How Is Digital Security Advancing in the 21st Century?
Cyberattacks are a growing threat to our society. New technologies can help enhance digital security and thus present exciting investment opportunities.
Civil protection is crucially important to a society’s sense of security. The technologies available to protect the general populace have developed at a dramatic pace in recent years, leading to the emergence of new surveillance methods, such as drones. In addition, digitalization and the networking of systems now make it possible to carry out cross-border criminal identity searches with the click of a mouse.
But the rise of digitalization has a flip side: Attacks on computer systems can now come from anywhere in the world. Cybercrime knows no borders, and is increasingly posing a threat to our society.
Technology As Key Driver of Civil Defense
More than half a century has passed since social psychologist Abraham Maslow argued that mankind’s need for security was crucial. In his “hierarchy of needs,” which was elaborated in the middle of the 20th century, he positioned the aspect of safety and security directly after the fulfillment of physical needs.1 This is something we can understand intuitively; our bodies cannot function without sustenance, while peaceful coexistence would be difficult to achieve in the absence of rules, laws, and legislative guardians.
In the area of civil security, society has historically gone to great lengths to protect its citizens. The police, fire service, and army represent the traditional state institutions tasked with ensuring protection of the civil population. Fast forward to the modern era, and “civil defense technology” has taken on an increasingly important role.
Civil defense technology encompasses explosives detection, infrastructure protection, and the surveillance of public places, as well as areas in which IT hardware and software such as drones, robots, and artificial intelligence can be deployed. Researchers at Credit Suisse are expecting significant growth in these technologies.
The Boundary between Surveillance and Protection of Privacy
The ever-changing threat situations in the public sphere are being countered with ever-smarter technological systems. For example, body scanners are now standard equipment at many airports, and explosive detection devices can establish within a matter of seconds whether a passenger has recently handled explosive substances.
Indeed, in some cases, the technological possibilities actually exceed what is politically desirable. Video surveillance, combined with facial recognition systems in public spaces, might contribute to security, but it also comes into conflict with protection of the individual’s private sphere. Political processes and choices between conflicting rights will ultimately determine the level of protection a society wants.
Given the increasing prevalence of attacks on Western society, discussions of this kind can quickly lead to increased surveillance of public places. In the area of video surveillance alone, global market research and consultancy firm MarketsandMarkets is expecting a rise in the total market volume from the current level of just over USD 30 billion to more than USD 75 billion by 2022.2
Gearing Up for Digital Attacks
One aspect that never occurred to Abraham Maslow in the last century is becoming a modern reality thanks to increasing interconnectedness and digitalization: Security on a local level now faces a new type of global threat – cybercrime. This can originate in any part of the world and affect any device with an internet connection in a whole host of ways.
Recent global cyberattacks have also made clear what kind of challenges we face in an increasingly digitalized world based on superconnectivity. Typically these do not constitute cases of life or death, but they do involve personal data and information or – in the case of companies – the preservation of business activities and reputations.
Cyberattacks Such As Phishing Are on the Rise around the World and Are Increasingly Elaborate
As a rule, cyberattacks have one objective: to gain access to confidential data such as credit card information, passwords, or account information, and to pro t unlawfully as a result. So-called phishing emails, or fraudulent emails from supposedly known or trusted sources, have become part of everyday life for many people.
But more worrying still is the increasing evidence that these attacks are becoming ever more refined: Whereas in the past phishing emails could usually be identified by spelling errors or patently bogus logos, today’s equivalents are often highly professional and therefore impossible to identify as fraudulent.
It comes as no surprise that the corresponding statistics make for striking reading: According to estimates, the economic damage attributable to cybercrime amounted to more than USD 650 billion in 2016. Within the space of a single year, some 4,000 hacker attacks on companies were recorded, with more than 800 million people falling victim to cybercrime.3 Fortunately, major attacks on public institutions such as hospitals, power stations, and even military installations, have, with a few exceptions, proved largely unsuccessful up until now.
Positive Outlook for the Cybertechnology Industry
Credit Suisse Research is expecting the rise in internet security expenditure to significantly outstrip overall IT expenditure growth. According to Statista, a German website for statistical evaluations, global expenditure on IT security products amounted to USD 122.5 billion in 2016. This is consistent with a year-on-year rise of 8.6%. However, this reflects a mere 2.4% of all global IT expenditure. Statista predicts that the market for cybersecurity will expand at a rate of 10% annually over the next five years.
However, the underlying sub-markets are highly fragmented, and this is also true of their growth prospects. For example, the end consumer market for security products is expected to increase by just 5%, as so many solutions within this segment of the market are offered free of charge.4 By contrast, the rate of growth for individual security consultancy, security implementation, and security outsourcing is expected to be between 8% and 16% annually.5 In the network security market, the focus of investors remains on firewalls, as this market is continuing to expand strongly at a rate of 13%.6
Despite superior and more innovative security measures, civil and digital threats are likely to remain among the most important social issues. Market drivers on the civil side include above all population growth and migration, but also more rigorous regulation and the greater demands made of security in the modern world. On the digital side, the focus lies on the increasing number of devices with an internet connection and networking capabilities, as well as on the unlimited possibilities that the internet offers not just to private individuals and companies, but also to criminals.