Cybersecurity: The Upside of Down

Tab 1

May 01, 2015

In late 2013, cybercriminals hacked into the point-of-sale systems of Target stores nationwide, installing malware that helped them steal personal information from as many as 110 million people. The incident was a wake-up call to consumers and companies alike: Cybercrime is a menace that impacts everyone.


“Target was actually only a very small fraction of the overall data that was stolen around customer identities in 2013,” says Jason Witty, Chief Information Security Officer for U.S. Bancorp, who adds, “Target represented slightly less than a fifth of the total IDs stolen in 2013.”


That 2013 total was about 552 million identities breached. According to the Washington Post, White House officials stated that U.S. law enforcement agencies notified 3,000 U.S. companies they had data breaches in 2013. That number is so staggering that consumers, companies and even the federal government are taking additional steps to address the issue and protect victims of identity theft. 


As the risk and frequency of data breaches increase, so too does the need for education, policies and protection — demand which could catalyze the growth of cybersecurity companies, industries and adjacencies. That could create potential opportunities for investors who wish to support efforts in fighting cybercrime.


If you’re interested in investing in cybersecurity companies, consider the following as you evaluate the landscape:

Tab 2

May 01, 2015

1. The World is ‘Hyperconnected’

The global population now stands at 7.2 billion, according to the U.S. Census Bureau. And the number of global mobile-phone service subscriptions is 7.1 billion, according to Ericsson’s February 2015 Mobility Report.


“About six out of seven people on our planet have a mobile phone subscription,” Witty says. “Smartphone sales represent about half of that. So we’re highly, highly, highly connected.”


All that connectivity facilitates increased innovation — but also increased risk.


“There are tens of trillions of connections that are happening all the time,” Witty says. “Certainly, that has given rise to a lot of innovation, a lot of new business models and a lot of new ways of thinking about how you use computers and devices. But in some cases, it has also outpaced our ability to control those devices from an information security standpoint.”


Our Takeaway: As the world becomes more 

connected, the demand for smart cybercrime solutions rises.


2. Threats are Numerous and Diverse

As connectivity grows, both cybercrime victims and criminals become more diverse. Witty says cybercriminals typically have one of three motivations:


  • Theft: Organized criminals steal at least $300 million per year through electronic means, such as malware.
  • Disruption: So-called “hacktivists” increasingly use technology as a form of protest, hacking into companies’ systems to disrupt operations of an organization with whom they disagree on ideological grounds.
  • Destruction: Since 2009, there have been at least 17 incidents in which countries have been caught using cyberweapons against other nations for military or political purposes.

Our Takeaway: The diversity of cybercriminals and cybercriminal intent creates a broad and expanding threat environment that may fuel increased demand for cybersecurity services and solutions.

Tab 3

May 01, 2015

3. Cybersecurity is a Government Priority

Cybersecurity has now surpassed terrorism as the No. 1 U.S. national security threat, according to the House of Representatives’ Homeland Security committee. In response, President Obama has made cybersecurity a major priority of his administration.


“The president has mentioned cybersecurity in his State of the Union address three years in a row,” Witty says. “In 2014, five major bills were passed to help the information security posture of our nation.”


The White House has also encouraged adoption of the National Institute of Standards and Technology’s Framework for Improving Critical Infrastructure Cybersecurity, which recommends

98 individual controls that companies can voluntarily implement to increase their IT security. “Government collaborated with industry to develop what they believe is the best framework for the whole country to adopt what will collectively up our game in cybersecurity,” Witty says. “That was published in February 2014, and we’re now starting to see wide-scale adoption of that framework.”


Our Takeaway: Government support of cybersecurity initiatives and solutions could help spawn increased cybersecurity innovation and development.


Take a look at where the investment opportunities lie – both to protect yourself and to take advantage of a growth area. Then, make your move.


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