Francisco A. Laguna & Wojciech Kornacki
Recent massive and coordinated cyber-attacks on governments and businesses alike reveal the urgent need for global cyber security. As digital transformation and technical advances have changed the way we communicate and do business, cyber threats and cyber-attacks have become more common. In order to respond to the ever increasing demand for cyber security, in the next several decades billions of dollars will be spent around the world to combat the new and emerging cyber threats and prevent attacks. This creates new business opportunities for information technology entrepreneurs.
What is Cyber Security?
Cyber security is the activity or process, ability or capability, or state whereby information and communications systems and the information contained therein are protected from and / or defended against damage, unauthorized use or modification, or exploitation.
Chances are that most of us received an email from an unknown source asking us for personal information, and we did not know that we were under a cyber-attack. However, this is actually called “phishing”, and phishing is considered a form of a cyber-attack. Other forms of cyber-attacks include:
- “pharming”: fraudulently redirecting a website’s traffic to another, fake website
- “malware”: software that performs unauthorized functions without your knowledge
- “Trojan horse”: software that appears to have a useful function, but also it has hidden and potentially malicious functions, or
- “spyware”: software that enables a user to obtain covert information about another’s computer activities by transmitting data covertly.
The particular challenge with cyber security is that most governments and businesses are completely unprepared for these new types of constantly evolving attacks and threats. In addition, some businesses and governments are not even aware that they are being attacked. This means that they may lose critical operational information, trade secrets and business information, without even knowing.
Domestic Cyber Security Opportunities
The U.S. Government requested US$ 19 Billion to improve cyber security defenses in the 2017 budget. In addition, the U.S. Department of Defense plans on spending an additional US$ 5 Billion on cyber security. Most likely a significant portion of these amounts will be awarded to private businesses specializing in cyber security, and many of the large defense contractors are rapidly developing their cyber security capabilities. However, even the biggest cyber security contractors will require a number of subcontractors to meet the demand.
While the U.S. Government is attempting to counter cyber threats for itself, it cannot protect private businesses from similar attacks. It is likely that private businesses will also have to improve their cyber security. Thus, many private businesses will have to develop their own cyber-attack detection and prevention safeguards and protocols.
International Cyber Security Opportunities
The cyber security market is expected to grow from US$ 77 Billion in 2015 to US$ 170 Billion by 2020. While North America and Europe greatly contribute to the growth of the international cyber security market, the Asian and South East Asian markets are quickly developing.
Similarly, many Arab governments have experienced cyber-attacks in the energy sector. Increasing their defenses will result in spending of approximately US$ 9.5 Billion by 2019.
Cyber Security Stocks are Increasing in Value
Many companies that specialize in cyber security are seeing their stocks increase. This rise is largely due to the perception that cyber-attacks benefit private cyber security companies. Close analysis of the ISE Cyber Security Index reveals that this index has gone up by 22% in 2015 alone. There seems to be a correlation between the number of cyber-attacks and the rise of stocks of companies specializing in cyber security.
Cyber Security Insurance gains Importance
Cyber security insurance has also seen rapid growth. Many insurance companies have begun to offer it to private business. These new policies also cover third-party loss resulting from the cyber-attack, all costs associated with the cyber-attack, extortion, and on-line trade secret protection.
Cyber security is here to stay. The domestic and international markets show tremendous opportunities for growth. If you are interested in learning more about future business opportunities involving cyber security, contact TransLegal or call 703-566-9427.