Why Have Cybersecurity Budgets Soared for TMT Companies?

Telecommunications, Media, and Technology (TMT) companies have seen their cybersecurity budgets soar, according to a recent report by Financial services company Moody's.

From a staggering 125% increase in cybersecurity budgets between 2019 and 2023, the surge in spending highlights the growing importance of robust cybersecurity measures in an increasingly digital landscape plagued by cyber threats. 

Yet, TMT issuers reported having a cyber manager and more cyber expertise at board level than the global median. They also report more frequent reporting to the CEO and the board, with Larger issuers reporting CEO compensation depends on cybersecurity performance objectives. 

So why is TMT taking cybersecurity so much more seriously than its peers?

TMT threat landscape 

The threat landscape of the TMT sector is rated in the medium-high cyber risk exposure, with Moody’s saying these businesses are especially vulnerable to cyberattacks.

Since 2018, T-Mobile acknowledged eight data breaches, including an August 2021 attack that exposed personal data on at least 76.6 million people.

This is in part because TMT companies handle vast amounts of sensitive data, including customer information, financial records, and proprietary intellectual property. 

With data extraction being one of the main purposes of an attack, for later ransoming for payment, a successful cyberattack can be costly. Add that to any reputational damage wrought, and you can see why companies are taking note.

According to a report by IBM, the average cost of a data breach in 2023 was US$4.45 million, with as much as 50% of breach costs being incurred more than a year after the breach.

This afterglow of an attack can stretch to the fact that any data loss can result in strict fines from the relevant authorities.

GDPR, implemented in the EU in 2018, is one of the world’s most far-reaching and widely regarded as one of the strictest data protection laws in the world, can hit companies with penalties of up to €20 million (US$21.5 million) or 4% of their global annual turnover, whichever is higher, for breaches. 

External factors, such as the rise of sophisticated cyber threats like state-sponsored attacks, have played a significant role in driving the need for enhanced cybersecurity measures. 

Microsoft alleged it experienced breaches from two separate alleged state actors  in 2023 and 2024.

Equally, ransomware is on the rise. A 2023 report revealed by Akamai and Vanson Bourne revealed that ransomware attacks have doubled over the last two years. This exponential growth saw Ransomware Payments Exceed US$1 Billion in 2023.

Equally, remote working practices spurred by the Covid pandemic have expanded the amount of entry points for these organisations, forcing a rethink.

Perhaps consequently, Moody’s report revealed more than 90% of TMT respondents have standalone cyber insurance, up from 78% in the 2021 cyber survey. 

Most companies with standalone cyber insurance have broad coverage, including for business interruption, regulatory fines, reputational damage, ransom payments and incident response.

TMT taking the cyber lead

The surge in cybersecurity budgets for TMT companies reflects both the industry's recognition of the critical importance of protecting against cyber threats and their understanding of the growing threat and regulatory landscape before them. 

According to a report by Gartner, global spending on security and risk management is projected to reach $215 billion in 2024, a 14% year-over-year increase from 2023, showing that the concern is well held cross sector.

Yet with TMTs going above and beyond companies in other industries on so many metrics - 58% of TMT companies conduct penetration testing at least twice a year, compared to 41% for non-TMT companies with TMT issuers reporting that they require both new and current vendors to undergo a cybersecurity risk assessment at a higher average -  it shows that currently, they are leading the charge in cybersecurity practices. 

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