There is an old adage that there are two types of corporates - those that have been victims of cyber security breaches, and those that don’t know that yet that they have been victims of a breach. This highlights the challenges faced by corporates to put in place efficient cybersecurity defences.
In our report, we assess the both the threats and the opportunity from cybersecurity, examining the market’s structure, dynamics and growth potential. Cybersecurity is a threat to corporate sustainability. Its consideration is a necessary and an important part of what constitutes good governance and sustainability practice. Therefore, we expand on the various ESG aspects we consider in our proprietary risk frameworks.
Cyber security breaches can impact every area of a business, it can lead to the theft of Intellectual Property (IP), ultimately damaging customer trust and brand reputation. These can have major financial repercussions, and negatively impact shareholder value.
Geopolitical threats and increasing sophistication are growing risks
Corporates’ exposure to geopolitical risks are increasing with the growing emergence of nation-state backed attacks, such as the SolarWinds attack. Cyber-attacks are becoming more sophisticated and are increasingly likely to go undetected for long periods of time – highlighting a significant impact for corporates.
Cybersecurity spending is outpacing wider IT investment
Corporate IT spend on cyber security is likely to continue to grow at a sustained pace, we forecast annualised growth of c.+20% to 2030e. This is far outpacing overall annualized corporate IT spending growth of c.+12% over the same period.1
Achieving security coverage will be challenging given market fragmentation and staff shortages
The cybersecurity market is extremely fragmented, with many companies operating in small niches. It is therefore challenging for companies to achieve the right level of security coverage through an integrated approach – an issue exacerbated by bottlenecks from staff shortages of cybersecurity professionals.
Artificial Intelligence (AI) is emerging as a risk and an opportunity
AI is an opportunity for corporates - but is also posing new risks. Automated type of attacks, algorithmic model-based and machine learning are relatively new developments. Most companies believe that they will not be able to respond to cyberattacks without AI2.
Cybersecurity is both a key Governance and Sustainability concern
Cyber security is a core area of risk for companies across all sectors, covering both the Governance and Sustainability of their business models. It is a board level consideration, which is increasingly being understood by the companies we cover.
Cybersecurity is a threat to corporate sustainability. Its consideration is a necessary and an important part of what would constitute good governance and sustainability practice.
The information provided should not be considered a recommendation to purchase or sell any particular security. It should
not be assumed that any of the securities discussed here were, or will prove to be, profitable.
1Source: Martin Currie internal estimates.
2Source: Statista and Cap Gemini, July 2019. Reinventing Cybersecurity with Artificial Intelligence.
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