SA Asks: What is the No. 1 cybersecurity threat facing companies today? (NYSE:SNOW)
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A recent rash of cyberattacks on Corporate America has put cybersecurity back in the spotlight.
UnitedHealth Group (UNH), for example, is still recovering from a ransomware attack on its Change Healthcare unit that ended up paralyzing administrative functions at hospitals, clinics and pharmacies nationwide. The healthcare insurer was forced to pay $22M to a cybercriminal group to regain access to its systems.
Also making headlines in recent months was 23andMe (ME), which experienced a security breach last fall that impacted the data of around 7M of its users. The hackers are believed to have gained access through compromised login credentials.
In late May, it was revealed that data cloud giant Snowflake (NYSE:SNOW) had also been hit, with hackers stealing data from potentially 165M customers using compromised login credentials. And earlier this month, Live Nation (LYV) confirmed that its Ticketmaster unit had also the victim of a cyberattack.
Which brings us to our cybersecurity investor question of the day: What’s the No. 1 cybersecurity threat facing companies right now?
We asked SA analysts Mark Holder of Stone Fox Capital and Julian Lin what they viewed as the most pressing threat.
Mark Holder: While the traditional threat from cybercriminals is stealing sensitive corporate data, such as the credit card numbers and identities of customers, the bigger threat to corporations now is the current trend in ransomware. Cybercriminals are increasingly using ransomware to shut down corporate networks and steal data requiring payments to restore the data and get the corporation back to work. Companies face both a cost in lost sales from network outages and the cost of paying the ransomware.
Cybersecurity Ventures estimates a total annual ransomware cost of $265 billion by 2031, with the average ransomware attack costing at least $10 million now. Rubrik (NYSE:RBRK) recently posted substantial growth playing into this threat area and the stock is one of the more reasonably valued cybersecurity stocks on the market now.
Julian Lin: Generative AI may be increasing the urgency for companies across the board to elevate their cybersecurity protections, creating a potential greenfield for cybersecurity companies to take market share against legacy vendors. This may be helping to explain how some names like CrowdStrike (NASDAQ:CRWD) and Zscaler (NASDAQ:ZS) continue to post incredible top-line growth with seemingly no signs that a deceleration is near.
