CYBER SECURITY: "New World... New Problems!"

Free Issue No. 14 from 15.07.2021
It's almost like politics: People have to solve problems that they themselves have caused! Are we perhaps even on the wrong track with the exaggerated digitalisation mania? In the overall view, probably not, but in certain sub-areas the question is quite justified. But as the saying goes: "The trend is your friend" and so it moves inexorably forward. Yes, Corona has even accelerated the entire digitalization development. Home office is modern and makes absolute sense in various respects. UBS and Credit Suisse both confirmed last week that they will stick to this working model on a situational basis; the advantages and disadvantages are well known. Ultimately, the entire corporate world is moving further and further online... online shopping, online banking, computer-controlled investing and much more are just around the corner. Even on farms this trend is gaining ground and thanks to sophisticated robotics and digital data collection (milk quantity, milk quality, feed quantity, etc.) the cows are allowed to enter the milking parlour on their own, just when it suits them to "empty their udders"... and this is by far not the only digital progress in agriculture alone. Item.

With every transaction and every further development that takes place over the internet, the risk of cyber-crime or the importance of cyber-security also increases. Everything is at risk and anyone who thinks any system is safe from hackers is sorely mistaken. Attacks on the digital path are becoming more and more sophisticated, which also noticeably increases the need for digital security solutions and elaborate services. The meaning of the word "cyber" alone would not actually be so breathtaking in comparison to the current cyber attacks: Cyber simply means "control" and comes from the ancient Greek for the seafarer's art of navigating a ship as flawlessly as possible. And the German term "Kybernetik" stands for regulation and message transmission in machines and also living beings. Unfortunately, the actual significance of cyber security is significantly higher and at least the often still lacking awareness is steadily increasing; quite a few business managements have heard and understood the wake-up call in any case, corresponding investments will follow!

But where does cyber security come into play? Just as we protect personal items, be it the locking of a car door, a safe or even the front door, systems connected to the Internet or a network must also be protected. This includes personal data as well as the software and hardware per se. For the IT layman, this topic quickly becomes very confusing. However, you can get a good overview by writing down the areas of a professional security solution... which are: Data Security, Application Security, Endpoint Security, Cloud Security, Mobile Security, Identity Management, Infrastructure and Database Security, Network Security and Operations Security. Of course, there's the physical protection of buildings and critical premises. And, crucially, training and awareness of staff in line with objectives. "Actually, pure new world risk mitigation madness!"

The topic of cyber security is and remains cutting-edge, as evidenced by the latest examples alone: cyber attack with ransomware on oil pipeline in the USA (e.g. paralysing supply), the attack (also ransomware) on supermarket chain in Sweden, which was allegedly triggered by a larger attack on a US software company. This leads us directly to the different types of cyber threats. The aforementioned ransomware locks up data and files and threatens to keep the files locked or even delete them if the hacked company doesn't pay a ransom demand. Then there is the DDoS attack (Distributed Denial of Service Attack), which blocks a company's network or server with excessive data traffic; the system and organization can thus be completely paralyzed. In addition, the "dreaded" malware is often used: This malicious software includes viruses, spyware, Trojan horses, worms and more, which can damage the computer. Malware is often hidden in emails. Then there is, for example, the "man-in-the-middle" attack (torpedoing conversations and data transmission), "phishing" to obtain passwords or credit card data with fake emails, then "social engineering" (personal interactions) or "SQL injection" (actions on vulnerabilities of data-driven applications). These are some of the most well-known practices of hackers.

The challenges are great, especially since the cases published in the media are only a small fraction of attacks. According to estimates, the global market for cyber security is expected to rise to around USD 435 billion by 2030, from a significantly lower USD 120 billion in 2019. This is equivalent to annual growth of over 20%. The growth will be enormous simply because cyber criminals are also constantly evolving technically and thus constantly implementing new methods. This, in turn, forces software vendors and cyber security companies to constantly come up with new solutions to mitigate risk. This constant battle, coupled with the potential mentioned above, leads to interesting considerations in the investment business, in our opinion - and not just since today. In addition, there is a global shortage of experts... there are reportedly up to 2 million cyber security jobs open worldwide.

As is so often the case with new trends, or with companies in the IT space in general, evaluating a single stock or a handful of stocks is no easy task for a specific recommendation. Filtering begins with the core question of whether to analyze and ultimately select an established company or a "newcomer" with upside potential. Blue chips in the cyber security sector, with a focus on US stocks, include JUNIPER NETWORKS, PALO ALTO, NORTONLIFE and INTEL. We would favour the latter as part of a general "IT investment". Those who are afraid of the agony of choosing an individual stock will find a valid alternative in the ETF sector with the MG PRIME CYBER SECURITY (symbol: HACK). Meanwhile, we have opted for a medium-sized but very well established company in the market, which is trusted by more than 60% of the For-tune 100 companies. Read our specific new recommendation on page 11!