches are not caused by someone within a organization.

However, Morgan said there is room for improvement.

“…there’s room for new market entrants with a new spin on solving an old problem – how to keep an eye on potentially malicious insiders with access to systems, data, and intellectual property that can be compromised,” he said. 

Morgan exampled one company, Ekran System, who has plans to expand its business through managed security service providers partnerships in the US and globally.

Beyond Q3 2018: Healthcare industry at risk

According to a Research and Markets report, ransomware attacks are expected to quadruple through 2020 as experts have termed the health care sector the “most hacked industry.”

“Hospitals are having a hard time recruiting and retaining cybersecurity workers,” Morgan said. “So they’re turning to specialty outside firms for help. Hospital CIOs are looking for healthcare cybersecurity companies that understand how to protect not only information systems, but patients too.”

Cybersecurity Venture predicts the healthcare cybersecurity market will exceed US$65 billion by 2021 and Morgan believes it’s a hot market for the rest of 2018 and beyond.

Investor takeaway

Keystone Financial, a company engaged in independent research on individual companies that are sent out to its clients said that cybersecurity is a long term bet for investing opportunities.

Apart from Ekran System, Morgan singled out couple of companies in different verticals of cybersecurity including CynergisTek (NYSEA:CTEK), a company focused on healthcare space and Sensato, a company focused on protecting medical devices.

In terms of the market growth, Markets and Markets forecasts that the cybersecurity market is set to grow from US$152.71 billion to US$248.26 billion by 2023 at a compound annual growth rate (CAGR) of 10.2 percent.

In short — the cybersecurity market as a whole is a “hot market” for investors, now and in the long term.

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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.