How US equities might fare under Biden
On 20 January 2021, Joe Biden will be inaugurated as the 46th president of the United States. One...
October is Cyber Security Awareness month and, let’s face it, most of us could do with tightening up on our online practices.
Rather scarily, it’s estimated that 100 ransomware attacks are taking place every 20 minutes. The attacks are becoming more frequent, more damaging and more costly: the estimated annual cost of cybercrime is expected to exceed $6 trillion by next year.
By 2025 there will be 100 billion ‘Internet of Things’ connected devices, all in desperate need of cyber security. So it is perhaps no surprise that global cyber security spending is expected to reach over $1 trillion.
As the campaign says: if you connect it, protect it, and this year that slogan is perhaps more important than ever. According to a report by the Office for National Statistics, the global pandemic has resulted in almost 40% of the UK workforce working at home instead of the office. While this has meant many businesses have still been able to operate and serve their customers, it does come with extra risks – not least our online security.
As Johan van der Biest, fund manager at Candriam, points out: “The emergence of COVID-19 has certainly accelerated the corporate necessity of digital transformation. Large companies were suddenly confronted with thousands of employees logging in from thousands of home networks from thousands of different devices. In those first months of COVID-19, almost all cybersecurity providers voiced a significant uptick in demand for their products as companies scrambled to safely guarantee continuity in their day-to-day operations confronted by a new distributed reality where everyone was working from home. Some tech insiders believe that COVID-19 has pulled the real inflection point of digital transformation 5-10 years forward.”
The investment opportunities in this area are diverse and interesting. While you may initially think of new technologies, there are also socially responsible investing and insurance aspects to consider. We asked some Elite Rated managers their thoughts:
Jeremy Gleeson, manager of AXA Framlington Global Technology, said: “Cybersecurity is big business and it’s getting more widespread – possibly even more so since Lockdown conditions began, as criminals sought to take advantage of an environment where many employees were working remotely from home. According to a CapGemini report written in April, there had been a 667% increase in Spear-phishing email attacks related to Covid-19 since the end of February.
“Long gone are the days that the average hacker was a stand-alone person, trying to breach an enterprise’s network for fun or writing a virus in order to gain notoriety. Nowadays, the perpetrators behind cyber-attacks can be crime syndicates, rival corporations or even government sponsored, meaning the resources they have behind them are much more meaningful. Also, the types of attack are varied, for example: Distributed Denial of Service (DDoS); Phishing and Spear-phishing; Malware; IP Spoofing, Spam, Zero Day Exploits etc. and the location of the attacks can come from anywhere in the world.
“There is no “silver bullet” when it comes to protecting an enterprise against cyber-attacks. CIO’s and CISO’s need to layer on solutions from different vendors in order to protect themselves from being vulnerable to an attack.
“Hence, we take a portfolio approach to investing in several companies involved in the sector, each of whom might provide specialist product to ward off certain types of malicious activity, for example: ZScaler (cloud-based security); Palo Alto Networks (firewalls); ProofPoint (email); Akamai (DDoS); Rapid7 (SecOps and Vulnerability Management); SailPoint (identity governance); Okta (single sign on) are some of our investments in this space.”
Matthew Page, co-manager of Guinness Global Innovators fund, added: “In 2017, IBM noted that 90% of all data had been created in the last two years. And it hasn’t slowed there: increasingly connected devices, remote work environments and cloud-based storage and computing has resulted in more sophisticated networking hardware and software, as well as more robust cyber security systems.
“With data privacy ever more at the forefront of consumers’ minds as a result of firms increasingly being targeted by cyber-attacks, firms such as Cisco and Fortinet or Checkpoint Software, are benefitting from the growing need for businesses to protect their consumers’ data.
“From an investment perspective, increasing regulations aimed at data security – such as GDPR in Europe – and the long-term reputational damage a data breach can have on a business, are turning high-end cyber security systems into a must-have that are more immune to budget cuts.”
Nick Martin, manager of Polar Capital Global Insurance fund, commented: “Cyber insurers play a pivotal role in the provision of cyber security. Their service offering is centred around loss prevention, which is more highly valued by customers than many traditional insurance products that focus more on post-loss reimbursement.
“With the increase in people now working from home post COVID-19, the role of cyber insurance has become ever more important. Examples of companies we see as well placed in this growing market include Hiscox, Beazley and Chubb.”
Chris Ford, manager of Smith & Williamson Artificial Intelligence fund, concluded: “The advent of quantum computing raises some significant security questions. The sheer weight of processing capacity delivered by quantum facilities calls into question some of the traditional means of securing systems built using classical principles. These quantum systems will, likewise, need to be secured themselves. Ongoing technological innovation requires that cyber security solutions remain at the leading edge. As we move into the era of quantum computing, that requirement has never been more pressing.”
If you would like some help and advice for staying safe at home, at work, online and on the move, Fidelity has put together this useful guide.