The WisdomTree Cybersecurity Fund (WCBR) is higher by 9% for the month ending September 14 and there’s more to that impressive showing than mere strength in the broader technology complex.
Cybersecurity exchange traded funds, including WCBR, are back in the limelight due to a pair of large-scale ransomware attacks affecting well-known consumer-facing companies: Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM).
MGM revealed a cyber attack earlier this week, which then stoked speculation — later confirmed — that rival Caesars recently endured something similar. In a September 14 regulatory filing, Caesars revealed that it dealt with a ransomware event and implied it paid the bad actors to relent. As of late September 14, MGM hadn’t confirmed that it is dealing with a cyber extortion scenario, but the group behind the hack revealed it is making financial demands of the casino operator.
It’s rumored that Caesars paid between $15 million to $30 million to the bad actors, and that the sum was covered by its cyber insurance policy. The point is that is money any company would rather spend elsewhere, confirming the relevance of WCBR and its member firms.
WCBR Long-Term Relevant
While Caesars and MGM are not huge companies, they are large and have strong brand recognition. As it pertains to cybersecurity, these firms and others in the travel and leisure industry are guardians of massive amounts of customers’ sensitive data, including bank account and credit card numbers, as well as Social Security numbers.
Consumer-facing companies, regardless of industry, can potentially suffer more than monetary loss when they deal with negative cyber events. That’s an ominous statement, but it is one that highlights the long-term potential of WCBR. This is because companies are waking to the point that while they can’t prevent every cyberattack, they can mitigate adverse impacts. That comes by way of spending on the services provided by WCBR member firms.
There’s no getting around the fact ransomware attacks are on the rise because it’s profitable for the perpetrators. Caesars joins an extensive list of companies that have paid cyber criminals to relent. That’s bad news, but it highlights the potency of the cybersecurity investment thesis.
“Ransomware attacks spiked exponentially through 2021, increasing by 350% since 2018. The number of times firms paid settlement fees also increased by over 100%, and downtime incidents rose 200% through 2021,” according to cybersecurity provider Fortinet.
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