The digital world is constantly evolving – and with that evolution comes the ever-increasing demand for cybersecurity.
Owing to the onset of the COVID-19 pandemic in 2020, many businesses were forced to go online and many workers had to adopt a remote working positions, which saw a sharp rise in the demand for cybersecurity products.
In October 2022 alone, there were 9.9 million online records breached worldwide.
This sudden boom in cybersecurity products, coupled with the ongoing need to create a safe, secure online environment, has paved the way for lucrative opportunities for investors.
Read on to find out how to invest in Cybersecurity.
Table of Contents
What is Cybersecurity?
Cybersecurity covers several crucial aspects of protecting us online. Predominantly, its key roles are to protect our devices (laptops, desktops, iPads/tablets, smartphones, etc.) and any services (such as online banking) we access via the Internet.
In short, it keeps individuals and organizations safe from cybercrime (blackmail, fraud, et al.), data/privacy breaches, and software hacking.
Those who rely on the Internet for their work and personal endeavors (such as online shopping and social media) rely on cybersecurity to keep us safe from multiple web-based threats.
Why Invest in Cybersecurity?
Are you considering investing in cybersecurity and wondering what’s in it? Here’s what:
According to investment giant Morgan Stanley, there is a “strong and growing demand for security services that could boost cybersecurity stocks for years to come”.
Cyber attacks and hacking are becoming more sophisticated, threatening data privacy. With the invention of cloud technology, coupled with remote/hybrid working, data is profoundly more accessible than ever before, and with that comes an increased need for airtight online security. This means that the cybersecurity stock game is a robust, reliable, and lucrative source for investors because the world is growing more digitized by the day.
So, cybersecurity is where it’s at for those looking for long-term investment opportunities within the tech world.
What Are Cybersecurity Investment Opportunities Available?
For investors looking to boost and build their portfolios by dipping a toe in the cybersecurity investment game, here are a few approaches:
- Consider pure-play single-stock investments. This is geared towards organizations within the following areas: endpoint security providers, defense and aerospace firms, and network security vendors.
- Research thematic exchange-traded funds (ETFs), which focus on gaining exposure from large-scale protection from large global corporations.
- Seek advice from experts as to where to begin.
How to Invest in Cybersecurity?
Although investing in cybersecurity is considered a “megatrend,” there is the capacity for long-term gain. But there are a few steps to take first.
Do Your Research
Identify the cost of cybersecurity. According to Mastercard, many key costs are embedded within IT infrastructure budgets (e.g., data protection, endpoint technologies protection, and network segmentation). They also warn that any functions not considered cybersecurity investments may have negative ramifications.
Familiarise Yourself With Your Subject
This means becoming something of a cybersecurity expert and understanding that the long-term success within cybersecurity investing often lies within the capabilities and knowledge of the investors.
Also, it is wise to bolster external resources (such as a partner) and build your expertise on industry standards (including ISO 27001 and CIS controls).
Get into the Mind of a Hacker
And look at cybersecurity in terms of gaps that cyber attackers could approach. This will help you understand potential threats that have yet to be addressed, as well as understand the security values of the organization.
Be Strategic
And have a foolproof plan.
Once you’ve completed the initial research on where you are at in terms of cybersecurity know-how, it’s time to put together a plan of action.
Things to consider when strategizing include:
- A timeline. It is better to plan and opt for years over months and allow for observation of the ever-evolving industry from both the protection and the hacker’s point of view.
- Evaluate the organization’s business priorities and understand its needs and vulnerabilities. Create objectives and assign them to various points of your carved-out timeline.
- Regularly communicate with all stakeholders.
- Set a realistic budget*. Base your budget on training, IT investments, operational expenses (these will be ongoing), and any additional parties or processes that may need to be implemented. This will allow you to create your digital ecosystem.
*Other things to consider when formulating your budget include factoring in the cost of any potential breaches, which can make or break your investment success. This can help discern whether your risk mitigation will be profitable when pitted against a predicted cost of data breaches.
Threat detection is only a small part of profitable cybersecurity investment. Also, you shouldn’t just consider the data breach cost alone. Factors in the recovery cost include damage to reputation, loss of revenue, loss of business, regulatory fines, and so on.
Investing in Cybersecurity: FAQs
Is cybersecurity a good investment?
As of 2022, cybersecurity investment is considered one of the top investment themes, so it is a good investment if you’re knowledgeable and prepared to invest.
What is the best cybersecurity company to invest in?
According to Investopedia, the best cybersecurity stocks are:
- A10 Networks Incorporation.
- NortonLifeLock Incorporation.
- CACI International Incorporation.
How much should you invest in cybersecurity?
It is advised to spend between 10 – 15% of your IT budget. Many banks and financial companies typically find a sweet spot between 6% and 14%.
Where can I find a cybersecurity fund?
Currently, the largest ETF (exchange-traded fund) in the Cybersecurity niche is the First Trust NASDAQ Cybersecurity ETF CIBR, which has around $5.14 billion in assets. Other valuable contenders, as of 2022, include:
- ETFMG Prime Cyber Security ETF.
- WisdomTree Cybersecurity Fund.
- Global X Cybersecurity ETF.
- iShares Cybersecurity and Tech ETF.
What is the average cost for a data breach in an organization?
In 2021, it was recorded that the average cost was around $4.2 million, which rose 10% from the previous year. 2022 stats have yet to be released.
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Thank you for reading my blog.
If you have any questions or feedback, please leave a comment.
-Charbel Nemnom-
Good informative post on Cybersecurity. Thanks for sharing!