In Focus: Megatrends  

'Advisers cannot ignore cybersecurity in today’s world'

'Advisers cannot ignore cybersecurity in today’s world'

Cybersecurity has become a growing issue over the past decade but has experienced renewed vigour since Russia's invasion on Ukraine in February.

Western businesses have been told to brace themselves for increased attacks amid the possibility that Russia will seek to up the ante as it struggles to cope with tough economic sanctions following its ongoing assault on its neighbouring country.

But cybersecurity also offers investment opportunities as part of a wider so-called 'mega-trend' in a world that is becoming ever more digital.

Christopher Gannatti, global head of research at Wisdom Tree, speaks to FTAdviser In Focus about the developments he is observing in this space, where the investment opportunities lie, and what advisers need to know for their own business's cybersecurity.

FTA: What investment trends are you seeing around cybersecurity and what are they driven by?

CG: We see three major shifts that impact how people interact with data transmission.

One is the uptake of cloud computing. Second is the 'internet of things', meaning that it’s no longer just the phone or the laptop that connects to the internet. Third is the advent of 5G, which encourages more data transmission because of its higher speed.

Investments in cybersecurity therefore need to address each of these things. 

Christopher Gannatti is global head of research at Wisdom Tree

 

 

 

 

 

FTA: How would you describe the mega-trend around cybersecurity?

CG: We have seen the terms ‘theme’ and ‘mega-trend’ used interchangeably in certain circumstances, so in some cases this depends on context.

In contexts where these are not the same, a mega-trend tends to refer to a bigger behavioural shift, but a theme might be a more concentrated component.

Within a broader mega-trend focused on how people transmit and consume data, you might have artificial intelligence, cybersecurity, the internet of things, 5G and cloud computing as underlying themes. 

FTA: Covid has had a big impact on cybersecurity, but has the Ukraine conflict further shifted the parameters in this space? 

CG: There have been significant hacks during the Covid-19 pandemic period, such as Solar Winds and the Colonial Pipeline.

In 2021 hackers managed to insert malicious code into a software product from IT provider SolarWinds, whose client list included 300,000 institutions (Credit: Reuters/Sergio Flores)

Fear is a great motivator; if people see a negative event, they might be inspired to make an investment to lower their future risk.

Ukraine and Russia have associations with cybersecurity, so it makes sense that there is some fear and preparation centred on these concerns. 

FTA: It's impossible to predict the future but it pays to spot opportunities early – what are the opportunities in this space and to what extent are they future-proof?

CG: Securing the ways in which companies and customers access their cloud computing resources is a big area of focus.

You don’t know for sure the exact companies that will do this well over the next five or 10 years, but the data would suggest the growth in this area should be there and should be strong.