Geopolitical & Investment Cycles

Cyberattacks Play into Escalating War Cycles

by John Isaacson | July 14, 2017

Cybersecurity has become a booming industry, especially in the wake of May’s WannaCry ransomware attack and last month’s Nuclear 17 attack on more than a dozen U.S. nuclear plants.
The WannaCry outbreak infected more than 200,000 computers across more than 150 countries and came with an estimated price tag of $4 billion.
And this growing threat is very real.
In late June, the Nuclear 17 attack put key U.S. government agencies – including the FBI, Homeland Security and National Security Agency – in hot pursuit of answers.
After all, it’s easy to see how damaging an attack on America’s power grid could be.

The fact is cybersecurity has become a big deal for business. And here’s why…

For example, the classic denial-of-service attack, or DoS, can make a machine or network resource unavailable to intended users.
And one of the most devastating types of DoS is called the distributed-denial-of-service attack, or DDoS.
With a DDoS, hackers can shut down an online service by overwhelming it with traffic from multiple sources.

Shockingly, these wicked DDoS attacks alone have become so common that many digital-security experts consider them Cyber Enemy No. 1.

Recent figures from Cisco Systems estimated that global distributed denial-of-service (DDoS) attacks surged 172% in 2016.
And they anticipate this figure to mushroom by 2.5 times to 3.1 million by 2021. And that might be conservative.

Hackers — both criminals and government operatives — reach out of the “dark web” to attack businesses worldwide.

Meanwhile, longtime leader in DDoS defense, Nexusguard, saw a 380% increase in DDoS attacks in the first-quarter of this year compared with the same period in 2016.
Clearly, data breaches are becoming more frequent … and more expensive.
Research by IBM and the Ponemon Institute showed the average cost of a U.S. data breach in 2014 was $5.85 million. For this year, that number is up 32% to $7.35 million.
Looking at the problem globally, business insurer Hiscox Ltd. estimates cybercrime costs at more than $450 billion in 2016.

Who’s behind these attacks?

There are large numbers of people on the “dark web” plotting different shakedown plots that do not have our best interests in mind. And it’s become easier with cutting-edge technology that is widely accessible.
But some of the more ominous hacking groups are “state sponsored” and have government backing. Russia for example has been blamed for previous cyberattacks, including two attacks on Ukraine’s electric grid and interference with the 2016 U.S. presidential election.
According to sources in government circles, the Russians also possess digital weapons capable of disrupting the electric grids of rival nations.

Even worse is this all dovetails with intensifying war cycles. These cybersecurity breeches go hand and glove with espionage and outright loss of liberty.

And it’s easy to see why other nations with limited military forces might re-direct efforts toward cyberattacks in hopes of destabilizing a region – or at the very least inflicting damage.
And what’s so insidious is that this was exactly what my former colleague Larry Edelson spoke about. A cyberattack could disrupt key U.S. infrastructure, like communication networks, transportation systems, electric power grids or storage for oil and gas.

What can you do?

You can take advantage of this growing threat and the demand for advanced security systems. Just invest in prominent players within the space.
And that’s why I’m looking to accumulate shares of FireEye Inc. (FEYE), Fortinet Inc. (FTNT), and Symantec Corp. (SYMC) on weakness.
Cheers,
John Isaacson