Recently I wrote about the risk of cyber crime on the investment scene in Caveat Emptor. The article emphasizes the need to mitigate the risk of cyber security in your portfolio. To do this, I suggest reviewing company’s published statistics on the cost of online crime. I also suggest gaining an understanding of the broad risk that the cyber crime iceberg has placed in the path of our markets, and to begin to adjust your investment targets accordingly.
Cyber security service offerings have grown over the last several years, so I will focus this article on two interesting plays in this market that help you take advantage of the continuing growth in this sector. By investing in security companies, you are taking part in a bull market that I believe has a long life cycle ahead.
Security Company Long Play
The young company I recommend watching is Imperva (IMPV). Imperva focuses on delivering data center focused security solutions including distributed denial of service (DDoS), web application hacking, and cloud based security. Described by the company as the new ‘third pillar’ of security, Imperva is focusing their product portfolio on distributed data risk. That is all of the data that the end users download, massage, transmit, and store online and in the cloud. This data can be crucial company intellectual property and may also include protected classes of consumer information that are required by varying regulatory bodies to be secured.
Back in the days of mainframes, all data usage was centrally controlled. Now; however, data is moved around corporate networks by the terabyte to accommodate the new speed of business. Protecting a static database solution is easy, but protecting information moving outside of core servers is much more difficult. As a result, most information security departments have struggled with solutions to secure data across company technology assets. Imperva’s solutions, Incapsula and Skyfence, were designed with this specific objective in mind. I believe this represents a sea change in the approach of securing critical corporate and consumer data.
