Facing the impact of the Sony scandal
To say that the hacking of Sony Entertainment was not the company’s finest hour would be an understatement. Along with four unreleased films and the personal data of 47,000 employees, the hackers exposed several gossip columns worth of information about actor scandals and back-stabbings. The online world is proving to be a risky place. Can we ever trust Sony and other corporations and governments again?
After the hacking on November 24, the stock crashed, losing over 10% in just one week. What’s interesting though is that market trends dictate that the company will in all likelihood recover.
This may be the worst incident that’s gone viral in a while, but it’s not the first time sensitive data has been leaked and it won’t be the last. Where customer demand for the product has been strong and companies have promised to tighten up their security, they have typically enjoyed a rebound in the markets. To Sony’s advantage is the fact that it stores relatively small amounts of consumer financial information, and the pictures division which fell victim to the cyber-attack accounts for only 10% of the company’s overall sales.
However, the Sony scandal is the most recent in a line of attacks on banks and public corporations that are starting to sow panic among the public. Customers may be able to forgive their favourite brands once, but our patience won’t last forever. Economic strength requires trust. Governments, international conglomerates, and even small and medium sized business owners are realising that they have to step up their game.
It’s no coincidence that within weeks of Washington blaming North Korea for the Sony attack, President Obama will outline his initiatives to protect American businesses from cyber-crimes. In his State of the Union address on January 20, Obama is expected to discuss identity theft, privacy and cybersecurity. On a much smaller scale, admittedly, Banc De Binary plans to host a conference here in Limassol in a couple of months on the same issue. We want to lead by example and raise awareness and standards in the financial-tech sector.
For investors wondering how to capitalise on this trend, it’s a solid estimation that many firms providing security software, hardware and services will be soaring high this year. Firms like FireEye, CyberArk,
Proofpoint, and LifeLock were enjoying gains in December and the trend is likely to continue. For broad access to the market, you could have a look at the new ISE Cybersecurity Exchange Traded Fund which currently holds 30 companies in the industry.
As our world becomes ever more connected, and our phones and apps and online accounts hold increasing amounts of data, internet security will prove vital in order to enable technological advances in the future. It’s a topic that has finally won centrestage and isn’t leaving us any time soon.