Why is cybersecurity important? Find out here why companies and investors need to pay attention to this growing market.
With the number of cybersecurity threats growing in a big way, more and more answers are emerging to the question, “Why is cybersecurity important?”
For starters, this proliferation of cybersecurity threats is increasingly causing damage to companies, governments and individuals. In July, Twitter (NYSE:TWTR) announced its most recent cybersecurity breach of 2020. The official accounts of high-profile billionaires (e.g Elon Musk, Bill Gates), celebrities (e.g. Kanye West, Kim Kardashian) and government leaders (e.g. Joe Biden, Barack Obama) were targeted by hackers who sent out tweets to lure followers into a bitcoin scam.
The Equifax (NYSE:EFX) cyber attack that happened in July 2017 is another example — the hack allowed access to the personal and financial information of almost 150 million people. In July 2019, Equifax settled with regulators for US$700 million.
There were plenty of malicious attacks in cyberspace to go around in 2018 and 2019, as well. These include attacks on Apple (NASDAQ:AAPL), Capital One (NYSE:COF), Facebook (NASDAQ:FB), Marriott (NASDAQ:MAR), Under Armour (NYSE:UAA), Toyota (NYSE:TM) Saks Fifth Avenue and Lord & Taylor.
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, and so are the costs. According to a 2019 research report by IBM (NYSE:IBM), a single data breach event could cost an organization nearly US$4 million — up 12 percent since 2014.
The report also shows that the effects of a cybersecurity attack can last years, with the costs incurred in the second and third years following a data breach being the most pricey for organizations in the healthcare, financial services, energy and pharmaceutical industries.
“Cybercrime represents big money for cybercriminals, and unfortunately that equates to significant losses for businesses,” said Wendi Whitmore, global lead for IBM X-Force Incident Response and Intelligence Services. Whitmore added, “Companies need to be aware of the full financial impact that a data breach can have on their bottom line — and focus on how they can reduce these costs.”
Moving forward, a 2019 Juniper Research report on cyber crime suggests that the cost of such malicious attacks will rise to US$5 trillion by 2024; 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 security threats, as are medical devices. In fact, the healthcare industry is expected to spend US$65 billion on medical device cybersecurity between 2017 and 2021.
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, the Obama administration proposed a US$19 billion budget for cybersecurity issues. 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 2017, eight out of 28 members of the National Infrastructure Advisory Council, which oversees the country’s response to cyber crime, 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 cybersecurity strategy — which still holds true.
In 2018, Trump’s chief of homeland security called cybersecurity the country’s biggest national threat. That same year, the president released a defense policy bill that addresses cybersecurity and calls for stronger measures against cyberthreats. However, he has also removed the position of national cybersecurity coordinator, a change that garnered much criticism.
Most recently, in mid-2020, a bipartisan group of senators introduced an amendment to the 2021 National Defense Authorization Act that would require the US Department of Homeland Security to appoint cybersecurity coordinators in each state. “Cybersecurity for state and local governments is just as important as federal cybersecurity, and frequently, they lack the resources, technical know-how, and situational awareness to secure their systems, or respond in the event of an attack,” said Ohio Republican Senator Rob Portman.
3. Why is cybersecurity important? Future outlook
Looking ahead, PwC’s Global State of Information Security Survey 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.
Meanwhile, the global cybersecurity market is estimated to reach US$173 billion in 2020, growing to US$270 billion by 2026, according to a report by AustCyber.
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.
The COVID-19 pandemic is likely to lead to an increase in targeted cyber attacks, namely phishing scams, as a massive number of people worldwide are now working remotely from home.
“Employees from organizations of all sizes and types now have minimal cybersecurity resources, if any, compared to what is normally available to them,” according to Steven Morgan, founder and editor in chief of Cybersecurity Ventures. “If remote workers don’t immediately self-educate, and if businesses don’t immediately provide their employees with security awareness training centered on the home office threat, then we could see global cybercrime damage costs as much as double by the end of this year.”
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:
This is an updated version of an article originally published by the Investing News Network in 2015.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.