Authors
Beijia Ma, Sarbjit Nahal, and Felix Tran
This primer sets out the challenges and opportunities offered by cybersecurity.
There are 80-90mn+ cybersecurity events per year, with close to 400 new threats every minute, and up to 70% of attacks going undetected. All companies are being hit: finance & insurance is the most targeted sector, followed by ICT, manufacturing and retail. Cybersecurity has become a homeland security threat with rapid growth in attacks against critical infrastructure and manufacturing. We believe cybersecurity poses a key threat to the three pillars of creative disruption: the Internet of Things (IoT), the Sharing Economy and Online Services.
The average cost of cybercrimes for US companies reached a record US$12.7mn in 2014, with cybercrime costing the global economy up to US$575bn annually. Cyberattacks are the #1 source of economic assaults against governments, and the #1 source of IP theft for corporates. The rise in disruptive technologies means that we are facing a potential worst-case “Cybergeddon” scenario where the ‘bad guy’ has the permanent advantage. Cybercrime extracts up to 20% of the value created by the internet, meaning that as much as US$3tn of global economic value could be at risk by 2020E.
The global cybersecurity solutions market is estimated at US$75-77bn in 2015 and forecast to reach US$170bn by 2020E. The primer highlights multiple entry points for investors wishing to play the cybersecurity theme. A list of c50 global stocks covered by BofAML that have exposure to cybersecurity-related solutions is also presented.