How Cybersecurity Drives Innovation in Critical Infrastructure (Nasdaq)

Critical infrastructure companies maintain assets, systems, and networks that are vital to national security, public health, and the economy. They are increasingly the target of cyber attacks: between July 2022 and June 2023, critical infrastructure industries experienced more ransomware attacks than any other sector.

This has led to increased regulatory scrutiny and federal guidance. The latest of these guardrails in the United States are the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA) which will eventually require companies to report cyber incidents and ransomware payments, the SEC’s new cybersecurity disclosure regulations for public companies, and the recent Shields Ready initiative to create resilience in critical infrastructure.

Many critical infrastructure industries have a reputation for slower innovation due to extensive regulations, and traditionally cybersecurity implementation has been seen as a cost of doing business. However, as a cybersecurity investor I have witnessed how the regulatory environment is elevating cybersecurity as a business enabler.

Today, cybersecurity not only protects against cyber threats but also generates digital transformation to drive value. This is evident in the critical infrastructure sector, where resilient companies have spent years leveraging cutting-edge cybersecurity technology to navigate regulations and address rising cyber threats.

Here’s how enterprises leverage cybersecurity for digital transformations across three critical infrastructure industries: financial services, telecommunications, and information technology (IT).

Financial Services

The financial services industry helps consumers and companies access financial goods and services and is integral to our digitally connected world. In recent years, rapid digitization, remote work, and expanding digital systems and data have increased cybersecurity risks including fraud, money laundering, data breaches, and service disruptions in the industry.

In response to tightening regulations following the 2008 financial crisis (including the Dodd-Frank Act) and broadening digital boundaries, financial services companies have leveraged cybersecurity to meet regulatory demands, manage cybersecurity risks, and transform business. The industry has experienced cybersecurity-driven improvements in fraud prevention, business efficiencies, risk management, and customer experience.

A good example is what BNY Mellon (BK) is doing to innovate in digital payment processing. BNY Mellon created the aggregated payment platform Vaia in collaboration with cybersecurity startup Verituity to help businesses access a wide range of payment services, verify payee identities, and prevent payment fraud. This transformation is creating better and more efficient customer experiences while reducing risk and ensuring payment accuracy and security.

Communications

Communications companies transmit, store, and use massive amounts of sensitive customer and business data. Data breaches and network attacks are growing risks and can lead to reputational loss, compromised consumer privacy, business disruptions, and a loss of customer trust.

The Federal Communications Commission (FCC) regulates this sector and recently proposed a cybersecurity labeling program for smart devices that would mandate consumer-facing information on smart device security. In response to growing regulatory, privacy, and cybersecurity concerns, the majority of communications companies have implemented new cybersecurity capabilities including encryption, data protection, 5G security, and Internet of Things (IoT) security.

Comcast’s (CMCSA) approach to cybersecurity-first product development is a defining example of digital transformation. In 2016, the company created an internal developer, security, and operations (DevSecOps) program that empowers developers with automated cybersecurity testing tools and coaching around secure application development. These innovations sped up the development process and helped Comcast create more secure products, all with a smaller team- creating new value for the company and their customers.

***This blog was originally posted on Nasdaq.com. You can read it here.***