Russian hackers, cybersecurity and where to invest

One of the more disturbing headlines this week was when UK Cabinet Office Minister Oliver Dowden announced that Russian hackers are looking to disrupt and destroy parts of the UK’s critical infrastructure. For this writer this triggered a lot of questions such as: are we safe, should a UK Minister be saying this in public and causing panic instead of quietly dealing with security issues, and do major infrastructure companies have sufficient security provisions in place to fend off such attacks?

While I couldn’t answer any of those questions, I had a clearer picture for a trading idea arising from such potential attacks, and that is cloud computing.

The question is where the companies’ key data is stored and how it is kept safe. Given the volume of data that infrastructure companies have to deal with, the data can be stored either on site, very close to the site in what is called an edge cloud, or in a cloud maintained at a remote server.

The big trend in cloud computing

Edge computing has become one of the biggest trends in cloud computing this year, a setup where data is stored and processed at the edge of the network, physically close to the source of the data. The reasons for that are that this allows faster processing and reduced latency when 5G is used.

This kind of cloud is already used by major producers such as Tesla or institutions like hospitals as this kind of infrastructure allows more privacy and security and can also operate more efficiently than a cloud operating from a remote location.

Key providers of edge computing services are Amazon Web Services NASDAQ:AMZN, Microsoft Azure NASDAQ:MSFT, ClearBlade and Dell Technologies NYSE:DELL.

Disaster recovery services

Another aspect of cloud computing that is receiving ever more attention is disaster recovery, be it from natural or man-caused disasters. If the servers are disabled because of a cyber attack, companies need to be able to retrieve their data from a separate, secure location where the data is backed up.

The data disaster recovery market is already worth about $4.5 billion and growth forecasts for this market for the rest of this decade range between 20% to 35% per year. There is a myriad of companies active in data disaster recovery with some of the top names being IBM NYSE:IBM, Cloudhpt, Recovery Point Systems and Microsoft.

The final aspect of interest is the cloud’s ability to withstand attempts to crack its safety network. As cyber-attacks become more common place, and not only from our friends from the East, cloud-computing services providers are investing heavily in fortifying their security systems and resilience. This is also giving rise to the growth of companies that are “security-as-a-service” providers. Some of the top names in this space are Fidelis, SkyHigh, Qualys and PaloAlto.

Whether next week’s headlines bring another story of potential Russian hacking, a data leak at a major government institution or plain corporate data theft it will be clear that cyber security has become as integral to our daily functioning as a microchip and therefore companies supplying those services will continue to be in demand for a long time ahead.

Here’s a selection of related ETF ideas