What is Cybersecurity Investing?

Cybersecurity is an exciting, growing field, leading many curious investors to question: what is cybersecurity? 
Cybersecurity services are platforms that protect computers, programs, and data from unauthorized access. Companies, corporations, institutions, governments, and individuals maintain and transport an increasing amount of confidential information on and through computers, rendering this data vulnerable to cyber attack. From home computers and personal banking information, to confidential federal date, all computer systems are vulnerable to risk. Cybersecurity platforms work to prevent, detect, reduce and resolve these vulnerabilities.

What is cybersecurity, and why is it so important?

Cybersecurity is quickly becoming a vital industry in ways which were unimaginable mere decades ago. Ernst and Young, in its 2014 Global Information Security Survey, pinpoints the main changes driving this shift. The report identifies the rapidly changing post-economic-crisis market, where mergers, acquisitions, market expansion and product launches are all on the rise, the increase in mobile computing, which pushes IT closer to consumers, and the degree of connection between our new digital ecosystem, as significant factors in the creation of an online environment which necessitates enhanced cyber security measures.

The prevalence of cloud-based services and third party data storing has opened up new areas of risk, as has the increase in IP addresses for operational technology systems that were traditionally closed (such as power generation and transportation systems). Essentially, our transforming relationship with computer technology has transformed how companies have to protect their cyber interests.

What does it protect against?

Threats related to cybersecurity are diverse, encompassing everything from competitor espionage to spam to phishing to internal employee attacks. However, the number one threat that most companies identify is the possibility of cyber attacks to steal financial information, including credit card numbers and bank information. 28% of respondents to an Ernst and Young survey described it as their first priority when it comes to cyber protection, while an additional 23% ranked it as their second priority. The second most important threat that companies seek to guard against is the potential of cyber attacks to disrupt the organization itself.
These attacks can come from a multitude of sources. In keeping with previous years, the Ernst and Young report discovers that employees are the most likely source of an attack against a company. However, when combined, various types of external attackers – criminal syndicates, state sponsored attackers, hacktivists, and lone wolf hackers – constitute a significantly greater threat for companies.

How is the market growing?

Cybersecurity investing is primed for growth, as the need for these cybersecurity services soars in corporate and governmental organizations. The Ernst and Young reports that less than one fifth of organizations have real time insight on cyber risks available. In other words, cyber threats are overlooked and ignored, and if they occur companies do not have an adequate response plan in place.
This suggests that the cyber security investing is going to quickly expand in forthcoming years, as companies work to rectify these shortcomings. However, company budgets don’t reflect this expanding need: 63% of survey respondents cite budgetary issues as the main reason for which they do not have enhanced cybersecurity measures in place, and almost half expect to see no growth in their budget in the coming years.
Nonetheless, cybersecurity investing is undoubtedly growing. The Cybersecurity Market Report projects that $1 trillion will be spent globally on cybersecurity from 2017 to 2021. Despite companies’ initial reluctance to expand their budgets in this direction, the obvious need for this security solution guarantees that the industry will continue to grow.
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This article was originally published on July 2, 2015.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.