Why is cybersecurity important? Find out here why companies and investors need to pay attention to this growing market.
With the number of cyberthreats growing in a big way, more and more answers are emerging to the question, “why is cybersecurity important?”
For starters, this proliferation of cyberattacks is causing increasing damage to companies, governments and individuals. Take the Equifax (NYSE:EFX) attack that happened in July 2017 as an example — the hack allowed access to the personal and financial information of almost 150 million people.
While some say there hasn’t been a data security issue as significant as that since then, there were still plenty of security risks to go around in 2018. These include the attacks on Facebook (NASDAQ:FB), Marriott (NASDAQ:MAR), Under Armour (NYSE:UAA), Saks Fifth Avenue and Lord & Taylor, to name a few.
Putting it simply, businesses need to respond to these threats by adopting strict security measures. In this article, we break down the three main answers to the question, “why is cybersecurity important?” and illustrate why this market is so crucial.
1. Why is cybersecurity important? Increasing threats
As noted above, the number of security incidents is increasing every year. From a total cost of $445 billion in 2014, the cost of cybercrimes reached $600 billion in 2017, according to a report by McAfee. Jupiter Research is estimating costs may even reach $2 trillion in 2019.
Moving forward, a Cybersecurity Ventures report on cybercrimes suggests that the cost of cyberthreats will rise to $6 trillion annually by 2021; that amount encompasses everything from damage and destruction of sensitive data, stolen money, lost productivity, theft of intellectual property, theft of personal and financial data, embezzlement, fraud, post-attack disruption to businesses, forensic investigation, restoration and deleted hacked data and systems, to name a few.
What investors might not know is that mobile devices are faced with rising cyberattacks, as are medical devices. In fact, spending on medical device cybersecurity alone is seen reaching $65 billion by 2021.
On that note, Dr. Alissa Johnson, CSIO of Xerox and former deputy CIO at the White House, said in an interview that in order to prevent cyber risk, it’s important to remember the basics. “Security is not just the responsibility of the security team, but as we’re learning and realizing — especially with all the spear phishing attacks — security is everyone’s responsibility,” she noted.
2. Why is cybersecurity important? Severity of attacks
It isn’t just the number of cybersecurity attacks that is increasing. The degree of these attacks is on the rise as well. According a PwC report, they are “becoming progressively destructive and target a broadening array of information and attack vectors.”
Politicians are at risk — indeed, Barack Obama’s administration proposed a $19-billion budget for cybersecurity. And Hillary Clinton’s private emails became front-page news during her presidential campaign, underscoring the importance of strong cybersecurity policies from government agencies.
In late August of 2017, eight out of 28 members of the National Infrastructure Advisory Council, which oversees the country’s response to cyberthreats, resigned.
According to BNA, those that resigned said that the Trump administration was paying “insufficient attention to the growing threats to cybersecurity of critical systems.” BNA had previously reported that the “Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure” order gives the heads of federal agencies responsibility for managing cyberthreats — which still holds true.
Since then, Trump has released a defense policy bill that addresses cybersecurity and calls for stronger defenses against cyberthreats. However, he has also removed the position of national cybersecurity coordinator, which garnered much criticism. In 2018, his chief of homeland security called cybersecurity the country’s biggest national threat.
3. Why is cybersecurity important? Future outlook
Looking ahead, PwC’s Global State of Information Security Survey 2018 states that “87 percent of global CEOs say they are investing in cybersecurity to build trust with customers.” As per this report, approximately two-thirds of respondents had appointed a chief privacy officer.
As these statistics show, companies are no longer asking “why is cybersecurity important?” — they recognize that it’s an area worthy of commitment and are taking preventative action against threats.
The struggle between increased needs and limited funding is, however, characteristic of the cybersecurity industry. Hopefully more and more business owners, government agencies and organizations are recognizing the need for systems to fight cyber risk and protect customers’ data, and are allocating funds accordingly.
Of course, as an investor, the bottom line is that the cybersecurity space is growing. As Steven Morgan, founder and editor in chief of Cybersecurity Ventures, has said, “cybersecurity spending will remain at 12 to 15 percent growth and continue to outpace most other tech sectors.”
Next time someone asks you, “why is cybersecurity important?” you’ll have more ideas to share with them. To continue learning about related topics, check out these articles below:
- 5 Top NASDAQ Cybersecurity Stocks Year-to-Date
- 5 Top Cybersecurity News Stories of 2018
- Cybersecurity Trends 2018: Year of Regulations and Breaches
This is an updated version of an article originally published by the Investing News Network in 2015.
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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.