#WhyESGMatters The ESG impact of cyber crime | Article – HSBC VisionGo

In this issue of #WhyESGMatters, we discuss the increasing need for companies and industries to protect themselves from cyber threats, and more.
Finance  ·    ·  6 mins read

The ESG impact of cyber crime

The speed and breadth of technological adoption highlights the ease of doing things digitally. However, as the global economy becomes more interconnected, countries, companies and individuals face increased risks of cyber crimes. The cost of these attacks globally is expected to reach USD10trn by 2025, up from USD6trn today and equivalent in size to the world’s third largest economy. While spending to counter these activities is forecasted to grow 7.7% annually, this may not be enough, particularly if digitisation accelerates faster than expected in a post-pandemic world.

In this issue of #WhyESGMatters, we discuss the increasing need for companies and industries to protect themselves from cyber threats. We also delve into the related Environmental, Social and Governance (ESG) issues, which are rising in signifi cance for companies, and highlight the industries that set to benefi t from the rise of cybersecurity spend.

1. The growing need for cybersecurity

As digitisation grows, so too will digital vulnerabilities, allowing damages from cyber crime to grow. The threat of cyber crime can come from a multitude of sources including hackers, insiders, competitors, industrial spies, organised crime groups, nation states and terrorists.

The intention behind cyber crime is often financial gain, but there are other motives too, including theft and spying. Common types of attacks include:

Figure 1 highlights the implications of cybersecurity from an ESG perspective (left) and other factors relevant for investors (right).

With the threat of cyber crime rising, spending to counter it could reach USD270bn per year by 2026 (see Figure 2).



2. ESG implications from cybersecurity

Cybersecurity threats touch upon all three components of ESG, with implications from disrupted connections to national infrastructure, to loss of confidence in technology and reputational damage to firms. Investors should take note of these impacts, as discussed below.

3. Industries providing cybersecurity solutions

In this section, we look at industries with growing cybersecurity revenues - grouped into either managed security service providers or cyber insurers. These are also opportunities for investors to explore.

8. Finaria.it

4. Conclusion

With the rapid increase in digitisation leading to a growing threat of cyber crime, spending on cybersecurity across industries is set to rise. This will help companies and their investors to protect against ESG risks, which include infrastructure outages, loss of personal data and reputational damage.

Investors should also be aware of industries that are set to benefit from companies boosting their defenses  against cybercrime, such as IT service companies, telecoms and cloud service providers. With clear indicators of continued growth in cybersecurity, this will offer investors more opportunities within the technology theme.

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