Is cybersecurity an investment opportunity?

Tendersetter

9:00 am

30 September 2020

More and more people are growing accustomed to working from home and adapting to virtual workplaces. The need for stable, fast and – especially – secure internet connections is rising at the same rate. Today’s digital infrastructure must be functional, resistant and impenetrable, as it is increasingly stressed. These circumstances have highlighted new risks and vulnerabilities in technological infrastructure that hackers could exploit to mount cyberattacks.

The cybersecurity industry

The cybersecurity industry has been rapidly expanding for several years.

In recent years, this expansion is mainly due to the explosion of the Internet of Things, which has given us not only connected tablets and smartphones but also household appliances, cars and wearable devices.

On top of this, the financial sector is also migrating to digital technologies. Home banking, followed by mobile banking, has paved the way for growth in the fintech sector, triggering a shift in our habits, which are progressively going digital. Cash will gradually become increasingly rare for payments and investments, making way for alternative digital payment systems.

This creates an enormous need for cybersecurity for users and companies.

People are now becoming accustomed to remote and smart working around the world. Working from home means protecting the sensitive or secret data of a company and of its employees, customers and suppliers with safeguards suitable for home devices and connections – rather than company devices and connections – which did not previously need the same level of cybersecurity.

Prospects for cybersecurity

It follows that, as remote working drives digital business models, it will become increasingly necessary for people and businesses to invest in cybersecurity.

According to Statista, businesses currently spend roughly $184 billion in the world, and this figure could grow to $250 billion by 2023. Moreover, this estimate pre-dates the pandemic, which further accelerated the spread of remote working. 

The Foxberry Cybersecurity & Data Privacy Index – USD, the benchmark index for cybersecurity investments, showed a return index of 30.1%, versus 14% in 2018. During the Covid-19 crisis, the index behaved more or less like the Nasdaq 100, plummeting rapidly and recovering just as quickly in the space of a few weeks. On average, over the past 5 years, the industry has grown 10% YoY and its growth is now expected to speed up.

The impact of Covid-19 on cybersecurity

The Covid-19 pandemic suddenly shifted priorities to cybersecurity: it immediately became a top priority for companies. As employees suddenly found themselves in a work-from-home model, chief information-security officers (CISOs) were forced to adjust, pivoting from working on routine tasks and toward long-term goals to establishing secure connections for newly minted remote workforces. CISOs also took steps to bolster business-facing operations and e-commerce after a surge in online shopping during pandemic lockdowns.

The same challenges that cybersecurity organizations face have spilled over to technology providers. These companies have rapidly pivoted to keep up with customers’ shifting needs and to institute new ways of doing business.

All this obviously affects companies’ budgets and investments in unexpected ways, with the elimination of plans and strategies designed at the start of the year. According to McKinsey research, the crisis-inspired security measures will remain top budget priorities in the third and fourth quarters of 2020.

Companies’ actions to maintain business continuity and protect remote workers will likely have ramifications for cybersecurity providers over 12 to 18 months. Plans for permanent remote work, phased offices reopening, and limited interaction with non-essential visitors will boost interest in some cybersecurity products and services.

CISOs that acted quickly to reorient cybersecurity to cover remote workers and business continuity during the COVID-19 crisis must now prepare for the future. Such preparation includes determining how to allocate limited cybersecurity budgets to support additional modifications. Cybersecurity providers must shift their approaches, becoming trusted partners to help customers maximize their spending while preparing for the “next normal”.

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