Cyber warfare market worth US$15.9 billion in 2012

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Global spending on cyber warfare will reach US$15.9 billion next year, up from an estimated US$12.5 billion this year as governments respond to a range of cyber threats, a new report says.

Visiongain’s Cyberwarfare Market 2012-2022 report says that governments around the world will continue to invest in a range of cyber warfare systems and solutions designed to offer protection against a wide range of cyber threats including protecting information and infrastructure from hostile states, as well as non-state actors both at home and abroad.

There has been widespread and growing concern about incursions into US networks by hackers determined to steal everything from state secrets to credit card numbers. Defence contractors like Lockheed Martin have been among the high-profile victims of cyber attacks. Others include Google and Citigroup.

Visiongain notes that spending on cyber warfare has been ring-fenced from the massive cuts being initiated in the defence sectors of a number of major markets. Despite this, sales may suffer a little, but are likely to remain relatively high, especially whilst the threat to national security posed by a successful cyber attack remains an important point of interest for both the public and private sector. For instance, the DARPA budget request for fiscal 2012, which began October 1, called for its cyber research funding to jump more than 73 percent to US$208 million from US$120 million.

Earlier in the year Visiongain said that cyber warfare was the current single greatest emerging threat to national security and predicted worldwide spending of US$12.5 billion this year.

Events last year, such as the discovery of the Stuxnet virus which disrupted centrifuges Iran uses to enrich uranium, have left little doubt as to the potential implications of nations failing to develop adequate cyber warfare capabilities. Cyber warfare is no longer seen as an aside to conventional defence but as a fourth area of operations alongside air, land and sea.

As cyberspace revolutionizes the way nations see their defence, a whole new market for defence sales is rapidly growing. As many nations seek to reduce overall defence expenditures, understanding this complex and vibrant new cyber warfare market will be vital for companies seeking to grow in the defence sector.

Earlier this year China’s military established a 30-person strong Internet security task force to protect China from cyber attacks. The establishment of the cyber warfare unit has caused concern in many Western countries, such as the United States, Australia and Germany, which accuse China of being behind high profile hacking events.

In February US cyber firm McAfee, which markets anti-virus products, said that Chinese hackers had infiltrated the networks of oil companies around the world, stealing financial documents and other sensitive information.

The Director of US National Intelligence James Clapper told the Senate Armed Services Committee that 2010 saw a “dramatic increase in malicious cyber-activity targeting U.S. computers and networks.” Clapper cited an April 8, 2010, incident in which state-owned China Telecom advertised erroneous network routes that instructed “massive volumes” of U.S. and other foreign Internet traffic to go through Chinese servers for 17 minutes. “This incident affected traffic to and from U.S. government and military sites, including sites for the Senate, the Army, the Navy, the Marine corps, the air force, and the office of the Secretary of Defence, as well as a number of Fortune 500 firms,” he said.

More and more countries are setting up their own cyber warfare divisions and experts predict that cyberspace is likely to be a key battleground for states in the 21st century – the United States Germany and Britain have set up cyber warfare facilities.

In October the National Security Agency, a secretive arm of the US military, began providing Wall Street banks with intelligence on foreign hackers, a sign of growing US fears of financial sabotage.
“We know adversaries have full unfettered access to certain networks,” Shawn Henry, executive assistant director of the FBI, said without identifying the adversaries. “Once there, they have the ability to destroy data,” he said in an interview. “We see that as a credible threat to all sectors, but specifically the financial services sector.”

Former Deputy US Defence Secretary William Lynn said cyber attacks could prove particularly devastating for financial institutions given the critical importance of the data stored on their networks and the need to maintain investor confidence in their security.

He said more than 100 countries already have some hacking capabilities, and such tools could soon be available to rogue groups.