The Cybersecurity Crisis emerging from the Ukraine-Russia War


Q2 2022

29 April | 4 mins

Key takeaways

  • For thematic investors, Cybersecurity has always been about investment by necessity, with one of the main catalysts leading this being event driven risk. 
  • Since the start of the Ukraine-Russia War, Germany has increased its defence budget, announcing a $113bn investment. The White House announced mandatory reporting of any cyber-breaches and Australia ushered in their biggest ever cybersecurity spend.
  • Since the conflict began, the Nasdaq CTA Cybersecurity Index has been a positive investment in the face of this event driven risk.

Event Driven Risk. For thematic investors, Cybersecurity is and always has been about investment by necessity, with one of the main catalysts leading this being event driven risk.

However, too much of the focus on event driven risk focus has been fixated on the pandemic and the significant shift to work from home, as you can see even from one of our own slides.

While we have commented that future military conflicts will find a greater percentage of the warfare take place in the Cloud rather than on the ground, the recent Ukraine invasion has brought this front and center. 




Perhaps one of most significant developments of the Russian invasion of the Ukraine, was that before a shot was fired or the tanks rolled in, cyber attacks were the front line. Cyberattacks have been launched from both sides. Both Sberbank and the Moscow Stock Exchange were targeted by the Ukraine IT Army, an officially-endorsed group of hackers. This followed attacks launched by Russia on Kyiv banks and government sites, as well as a computer-wiping malware that spread across the country in the lead-up to the physical invasion.

In a major policy pivot – Germany (with other countries likely to follow) is sizably increasing its defense budget – now and in the future. The announcement of the $113bn investment into Germany’s defense came just hours before Russian President Vladimir Putin ordered Russia’s nuclear forces to be put on high alert. The $113bn fund, currently a one-time measure for 2022, is highly suggestive of future funding which could be allocated in years to come and could well exceed the 2 % of GDP threshold going forward. This could likely signal an overall future increase in defense spending. We ask investors, where do you think a large portion of this $113bn will be spent?

In the U.S., and before President Biden took office, the threats which the SolarWinds attack and the Colonial Pipeline hack posed to national security were massive. Federal security agencies swung into action with guidance, warnings, and in the case of federal agencies, orders to improve cybersecurity defenses.

On the 22nd March, Biden warned of the “evolving intelligence that the Russian Government is exploring options for potential cyberattacks”. The White House went one further with its mandatory reporting of any cyber-breaches.

The new law requires critical infrastructure operators to share breach information with federal agencies within 72 hours, ransomware payment information within 24 hours, modernize to better cybersecurity standards, and establish security standards for software.

The recently signed $1.5 trillion government bill will go some way to providing the funding for this new legislation, but following President Biden’s latest comments, we can expect both further public funding and private sector investment in the near-future.

Since the conflict began, the Nasdaq CTA Cybersecurity Index appears to have been - thus far –a positive investment in the face of this event driven risk.




References to specific companies should not be construed as a recommendation to buy or sell shares or other financial instruments issued by those companies, and neither should they be assumed profitable. You should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing.

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