Transcript
Speaker: Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
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Speaker: This podcast was recorded for publication on the 5th of December 2024 by HSBC Global Research.
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Speaker: Hello, I'm Aline Van Dyne in New York.
Speaker: From mobile phones to cloud computing, we are all increasingly reliant on technology.
Speaker: But more devices and more data means a greater risk from hacks and cybercrime.
Speaker: In response to this, the cybersecurity industry is booming.
Speaker: Steve Bursey, our head of US technology research, has just put out a major new report on the topic, and he joins me now to talk about this in more detail.
Speaker: Steve, welcome to the podcast.
Speaker: Hi, and thanks for hosting me.
Speaker: So let's start with some context around this, some figures.
Speaker: Has cybercrime actually increased and by how much?
Speaker: I think we're all aware and kind of watching our systems as we log into the internet and such.
Speaker: But, you know, the FBI has done studies on this.
Speaker: They estimate that in 2023,
Speaker: there were about 880 billion attacks globally with some $12.5 billion in losses.
Speaker: So it is a big deal.
Speaker: There's a lot of attacks, a lot of losses, and it's actually getting worse.
Speaker: So there's also some estimates out there that have looked at attacks in 2024.
Speaker: And unfortunately, they put that at about a
Speaker: 30% increase in weekly cyber attacks globally.
Speaker: Wow, those figures are quite staggering.
Speaker: And how much, Steve, are companies globally spending on trying to counter this?
Speaker: You know, on a global cyber security spending, 2024, it's actually growing at about 12% and it's looking like 200 to 250 billion USD.
Speaker: is the estimate on global cybersecurity spending.
Speaker: So it's a big number.
Speaker: Let's delve into the reasons for the increases in attacks.
Speaker: What are the main drivers?
Speaker: Sure.
Speaker: So there are a few things that are driving this.
Speaker: I think we all know work from home is out there and is popular.
Speaker: That just opens up a whole new set of threat vectors.
Speaker: It's difficult to kind of control these endpoints.
Speaker: Users have their own way of working.
Speaker: They're on their own personal systems.
Speaker: So that is a source.
Speaker: As well, conflict in EU, that has kind of opened the doors for state actors.
Speaker: and also residents of those regions.
Speaker: It's a green flag or a green light for them to go at it.
Speaker: So we've seen increase in state actors and regions off of that conflict.
Speaker: And also the big one is AI.
Speaker: And this one, I don't want to say sinister, but it's sinister.
Speaker: It's very smart.
Speaker: It's relentless.
Speaker: It never sleeps.
Speaker: It used to be
Speaker: You know, hackers in some country in a dark room, maybe late at night, trying to get into your system, but AI never sleeps.
Speaker: So the amount of attacks that AI can do, because it's a 24-hour around-the-clock attack,
Speaker: threat vector and the sophistication of AI is just through the roof.
Speaker: We've all seen those emails asking for money to release that will that someone left us billions of dollars.
Speaker: But AI is much smarter than that.
Speaker: And it looks real with AI.
Speaker: Is AI also helping to combat attacks?
Speaker: Absolutely.
Speaker: So it's always a point counterpoint type of situation.
Speaker: So not only are the threat actors using AI, but the good guys are using it as well.
Speaker: So many companies are embedding AI into their opportunities.
Speaker: And as far as companies go, they've usually had thousands of threats per day that they were looking at.
Speaker: And it's just a personnel issue where they just don't have enough employees to go through the large quantity of attacks.
Speaker: So they're using AI to better filter, to better identify actual threats versus maybe some false alarms.
Speaker: So they're getting a better grip on it, but it's also more intelligent.
Speaker: The other side of that too is it's finding these threats faster, minimizing the amount of damage that can be done once a threat enters your network.
Speaker: If it's quickly, if that fire is quickly put out, it lessens the damage done.
Speaker: What are some of the biggest areas of spend in cybersecurity?
Speaker: And just explain to us what types of attacks they're trying to counter in these areas.
Speaker: So cloud security has the biggest percentage of spend, about 65%.
Speaker: It's growing at actually about 12% per year.
Speaker: So it's not only is it big, but it's one of the faster growings, only topped by maybe endpoint security at growing at 13%.
Speaker: But cloud security is basically all of the corporate applications that have been moved to these public clouds and private clouds.
Speaker: But, you know, so we're talking about the Microsoft Azure type of cloud situation, Amazon cloud, Google cloud.
Speaker: It's the corporate applications that live in those environments.
Speaker: And because it's a public cloud, it's exposed to the public.
Speaker: And these threat actors try to access your corporate systems versus if you rewind the clock, call it 15 years ago, all of your corporate applications were really inside of your network.
Speaker: protected by your firewalls was much more difficult for actors to get in.
Speaker: But out in the cloud, there's just a different set of threat vectors that have to be thought about.
Speaker: And hence, we're building these new technologies out and hence the spend about 65% of all security spend on cloud security.
Speaker: Another big one would be endpoint security.
Speaker: It's only about 6% of the spend right now, so growing.
Speaker: And it's growing at about 13%, so growing the fastest of all of the sectors.
Speaker: But this is all about, endpoint security is about device protection.
