As cybercrimes continue to grow across the globe, there is a much bigger need for ways to deal with them.
MarketsandMarkets has forecasted that the cybersecurity industry will grow from 2018’s $15.66 billion to more than $31 billion by 2023. For investors, there are a number of cybersecurity stocks that you can get through ETFs, or exchange-traded funds, instead of just investing in a couple stocks.
Cybercrime is growing highly sophisticated, and it is targeting both companies and people.
The cybersecurity industry is already worth billions, and this is expected to double over the next five years.
Cybercrime is unyielding, and it is unlikely to slow down anytime soon. It is way too easy for people to do, and it is highly rewarding. On top of that, the chances of getting caught when doing these types of crimes are quite low. Simply put, identity theft is the easiest crime to commit and the hardest to get caught for.
Those who are skilled cybercriminals are able to match, and in many cases, do better, than the most advanced IT companies out there. They stay in step, and sometimes a step ahead, of the people who are trying to stop them. These criminals move quickly, and they aren’t showing signs of stopping.
As we said, cybercrime is a very easy crime to commit, and one of the reasons for this is that so many people simply don’t take the steps to protect themselves. Consumers and businesses function in what I believe is a state of denial; they want to believe “it can’t happen to me” and they are dead wrong. This is basically the equivalent of someone leaving their front door open for burglars. Cybercrime is also not expensive to commit, but it has a huge return on any investment that these criminals make into their craft. In other words, it has a high risk-to-payoff ratio, meaning it is not very risky, but it has a really high payout. This means that a good cybercriminal can make thousands and thousands of dollars, and in some cases millions, with very little risk of getting caught.
When you think of the big cybercrimes, from Target and Equifax to Ashley Madison, Yahoo, Facebook, and Home Depot, none of the people responsible have yet to be caught, and they have likely made a ton of money. Though law enforcement agencies can be quite skillful and aggressive in pursuing a cybercriminal, many operate outside of their reach, such as overseas.
Here are some of the trends in cybercrime that can further drive the demand for better cyber security:
Cyber Attacks on Colleges: Iranian hackers allegedly attacked hundreds of colleges and universities around the world, as well as more than 50 public and private companies.
More Data Breaches Than Ever Before: Through the middle of 2018, there were already more than 600 data breaches that had occurred, which is approximately 22 million pieces of data. In 2017, there were more than 1300 data breaches.
Cyber Attacks are Often State-Sponsored: Iran, North Korea, and Russia have all been charged and found guilty of attacking businesses and governments.
Cyber Liability Insurance: There is also a great increase in the number of cyber liability insurance out there, and many major insurance companies are starting to offer it. This is the fastest growth segment in all insurance.
With the prevalence of cybercrime getting more common every day, the demand for these services is also on the rise. In fact, it is estimated that damages from cybercrimes will cost approximately $6 trillion each year by 2021. This is up from 2015’s $3 trillion. This means that the companies out there help to protect against cybercrime and those who help in stopping these crimes are in very high demand.
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Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The fund is concentrated in technology-related companies that face intense competition, both domestically and internationally, which may have an adverse effect on profit margins. Such companies may have limited product lines, markets, financial resources or personnel. The products of such companies may face obsolescence due to rapid technological developments, frequent new product introduction, unpredictable changes in growth rates, competition for the services of qualified personnel, and competition from foreign competitors with lower production costs. Technology companies are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Funds are non-diversified, meaning they may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Diversification does not assure a profit or protect against a loss in a declining market. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Cyber Defense Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Cyber Defense Index.
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