Wealth Management: Instant Insights – Cybersecurity
Cybersecurity in the post-pandemic world
The global COVID pandemic has fundamentally changed the way we work. As millions of workers retreated to home offices in early 2020, cyber predators took advantage of hacking into sensitive data and relatively unprotected corporate networks. Looking ahead, the emergence of a hybrid work environment (see Future of Work), combined with ongoing digital transformation of companies make the protection of our virtual environment and data a key priority for households, companies and governments.
Increased awareness is putting the topic of cybersecurity at the heart of business transformation and innovation although much work remains outstanding. With that, the global cybersecurity market is expected to grow from $183 billion in 2019 to $230 billion in 2021, at a compound annual growth rate of 12.0%.
More sophisticated cyberattacks
From accessing private information to disrupting business processes, extorting money to halting manufacturing, cyberattacks are diverse and increasingly sophisticated. The ransomware attacks of 2021 reiterate the global scale of the cybersecurity problem. Ransomware is a form of malicious software that blocks access to a computer, or its data, and demands money to release it. The attack on the US Colonial Pipeline in May 2021 left thousands of petrol stations without fuel for several days, the hacking of US meat processor JBS closed off a quarter of US beef operations for 2 days. More recently, software firm Kaseya which provides software tools to IT outsourcing companies was hacked, impacting 1500 businesses around the world and forcing the closure of 800 grocery stores in Sweden whilst knocking schools and kindergartens in New Zealand offline.
The number of data breaches are growing fast
Companies and individuals today rely on cloud-based processes and the Internet of Things (IoT). The number of connected devices globally is expected to rise from 31 billion in 2020 to 35 billion in 2021 and 75 billion in 2025. Increased connectivity means more targets for cyberattacks, and poorly secured devices run the risk of being infected with malware and expose to phishing attacks.
The average number of cybersecurity breaches has doubled in the past year and around 50% of computers that were infected once were re-infected within 12 months. The cost of cyberattacks is set to reach over $10.5 trillion by 2025. Compared to 2019, 2020 saw a +358% increase in malware and +435% increase in ransomware attacks, with 59% of organisations experiencing a material breach in the last year.
A call to action for businesses
The growth of artificial intelligence, machine learning and the IoT along with the spread of 5G heighten the complexity of IT infrastructures worldwide requiring a greater need for cybersecurity CapEx. Companies' cybersecurity readiness or maturity also varies between sectors with some sectors such as healthcare or banking having better cybersecurity management profiles than for instance industrials or insurance sectors. Nevertheless, as captured in a 2021 survey2, overall levels of business readiness remain low. (see Figure 2)
A lack of business readiness can in part be explained by a recent study showing only 36% of organizations factor in cybersecurity issues right from the planning stage of new business initiatives. However, 9 out of 10 organisations are increasing their cybersecurity budgets for 2021 compared to 20208 as management boards and COOs become increasingly conscious of the work which is required in this area.
Looking ahead, the cybersecurity market is forecast to be worth $403 billion by 2027, a compound annual growth rate of 12.5%. A growing number of highly specialised players will evolve to help companies manage their cybersecurity risks, generating opportunities for investors in turn.