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Whilst traditional asset classes such as private equity and property funds continue to dominate the market, we take a look at the growth of digital media funds.
Alternative asset classes are experiencing particular growth in Jersey. According to Jersey Finance, Q4 2015 saw an additional 104 alternative fund managers in Jersey being authorised to market into Europe, up by 24% compared to June 2015.
Whilst the traditional asset classes such as private equity and property funds continue to dominate our funds market, we have also seen, and continue to see, a growth in other alternative asset classes, such as digital media, intellectual property, debt restructuring, infrastructure and cybersecurity. Jersey’s own inspiration to develop and market itself as a gigabyte island is testament to the faith of the business community and government in the value of alternatives. Equally, it places Jersey in a positive position to attract speculative and alternative investors for emerging entrepreneurial funds.
Investment in digital media, specifically cybersecurity asset classes, is of particular interest at present. Never has the world’s attention been so focused on cybertechnology. Headlines reporting cyberattacks of government systems, as well as those closer to home such as breaches of personal data via attacks on inter alia, Sony, Talk Talk and the infidelity social network Ashley Madison, have meant that cybersecurity is on the forefront of many individuals’ agendas.
A survey by PricewaterhouseCoopers (PwC) on behalf of HM Government (2015 Information Securities Breaches) shows that 90% of large organisations and 74% of small businesses reported that they suffered a security breach during 2015, up by 81% and 60% from 2014 respectively. The same report shows that, for companies employing over 500 people, the average cost of dealing with the ‘worst single breach’ is now between £1.46m to £3.14m, up significantly from between £600k to £1.15m during 2014.
There is no doubt that the costs, both financial and reputational, of dealing with a data breach is unsustainable and businesses must be proactive in dealing with these continuous threats. The main priorities for businesses should be twofold, with the focus being on updating their existing security platforms and ensuring adequate training of staff.
There are myriad security platforms available with companies such as Darktrace, which takes advantage of new advances in probabilistic mathematics as opposed to the traditional approach, focusing on the creation of parameters. Given the sheer number of venture capital businesses of this nature in the current marketplace, advice should be carefully sought with a view to securing the right system for the individual business.
In relation to staff training, the PwC survey found that 75% of cyberattacks on large organisations were the result of staff related breaches, and focus must be given to providing adequate staff training to ensure that employees are aware of their responsibilities in helping to avoid cyberattacks.
Such prevalence of global cyber terrorism has caused considerable embarrassment to various national and supranational organisations to the extent that domestic and foreign budgetary spend has increased hugely in recent years. The US Department of Defence’s Cyber Command Unit has seen its budgets increased exponentially year-on-year from a budget of US$191m in 2013 rising to US$509m in 2015. Other governments have seen similar percentage growths.
Jersey’s own aspiration to develop and market itself as a gigabyte island recognises digital drive, sophisticated information technology and the relevance of social media worldwide. Not only are we experiencing an increase in investment into evolving operating systems, cloud database growth and user application development, but also complementary investment in pro-active (as opposed to reactive) cybersecurity systems given the propensity for high profile cyberattacks.
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