Cyberattacks have been making headlines as several notable companies have recently experienced high-profile data breaches. With the increasing number of incidents, we take a look at the financial fallout by those affected, and the growth of the cybersecurity industry.
Last year could have been dubbed the year of cyberattacks – Microsoft ($MSFT) got hacked by Lapsus$, Crypto.com had US$33m of cryptocurrency stolen, Australian telco, Optus, had its database breached, and CashApp ($SQ) experienced the bitterness of an ex-employee.
The number of incidents have been enough for Australia to say that cyber espionage is on track to beat terrorism as the country’s biggest security threat in the next five years. In New Zealand, 8,831 cyberattacks were reported in 2021, an increase of 13% from the previous year. McKinsey estimates the damage from cyberattacks to amount to US$10.5 trillion annually by 2025, increasing 300% from 2015. But what about the targets of these cyberattacks?
Companies who have been impacted by cyberattacks experience not just reputational damage, but also service outage, revenue losses, lawsuits, regulatory fines and unsurprisingly, a large decline in share price.
Australian healthcare company, Medibank ($MPL), for example, lost over 20% in its share price the day it publicly announced that customer’s personal information had been stolen in a hack. Not only that, it currently has a class-action lawsuit against it that could see its 9.7 million customers compensated up to A$20,000 each, furthering its losses after already having several customers cancel their policy.
Another example is British Airways. They experienced one of the biggest data breaches the UK had ever seen. With hackers obtaining credit card information of almost 380,000 customers, the UK’s Information Commissioner’s Office (ICO) handed out its biggest ever fine of £183.4m to the airline before later reducing it to £20m.
The cybersecurity industry has been growing rapidly as a result. Analysts forecast global corporate spending for cybersecurity to increase 11.3% in 2023 to US$188.3b. Massive corporations including Alphabet ($GOOGL) have gone as far as fully acquiring cybersecurity firms in order to protect its customers; and itself. Consequently, cybersecurity companies such as CrowdStrike ($CRWD) and Okta ($OKTA) have reported revenue increases of 54% and 37% respectively, eclipsing previous analyst estimates.
The internet is only becoming a more complex place and our reliance on secure data will only intensify. As an investor, would you invest in cybersecurity?
At Stake, we prioritise our customers' security. In late 2022, we upgraded our security infrastructure by implementing 2FA through SMS verification. This added an extra layer of protection, ensuring key actions such as logging in or withdrawing funds could only be performed after successful verification. For the highest level of security, we recommend using an authenticator app such as Google Authenticator or Authy.