Digital economy: Is a perfect storm looming in cyber­security?

Since the Crowdstrike crash last summer – the largest IT outage in history – headlines about cybersecurity have been relentless. The hacker attack on the largest US water supplier, American Water, last fall demonstrated that even critical infrastructure for sustainable development can be affected. And in mid-February, around 2.500 experts gathered at the ‘Swiss Cyber Security Days’ conference in Bern to discuss how to deal with the issue of cyber in the face of exponentially growing technology.

Is something brewing? According to the findings of the "Global Cybersecurity Outlook 2025" published by the World Economic Forum (WEF) and consulting firm Accenture last January, IT users could indeed be facing the perfect storm in the coming months. The authors highlight several developments negatively impacting cybersecurity.

Digital Economy Creates New Entry Points

Firstly, increasing geopolitical tensions are leading to an (even) more insecure overall environment. The unpredictability is further heightened by complex supply chains and dependencies in global trade. Additionally, new technologies such as Artificial Intelligence (AI) provide cybercriminals with powerful new tools.

In general, the forces of digitalization continue to be felt: The rapid advancement of internet connectivity is increasingly blurring the line between cyberspace and the real world, creating new entry points for cybercriminals.

Conversely, the targets of such attacks appear increasingly vulnerable. Especially in emerging markets and among smaller entities like SMEs, confidence in their own defenses is shaken, as the WEF study survey shows. 38% of the surveyed public organizations consider themselves insufficiently resilient to attacks. According to the report, private sector actors feel somewhat more secure, with 10% of survey participants fearing a lack of resilience.

Ransomware Attacks Particularly Feared

This does not mean that companies take cyber risks lightly. In a survey by consulting firm Capgemini from 2024, 92% of organizations reported experiencing a security breach, compared to 51% three years earlier. Successful attacks are thus increasing significantly (see graph below). And they are costly: according to an IBM report from 2024, the average cost of a "hack" is estimated at around USD 4.8 million, with a rising trend. Often more severe are the long-term consequences: loss of reputation and damaged customer trust can lead to permanent business losses.

As the WEF report shows, so-called ransomware attacks are particularly feared: hackers block IT services or data of the victim and demand ransom for their release. Companies are also concerned about fraud schemes such as phishing or the risk of supply chain disruptions. "Distributed Denial of Service" (DDoS) attacks, where websites are overwhelmed with numerous requests and temporarily crippled, are also considered dangerous.

Financial Damage from Cyber Attacks in the USA

Cybersecurity with 10% Growth?

The ubiquity of the internet means that virtually any organization can fall victim to such attacks; the healthcare sector, with its sensitive patient data, has proven to be particularly "in demand" from a hacker's perspective – recently, the largest US health insurer, UnitedHealth, had to announce that a hack in 2024 affected the data of 190 million people, as the newswire "Reuters" reported. 

Cybercriminals also target large sums of money managed by the financial sector or critical infrastructure such as energy and water supply. A successful attack here can have dramatic consequences for public safety and health.

In light of the opportunities presented by the long-term investment theme of the digital economy, there is also good news in this complex situation: the segment of providers of cybersecurity services and solutions is developing just as dynamically. The industry is growing annually by more than 10% (see graph below), and there are many innovative solutions.

Meanwhile. the "Cyber Market Map" by consulting firm McKinsey estimates that the sales market for such solutions stood at USD 140 to 150 billion in 2021 – and that would be only a tenth of the total addressable market.

Cybersecurity Market Revenue Forecast

From the Cloud to Zero-Trust

This seems plausible when considering that many companies still provide only a minimal level of security. Many smaller organizations, which were previously disconnected from the internet, are, in our opinion, not yet or barely equipped with security tools. The current WEF report also identifies a growing gap – between often less resilient SMEs and large corporations that can more easily afford the arms race with hackers. The need for catching up appears significant – another driver for the cybersecurity market.

Providers in this sector are also relying on cutting-edge technologies, confirming the future viability of the digital economy investment theme. Advanced, cloud-based security solutions are scalable and can respond relatively quickly to new threats. AI systems analyze vast amounts of data and can detect suspicious activities early on. So-called zero-trust applications can prevent unauthorized individuals from gaining unnoticed access to systems. Users are granted access only to the specific areas they request. Each additional service checks whether the existing login credentials justify access.

Complex Applications Speak for Thematic Funds

In summary, increasing digitalization makes cybersecurity indispensable for every company. Meanwhile, innovative technologies such as AI and cloud solutions drive innovation and efficiency in this segment of the digital economy. Investors interested in the opportunities of the digital economy investment theme face a highly dynamic environment and complex technologies that require a lot of expertise to understand.

Actively managed thematic funds may offer an easy access to selected companies in the cyber security industry.

The strategy of the ‘Swisscanto (LU) Equity Fund Sustainable Digital Economy’ investment fund, for example, takes into account companies that can make a positive contribution to the digital transformation of numerous sectors of the economy with their products, services and manufacturing methods, with a view to shaping a more sustainable future. The investment universe includes, among others, companies in the cyber security industry. The investment fund, which is managed by a proven team of asset management experts from Zürcher Kantonalbank, also offers a high degree of sustainability.

Three takeaways on cybersecurity and investing in thematic funds on digitalisation

Investment theme «Digital Economy»: Insights