Share Prices & Company Research

News

27 January 2022

Cyber-Wars

Our data has become an asset. We use it as currency in exchange for products and services, as internet platforms vie for our attention and collect information on our every move to tailor advertisements and then sell our attention to the highest bidder. When we manage most of our lives online and platforms are making it easier every day to pay for goods or fill out a job application, auto filling and saved credentials are crucial time savers to increase personal productivity. But all this data must be stored somewhere, and someone must protect it.

Cybersecurity is far from a revolutionary industry of this century and one that even predates personal computers (See: Calculating the Risk). But in the 1990’s, the “PC” became part of the furniture, and anti-virus software was a critical insurance policy to evade the inevitable bugs that would render the family computer inoperable. Thirty years on, PC viruses have seemingly vanished into irrelevance, despite our lives becoming increasingly more connected.

Instead of our own PCs, it is our data that is under attack. This valued asset is becoming a fundamental tool for business, political influence, and even warfare, and thus security is mission critical to companies. There have been a multitude of high-profile breaches in the last decade, exposing the vulnerability of firms’ poor risk management.

With data becoming ever more sensitive, the cost of these breaches has risen 60% since 2013. Firms are now seeing this as beyond reputationally damaging and instead part of their financial prudence which has seen rise to a multibillion-dollar market in products and services to protect against these risks. In a survey of business leaders conducted in 2019, cyber incidents topped the list of largest threats to businesses, surpassing both natural catastrophes and new technologies.

So who is going to arm the companies who hold his data? Entering the UK’s markets with a bang, Darktrace is a cybersecurity software company which started as a conception in the minds of Cambridge mathematicians. With such intellectual beginnings, one could assume it is a competent solution (See: Dark Side of the Web). Customers clearly think so, with double digit sales growth in its aptly named ‘immune system’. Though, investors are more cautious; the firm has demonstrated little appetite to invest in research and development, which is crucial when the enemy is finding new ways to break your defences.

Of course, the challenges posed by cybersecurity present great opportunity. No surprise then that the industry has seen a number of new entrants that have crowded the market with supposed solutions to the challenges facing business and governments. Though the complex nature of cybersecurity means searching for the right solution and monitoring its performance is near impossible (See: Lemons, Peaches and Security Breaches). Seemingly, the only answer is for firms to overspend and layer solutions over one another in the hope that one will provide a line of defence in the event of an attack.
 
This article was taken from the November 2021 Market Insight. To subscribe to our investment publications, please visit www.redmayne.co.uk/publications.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. The value of investments and any income derived from them may go down as well as up and you could get back less than you invested.
Cyber-Wars
SUBSCRIBE TO OUR PUBLICATIONS
We offer complimentary investment publications produced by our in-house Investment Research team. Please click here to view our range.
Continuing our Personal Service: View our Latest COVID-19 Update: 17th May 2022
We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.