The constant rise in cyber-attacks means that robust cybersecurity is no longer a nice-to-have; it's a necessity. This presents growing opportunities for companies in the business of helping organisations to protect themselves.
The statistics detailing the rising threat of cyber-attacks paint a dramatic picture. Both the number of incidents and the financial losses involved are increasing rapidly. According to the International Data Corporation (IDC), more than one-third of companies worldwide experienced a ransomware attack in 2023. On average, 26,000 attacks are carried out by hackers every day - or one every three seconds. The number of deepfakes in circulation - photos or videos that have been digitally altered for malicious purposes - has increased 62-fold in the past five years to 500,000.
The cost of cybercrime is staggering, and is expected to rise from 8 trillion USD in 2023, to 10.5 trillion USD in 2025, which means damages of 300,000 USD every second. If cybercrime were a state, it would be the world's third largest economy, right behind the USA and China.
No wonder Americans are more concerned about their online security than about burglary, assault, or carjacking. This new world feels less safe, with risks like shortages of food and energy, social polarisation, and inequality rising all around us. Against this unsettling backdrop, many of us long for stability, safety, and security.
As Joseph Nye, a professor at Harvard University, once said, "Security is like oxygen - you tend not to notice it until you begin to lose it, but once that occurs, there is nothing else you will think about."
Rapidly advancing digitalisation and an increase in geopolitical tensions are creating fertile ground for cyber-attacks. This is because digitalisation and cloud computing mean that most information is no longer stored locally but online, making it easier for criminals and bad state actors to access sensitive information and exploit it for their own purposes.
In the summer of 2024, when a security update from cybersecurity provider CrowdStrike paralysed 8.5 million Windows devices, the world was brutally reminded of our utter reliance on functioning technology. Long queues formed at many airports, planes were grounded, bank trading systems went on strike, and even hospital surgeries had to be postponed. And all these problems resulted from software designed to prevent hacking!
Recent cyber issues at United Health, and at casino operators MGM and Caesars Entertainment, have shone a spotlight on cybersecurity and concerns that these expensive attacks could increase. Not surprisingly, companies are citing spending on cybersecurity as a top priority (after spending on AI/machine learning), which suggests that this will be one of the last areas to be cut in a downturn.
The global market in cybersecurity is estimated at just under USD 200 billion. It's expanding rapidly, with a forecast compound growth rate between 10 % and 12 % over the next few years. This growth is being driven by the increasing importance of cloud computing and the Internet of Things (IoT). The explosion in so-called "smart" devices, which speak to each other over the internet, is driving growth in security solutions.
New regulations are driving momentum across the entire sector.
With geopolitical tensions and the growing threat of cyberterrorism, governments are also taking steps to encourage large IT companies, service providers and large infrastructure operators to ensure the online security of small businesses and consumers. This is leading to new regulations that are giving the entire sector a boost.
The market for cybersecurity solutions can be divided into two areas: security products and security services. Both aim to counteract or at least to mitigate cyber-attacks. The industry is relatively fragmented, with well-known IT groups as well as pure play providers offering industry-specific solutions.
Security products account for just over half the market, and consist of technologies and software solutions to protect IT systems, data, and networks from unauthorised access. These solutions are used to detect cyber threats and report them to the appropriate authorities. About 70 % of the revenues in this sector are generated by the top ten companies.
Security services companies provide consulting services in the field of cybersecurity. The complexity and diversity of cyber threats, as well as the different IT infrastructures of individual institutions, can require bespoke solutions. Companies in this sector help their clients to select and implement the most suitable software for their specific issues. It's a more fragmented market, with the top ten providers accounting for just 50 % of revenues.
Overall, companies in the cybersecurity sector are likely to benefit from growing sales, as the ongoing spread of cloud computing and IoT, the explosive rise of AI, and heightened geopolitical tensions create fertile ground for cyber-attacks. Since adequate protection is essential for private individuals, companies, and governments alike, we see strong growth potential in the cybersecurity sector for years to come.
