In the Aftermath of the US Pipeline CyberAttack, Israel's Cyber Security Companies Provide Solutions

It was the type of attack that U.S. authorities have often warned about but still sounded like the plot of a new bestseller or blockbuster film. In May 2021, a ransomware attack targeted the largest U.S. fuel pipeline stretching 5,500 miles from the Gulf Coast to the New York Metro area. The Colonial Pipeline company had no choice but to close the pipeline for two days until the issue was dealt with.

Ransomware, which allows hackers to hold computer systems in a kind of hostage situation, is concern security officials have cautioned against for some time. There are concerns that in addition to fuel pipelines, ransomware could also target hospitals, central banks and utility companies.

The attack was a sobering indication of the kind of disruption hackers are capable of However, officials have stated clearly that they did not reach sensitive systems concerned with the actual operations of the pipeline.

Although the ransomware attack elicited a sigh of relief when the issue was resolved and the Colonial Pipeline resumed its operations, the ordeal exposed how fragile these systems are, how easily hackers can gain access, and how close they were to penetrating the system that actually runs the pipeline. Much of the infrastructure is out of date and unprepared for a more sophisticated attack.

The U.S. Looks to Israel for CyberSecurity Solutions

Now and in the recent past, the United States has looked to Israel for cybersecurity cooperation and solutions. In 2017, the White House and Israel’s Prime Minister’s office founded the US-Israel Cyber Working Group with the stated goal of “unprecedented cooperation on cybersecurity through a whole-of-government approach between our two countries on pressing cyber challenges.”

The US-Israel Cyber Working Group collaborated on a number of projects concerned with aviation and research and development efforts to protect the energy sector from cyber attacks. Since then, Israel and the United States have frequent communication and collaboration on cybersecurity initiatives.

The Strength of Israel’s CyberSecurity Sector

Israel’s cybersecurity sector was not only unharmed by the COVID-19 but it actually saw significant gains during the pandemic. Investments in Israeli cybersecurity companies rose 70% during 2020. In fact, 31% of all global investments in the sector were in Israeli companies, and Israel’s cybersecurity companies were second only to the US in this category.

The reason for the significant growth was the increase in cybersecurity threats during the pandemic and Israel’s leadership in the sector prior to the crisis. Five Israeli cybersecurity firms achieved unicorn status during the pandemic. A unicorn is a privately-held company that reaches a valuation of at least $1 billion. These unicorns are– Snyk, SentinalOne, Cato Networks, Forter, BigID.

Although M&A activity slowed down somewhat in 2020 due to the pandemic, 20 Israeli firms were acquired for a total of $4.7 billion. M&A activity is expected to pick up as economies in the U.S. and Israel open up once again, which may signal more acquisitions.

The Unique Advantage of Israel’s Cybersecurity Companies

There is some speculation as to why Israel in particular excels in the cybersecurity space compared to other countries its size. One factor is the contribution of former IDF hi-tech experts who are employing their skills gained in the military to provide solutions to provide defense for civilian systems.

The cybersecurity startup Axonius, for example, was founded by Dean Sysman, Ofri Shur, and Avidor Bartov, three Israelis who served in the same military intelligence unit.

Axonius is now based in New York and now has a $1.2 billion valuation. Although many startups try to get purchased by Microsoft and other companies, increasingly these startups are making efforts to go public as independent entities.

Investing In Israeli Cybersecurity

Investors can gain exposure to Israel’s cybersecurity through ETFs and funds which provide diversified and secure exposure to Israeli equities. The Jerusalem Portfolio is ideal for first-time and veteran investors and can be started with as little as $180. You can open the Jerusalem Portfolio for your own investment or give it as a gift that will appreciate in value.

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Published on 31st May 2021

The Jerusalem Portfolio