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MarketWatch April 2017

Cyber Security: A Growing Concern

david-hillery-author.jpg David Hillery
Senior Investment Strategist

As the world becomes more interconnected, cyber security is becoming an ever more prevalent topic. Close to 50% of the world’s population is now online according to the International Telecommunications Union. Though the benefits are obvious, it does bring greater risks.



This Investing Insights white paper outlines the growing relevance of having a solid cyber security framework, while highlighting where threats and opportunities lie for investors.  


Cyber crime threats have increased and as a result business and household security budgets must increase. According to IBM, between 2014 and 2015 there were 64% more security incidents detected globally. In the same year Symantec noted that over half a billion personal information records were stolen or lost. Security is now at the top of the agenda for executives and boards of directors.

All businesses today are essentially information technology (IT) companies to some degree. As the internet of things (IOT) becomes a more important facet of our everyday and business lives, it has become critical that businesses have a secure network infrastructure. Many infrastructure systems are outdated and companies are aware of the value of upgrading security systems as relying on aging security opens the door to attackers.

Figure 1: The greatest challenges according to CEOs

Cyber Security Graph
Source: Fortune

Expanding market

The cyber security industry is rapidly expanding as attackers are becoming more sophisticated and there is increasing scope for cyber criminals to attack a person’s life from work to home. Businesses and governments are becoming more wary of the risks of destructive attacks on critical information. This means cyber security is a priority for most CEOs and heads of government bodies. We have seen several high profile cyber attacks which have increased the general public’s awareness of the effect an attack could have on their lives. According to Bernstein, the day after the Sony attack in 2016 the percentage of executives concerned with breaches rose from 45% to 74%.

The threats

The continued automation of products means the need for robust cyber protection increases. As a result, professionals and business executives rank cyber attacks as the number one risk to doing business in the US, according to a survey conducted by the World Economic Forum. While a recent Cisco report notes the biggest causes for concern among security professionals are the growth of the IOT, increased use of mobile devices and the advent of cloud infrastructure. These megatrends are expected to drive growth in the technology sector for years to come and innovations in the security market will need to grow in tandem.

Any device we use in our day-to-day life can be connected to the internet. Gartner expects that 26 billion devices will be connected to the internet by 2020. The view is that anything that can be connected will be connected in the years to come so the IOT will grow rapidly. The use of IOT brings the vulnerabilities of the digital world into the real world.

The proliferation of mobile devices has created more endpoints to protect. Over the past decade the mobile phone has become an extension of the hand for most. Now much of our daily life is conducted through mobile devices with applications available to deal with everything from our social lives to financial affairs. According to Cisco, internet traffic from mobile devices is expected to account for two-thirds of total IP (Internet Protocol) traffic by 2020. This has made the need for adequate security ever more important with the Harvard Business Review noting phones are the largest cyber security risk for individuals.

According to KPMG, 97% of companies surveyed in a 2016 report had been victims of cyber attacks. The reality facing every business today is that any device we use in our day to day professional and personal life can be exposed. This creates new security problems and companies must ensure that they have adequate protection to ensure the future safety of their business.

If you would like to learn more about how cyber crime could impact your business in the years to come, we will soon be publishing a white paper on the threats businesses face from cyber attacks and we will also be hosting an event with leading industry experts in this area. If you would like to receive more information on this topic, please do not hesitate to contact your Davy private client adviser.

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