Speaker: So these are your personal phones, tablets, PCs, devices.
Speaker: that and also your corporate phones, PCs, tablets.
Speaker: So it's the explosion of devices that people are using to access these corporate systems is just through the roof and there's new threat vectors for each one of those devices.
Speaker: It's a new point where a hacker can get into the system.
Speaker: So these devices need to be protected
Speaker: And that's growing at about 13% on the endpoint security.
Speaker: Interesting, Steve.
Speaker: And now there are a few big listed companies in this business, but there are thousands of smaller players, right?
Speaker: That's right.
Speaker: So we cover about four in our coverage, but there are hundreds of publicly traded security companies.
Speaker: all over the planet on various markets.
Speaker: But the US tends to be the dominant player in the software sector.
Speaker: We think there's over 3000 vendors attacking and putting out solutions for cybersecurity.
Speaker: So that really opens up a big opportunity for the big public companies
Speaker: for consolidation opportunities and picking up just good technology.
Speaker: And we see that a lot.
Speaker: It tends to be a very acquisitive sector and some good stuff coming out to fight against these new threats.
Speaker: Yeah, I know in your report, which is absolutely jam-packed with data, there's one interesting statistic, for example, that a lot of companies use over 50 cybersecurity tools.
Speaker: So I guess companies are using lots of different vendors, and that explains why there are so many players in the US.
Speaker: That's right.
Speaker: And there is a bit of a consolidation to reduce the amount of
Speaker: products that you're using.
Speaker: Because you could imagine if you have 50 systems, it's bad enough to check Outlook for a worker.
Speaker: Imagine if you had 50 Outlooks that you had to check your email each day and looking for threats, flags that someone's trying to attack your systems.
Speaker: So there is an effort to try and consolidate onto platforms.
Speaker: So we talk about platform consolidation in the report as well.
Speaker: So Steve, let's end on something practical for our listeners.
Speaker: Any top tips on how to deal with some of these increased threats that we face, not just in the workplace, but also personally?
Speaker: Sure.
Speaker: I know my wife is guilty for one of these, but the biggest one I would recommend is not reusing passwords.
Speaker: So, you know...
Speaker: blue water on every one of your systems as a password is not a great practice because if they, if hackers get into one system and find that password, they'll try other systems like banks and brokerage accounts, and they'll try that password.
Speaker: And many times your username is simply your name or an initial in your name.
Speaker: you might wanna have a username that someone can't think directly as something that you might have chose as a username.
Speaker: So a unique username that isn't easily identifiable and don't reuse passwords.
Speaker: But the other thing is with AI now coming out, it's pretty daunting, the technology, and it's very sophisticated.
Speaker: AI can capture just about three seconds of your voice.
Speaker: So say my voice on this podcast.
Speaker: It needs three seconds, and then it can really replicate the reflections, the sound.
Speaker: You cannot tell if this was Steve Bercy doing this podcast for the last several minutes.
Speaker: So you need a safe word.
Speaker: So if one of your family members calls you on vacation, and sometimes it's easy to identify that you're on vacation due to Facebook and such, if they call you on vacation and ask for $3,000 because they lost
Speaker: their passport and wallet, you might wanna have a unique safe word, a word that only you know that the internet, it's not been published anywhere, AI can't find it by scrubbing your profile.
Speaker: So a unique word that only you agree on
Speaker: And the trick is to do this prior to going on the trip.
Speaker: But something like, you know, Disney trip 2024.
Speaker: Or banana pudding or anything.
Speaker: Exactly.
Speaker: But you have to do it, you know, now.
Speaker: And this doesn't have to be only when you're traveling.
Speaker: You should have one in place at all times.
Speaker: Okay.
Speaker: So not obvious usernames, don't repeat passwords, and have a safe word to use within your family and close friends.
Speaker: Absolutely.
Speaker: Steve, thanks so much.
Speaker: You've given us a lot, and I would encourage all our listeners to check out your report as well, which is jam-packed with information.
Speaker: Thank you, Steve.
Speaker: My pleasure.
Speaker: Thank you.
Speaker: Here are three quick things to bring to your attention.
Speaker: As we head towards 2025, it doesn't look like it's going to be a happy new year for emerging market currencies.
Speaker: That's according to Paul Mackel, global head of FX research.
Speaker: The dollar looks set to stay strong amid ongoing U.S. exceptionalism, while the sting from potential U.S. tariffs could also create shocks for EM currencies along the way.
Speaker: Now, Europe's recent economic performance may have been poor, but Simon Wells, chief European economist, sees some longer-term opportunities.
Speaker: In the second of his series of reports, Simon examines differences within the region and finds some success stories.
Speaker: Central and Eastern Europe have enjoyed stellar growth and periphery economies have experienced a remarkable turnaround.
Speaker: And despite being labeled the sick man of Europe again, Simon says it's too early to write off Germany.
Speaker: And finally,
Speaker: The Extel Asia Survey 2025 is entering its final stages.
Speaker: If you are an HSBC client participating in this survey and you value our service and insight, then please vote before the deadline on the 6th of December.
Speaker: That's it for this week.
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Speaker: with any comments or questions.
Speaker: So until next week, thanks for listening.
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