Cybercrime vs. Cybersecurity: How to Invest | BetaShares

Cybercrime vs. cybersecurity: how to invest in the escalating arms race

BY Ben Rohrt | 31 May 2022
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cyber security

Cyberattacks on both individuals and companies are on the rise, and with geopolitical tensions running high, specifically around the Russia – Ukraine war, could we see the case for investing in cybersecurity increase even further?

In this blog, I’ll explore the growth of the cybersecurity industry, as well as the financial implications to governments and individuals as they look for ways to protect themselves from the growing threat of cybercrime.

There was a time not too long ago where the only place you needed to worry about getting a virus was when you downloaded the wrong file on Napster or Limewire. The prospect of which, while potentially damaging, did not have the wide-ranging implications that we see in 2022. Cyberattacks can come in multiple forms, from Denial of Service, to Malware and Phishing.

Source: https://www.stealthlabs.com/blog/cyber-security-threats-all-you-need-to-know/

Today, cyberattacks have far-reaching and real implications for both corporations and individuals. We are seeing this play out through the theft of personal information and financial details, interruption of supply chains to global businesses and digital warfare initiated by some governments around the world.

The case for investing in cybersecurity

As shown in the figure below, estimates place the costs of ransomware attacks last year at a staggering $20 billion, up from $325 million in 2015, a multiple of 61x in only six years. This figure is forecast to grow to over $265 billion by 2031. According to Cybersecurity Ventures, a ransomware attack was estimated to occur every 11 seconds in 2021.

global ransomware

 

Fortune Business Insights expects the cybersecurity market to grow from US$156 billion in 2022 to US$376 billion in 20291, a compound annual growth rate (CAGR) of 13.4% over this time. This growth is being driven by the emergence of more online e-commerce platforms, as well as the increasing importance of the Internet of Things (IoT), cloud computing and artificial intelligence (A.I.) sectors. As we move even more to online and connected services, the more potential arises for details to be exploited or placed at risk by those seeking to cause disruption. Put simply, the more devices we connect to the internet, the more opportunities that exist for attacks to occur.

The increasing move towards e-commerce solutions and the IoT by consumers means that the businesses and corporations involved need to ensure that user information as well as their own business activities and intellectual property have the appropriate security in place to prevent data and financial losses. This is forcing the adoption of many advanced technologies in order to understand and identify the threats that they face.

From a geopolitical standpoint, there is also significant risk posed by hostile overseas governments. The current Russia – Ukraine war, and the financial sanctions placed on Russia for its role as the aggressor, has led the White House to warn of the potential of widespread Russian cyberattacks in retaliation for what it sees as unnecessary measures by the U.S. and its allies4.

In 2023, the U.S. Government has proposed a combined US$65 billion budget for federal spending on IT and cybersecurity,2 with $10.9 billion directly related to civilian cybersecurity funding. Closer to home, the latest Australian federal budget announced $9.9 billion in cybersecurity spending3.

Summary

In a world where consumers and businesses are increasingly connected, and data is accessed remotely through a variety of devices, the need for data security only becomes more important. This inevitably leads to an increased focus and spend from governments, corporations and individuals towards protecting their data and intellectual property.

Australian investors can gain exposure to the cybersecurity sector via the BetaShares Global Cybersecurity ETF (ASX: HACK), which aims to provide a simple and cost-effective way to gain exposure to the world’s leading cybersecurity companies in a single ASX trade.

 

Investment risks associated with HACK include market risk, cybersecurity companies risk, concentration risk and currency risk. For more information on risks and other features of the Fund, please see the Product Disclosure Statement, available at www.betashares.com.au.


1. https://www.fortunebusinessinsights.com/industry-reports/cyber-security-market-101165
2. https://www.whitehouse.gov/wp-content/uploads/2022/03/ap_16_it_fy2023.pdf
3. https://www.afr.com/politics/federal/budget-s-9-9b-cybersecurity-spending-is-worth-every-dollar-20220330-p5a999
4. https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/21/statement-by-president-biden-on-our-nations-cybersecurity/

 

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