As security forces bolster their presence on the border in anticipation of a call to action, and the Israeli public rushes to malls to stock up on generators and emergency supplies, there are those working tirelessly around the clock to fortify the defensive wall of Israel's capital market against the threat of a cyberattack that could shake Israel’s economy to its core.
Such a scenario is not far-fetched. According to a report by the Cyber Directorate, under the banner of the Gaza war, more than 3,380 cyberattacks have targeted publicly traded companies in Israel this year, with 800 of them classified as incidents with significant damage potential. Throughout 2023, there were 13,040 confirmed cyber incident reports from citizens and organizations, 68% of which occurred during the war in Gaza (from October 7 to December). This marks a 43% increase in attack reports compared to 2022.
Among the companies that have had to deal with breaches since the beginning of the war are Bezeq, Cellcom, and Signature-IT, a web hosting company providing services to many well-known Israeli firms such as Home Center, Osem, Strauss, and a few others. Just three weeks ago, another breach occurred at the Israeli pharma company Rekah, valued at over $38 million, which had to shut down its distribution system due to the attack.
And how much does this cost us?
According to an economic analysis of cyberattack damages in Israel over the past year, the National Cyber Directorate estimates the total cost at about $3.2 billion annually. Israeli cyber experts believe this unprecedented amount merely reflects the potential economic damage that could materialize during an intense war in the north.
"Economic and capital market damages can reach hundreds of millions a day," warns Aviv Hooker, co-founder of Faddom, a company managing a platform for mapping and documenting IT infrastructures, serving some of Israel's largest business entities like the Bank of Israel, Clal Insurance, Shufersal, SolarEdge, and more. Faddom's technology allows, among other things, to identify and preemptively prevent cyberattacks, as well as mitigate damage by disconnecting server networks, thereby preventing the shutdown of company distribution systems.
"The war with Hamas, combined with threats from Iran and Hezbollah, has highlighted the need for robust national security measures, yet the cyber front remains one of our most vulnerable battlefields," he emphasizes. "Iranian and Hezbollah cyber units have become more sophisticated over time, and with this sophistication, the threats and likelihood of attacks have grown in direct correlation during such a war."
"In the era we live in, organizations and businesses must achieve full protection for their digital assets, identify vulnerabilities, and address them before breaches can be identified and exploited," Hooker argues, clarifying that "if we don’t adopt an approach that assumes threats can come from anywhere and without any warning, we might find ourselves in serious trouble very quickly."
When Aviv Hooker talks about "trouble," he means the destabilization and undermining of the resilience and stability of Israeli markets. According to him, the latest Cyber Directorate report, while focusing on the economic implications of the increasing cyberattacks on Israeli companies, does not address attacks against critical assets and entities where a breach would constitute both an economic and security blow. He details: "For example, a cyberattack on the Tel Aviv Stock Exchange could cause enormous economic damage comparable to a security breach. Such a shutdown by a hostile entity could drive investors away from the capital market and severely impact the nation's financial stability, affecting the pockets of every one of us."
Cyber - the iron dome of Israel's economy
The "economic blackout" scenario already keeps many economists awake at night. However, just like the Iron Dome system intercepting threats before they hit the home front, many Israeli companies are devoting their utmost efforts to developing and providing defense systems to neutralize threats when the moment of truth arrives.
"Research conducted in recent years indicates that the cost of damages can be significantly reduced by implementing effective cyber defenses," Hooker says. "Implementing just a few cybersecurity measures can lead to a significant drop of up to 50% in the probability of cyberattacks on those systems and result in substantial economic savings."
Therefore, it is no coincidence that eight out of the ten largest exits of Israeli companies in 2023 were in the cyber field, with sales totaling about $2.8 billion, accounting for roughly 80% of all Israeli high-tech exits that year. Among the Israeli cyber companies sold this year were Axis ($500 million), Laminar, Bionic, and Armetic ($350 million each), and Dig Security and Talon Cyber, both bought by the American cyber giant Palo Alto Networks for about $1 billion.
The trend continued strongly this year as well. In March, the Israeli cyber company Avalor was sold for $350 million, just a day after another Israeli company, Gem Security, was sold for a similar amount. The trend continued in April, when Israeli cyber companies Silk Security and Entitle were each sold for an estimated $150 million.
The success of the Israeli cyber market, even in the shadow of war, is no coincidence and underscores the understanding of companies in Israel and worldwide of the importance of protecting their systems from potential attacks. "The cyber arena is becoming inseparable from the central battlefield," Hooker emphasizes. "We are at a pivotal moment where nations, organizations, and companies need and must invest in their preparedness for cyberattacks. As tensions on the northern border increase, so does the required preparation time for a potential attack, and those who do not act today will find that tomorrow is already too late."