Cyber incidents are some of the biggest risks companies face in 2021. Approximately 66% of small to medium-sized businesses have experienced a cyberattack in the past 12 months, with their frequency and effectiveness growing. As recently as 2016, a company was the victim of a ransomware attack every 40 seconds. By this year, the frequency had risen to every 11 seconds. That’s why cybersecurity should be a major focus this year.
Cyber is one of the biggest risks today
According to Visual Capitalist, cyberattacks pose a top-three risk to companies in 2021. The threat from cyberattacks ranks below only business interruptions (such as supply chain disruptions) and pandemic outbreaks (including the health of a workforce and potential restrictions on movement).
These challenges have taken on unique features thanks to the pandemic. With the move to remote working, many companies have been keeping more information on the cloud, meaning this data needs to be protected. And with many employees working on non-secure home network connections, work-from-home has opened corporate networks to new vectors of attack.
The most common types of attacks faced by businesses are phishing and social engineering (57%), compromised or stolen devices (33%), and credential theft (30%).
The economic costs to business
According to IBM, data breaches will cost a company, on average, $4.24 million US in 2021. That’s up from $3.86 million US in 2020 and represents the highest average cost in the 17 years IBM has been tracking figures. And the average cost was an additional $1.07 million US higher for companies when remote work was a factor in causing the breach.
Overall, cybercrime will cost the world $6 trillion US in 2021 and as much as $10.5 trillion by 2025, up from $3 trillion US in 2015. Measured as a country, cybercrime would be the world’s third-largest economy after the United States and China and is more costly than all the damage inflicted from natural disasters in a single year.
The reputational damage to business
Beyond the financial cost, there is tremendous reputational damage done to an organization by a successful breach. Cyberattacks often make online platforms, like websites, inaccessible. The negative feelings this engenders in potential clients can be difficult to undo, which is one reason it’s essential to protect your platform.
The Colonial Pipeline attack from May of this year is a prime example of the combined financial and reputational damage cyberattacks can do.
One of the United States’ largest fuel pipelines, the ransomware attack on the Colonial Pipeline shut down its entire network, closed sections of its pipeline, and affected its operations for more than 11 days. Colonial Pipeline carries almost half the gasoline, diesel, and jet fuel used on the US East Coast, and the attack led to temporary price spikes and gas shortages up and down the East Coast. In parts of the US South, three in every four gas stations ran dry.
The work of a hacking group in Russia, the CEO of Colonial later revealed that the company paid the equivalent of $4.4 million in cryptocurrency to the hackers to release its systems.
But cyberattacks don’t just impact business. They can affect any organization that has what hackers consider valuable data, such as private and personal information about individuals.
In March of this year, for example, the Buffalo Public School system in New York state suffered a breach of its records, potentially leaking highly sensitive personal information on its 34,000 students. The ransomware attack on March 12 shut down the entire school system. It caused the cancellation of both remote and in-person instruction until the school system resumed operations tend days later.
Not only are breaches expensive for businesses when they happen, but their costs also have a dampening effect on incentives for innovation and investment. For all these reasons, cybersecurity considerations are more important than ever and should be a primary focus for organizations in 2021 and beyond.
Investing in Cybersecurity with Evolve ETFs
Cybercrime is increasing. As a result, there is expected to be an increase in spending on cyber security over the next five to ten years. This ETF invests in global companies involved in the cyber security industry. For more information visit the fund page here: https://evolveetfs.com/product/cybr/