# Navigating GDPR – threats and opportunities Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2018-05-23 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: Investing in Digital Security: Seizing Opportunities in GDPR Meta Description: Learn about the investment opportunities in digital security amidst growing concerns over data breaches and the GDPR regulation. Find out more with Harriet Tags: featured Tag URLs: featured (https://financedigest.com/tag/featured) URL: https://financedigest.com/navigating-gdpr-threats-and-opportunitieshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/harriet-parker-1736842700458-compressed.jpg) **_Harriet Parker, Investment manager, Liontrust Asset Management_** As more of our lives are carried out online, protecting personal or corporate data from theft continues to offer opportunities for investment. ![Harriet Parker](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/harriet-parker-450x299-1736842700412-compressed.jpg) Harriet Parker Several businesses are finding better ways to protect this growing area of the economy and Enhancing [digital security](https://www.financedigest.com/taming-the-new-wild-west-how-biometrics-can-help-the-ecb-deliver-a-secure-digital-euro.html "Taming the ‘new wild west’: how biometrics can help the ECB deliver a secure digital euro") has been a key theme across our Sustainable Future funds for many years. This theme is becoming ever-more important with a number of high-profile [breaches recently leading to growing concerns about how personal data is managed and the new European General Data Protection](https://www.financedigest.com/how-financial-organisations-can-stay-protected-from-financial-data-breaches.html "How Financial Organisations can Stay Protected from Financial Data Breaches ") Regulation (GDPR) coming into force on 25 May this year. This requires [companies to prove they understand](https://www.financedigest.com/understanding-company-debt-finance.html "Understanding company debt finance") where data is held and who has access to it, and also introduces stricter rules on security and processing. From a scale perspective, it is important to note this regulation does not just apply to EU businesses but to any company holding European data – and the penalties for non-compliance are considerable, with fines up to €20bn or 4% of revenue, whichever is higher. **Key requirements under GDPR:****Increased rights for data subjects, the right to “be forgotten” and data portability****Software developed with security in mind (privacy by design and by default)****Pseudonymisation or encryption of [personal data](https://www.financedigest.com/data-privacy-and-navigation-how-our-personal-data-is-used-in-navigation-apps.html "Data Privacy and Navigation: How our personal data is used in Navigation Apps.")****[Secure processing of data](https://www.financedigest.com/cyber-security-data-re-assurance.html "Cyber Security: Data ‘Re’-Assurance")** Initial [research from Ernst & Young suggests](https://www.financedigest.com/new-research-suggests-over-13-million-brits-were-inadequately-managed-while-working-remotely.html "NEW RESEARCH SUGGESTS OVER 13 MILLION BRITS WERE INADEQUATELY MANAGED WHILE WORKING REMOTELY*") that half of relevant companies will not be fully compliant with requirements by the deadline, suggesting the regulation should be a catalyst for higher IT spending in Europe over the long-term. [Areas set](https://www.financedigest.com/high-barrier-packaging-films-for-pharmaceuticals-market-set-for-5-cagr-through-2029-blisters-remain-top-application-area-says-a-new-fmi-report.html "High Barrier Packaging Films for Pharmaceuticals Market Set for 5% CAGR Through 2029; Blisters Remain Top Application Area, Says a New FMI Report") to benefit include vulnerability management, security analytics, identity and data protection technologies, and storage software. Although we see many organisations allocating additional spending to comply with GDPR, a good proportion of this money looks set to be channelled towards external [advisory services](https://www.financedigest.com/visa-launches-crypto-advisory-service-for-financial-institutions-merchants.html "Visa launches crypto advisory service for financial institutions, merchants"), benefiting companies with greater involvement in this area. But if half of companies are not yet prepared, we believe there could also be an upsurge in demand for [cyber security](https://www.financedigest.com/a-culture-of-cyber-security-throughout-financial-services-organisations.html "A Culture of Cyber Security Throughout Financial Services Organisations") products. Our GDPR focus is twofold: we continue to look for businesses benefiting from the _Enhancing digital security_ trend but as many of the companies in our Funds have to comply with the regulations, it has also become a key engagement issue. Initial research last year showed [corporate disclosure on this issue](https://www.financedigest.com/9-issues-in-corporate-finance-and-strategies-to-overcome-them.html "9 Issues in Corporate Finance and Strategies to Overcome Them") was limited and we continue to assess the level of preparedness among our holdings. Smaller companies with fewer resources could be at significant risk, for example, given the potential fines and loss of [consumer trust](https://www.financedigest.com/trusting-in-trust-marks-enhancing-consumer-trust-in-your-ecommerce-business.html "Trusting in trust marks: enhancing consumer trust in your ecommerce business "). In the lead up to the GDPR deadline, we have been investigating other [opportunities among the growing number of companies innovating in the digital](https://www.financedigest.com/an-analysis-of-vc-investment-in-the-defence-sector-and-the-mods-readiness-to-exploit-digital-opportunities.html "An analysis of VC investment in the Defence sector and the MOD’s readiness to exploit digital opportunities") security space. This spans a broad range of businesses, involving [analysis of vendors](https://www.financedigest.com/musical-instruments-market-insights-deep-analysis-of-key-vendor-in-the-industry-2022-2026.html "Musical Instruments Market Insights, Deep Analysis of Key Vendor in the Industry 2022-2026"), master data management (MDM) companies and larger systems integrators and consultants with a high percentage of revenues coming from products exposed to digital security growth. Current [holdings with exposure to this include pure-play security software](https://www.financedigest.com/is-your-accounting-software-holding-you-hostage.html "Is your accounting software holding you hostage?") providers such as Sophos in the UK and Splunk in the US. Sophos provides information [technology security](https://www.financedigest.com/how-open-source-technology-is-securing-the-future-of-financial-services.html "How open-source technology is securing the future of financial services") and data protection products, offering protection against viruses, malware, spyware, intrusions, unwanted applications, spam, policy abuse and data leakage. Splunk develops web-based application software that collects and analyses data generated by websites, applications, servers, networks and mobile devices and its products can be used alongside traditional digital [security products to better assess threats](https://www.financedigest.com/the-future-of-finance-how-to-defend-against-the-top-threats-to-cloud-security.html "The Future of Finance: How to defend against the top threats to cloud security"), incidents and responses. We will watch the impact of GDPR in the months after May with interest: when similar rules came into force in the Netherlands, for example, there were over 1,000 breaches in the first 100 days. It will be here that we get to understand how [well companies](https://www.financedigest.com/computerized-physician-order-entry-cpoe-systems-market-to-generate-profitable-avenues-for-existing-companies-as-well-as-new-players.html "Computerized Physician Order Entry (CPOE) Systems Market to Generate Profitable Avenues for Existing Companies as Well as New Players") have prepared. As a digital security expert said to us recently: “You’ll never know when you’ve overspent on security, but you’re sure to find out when you haven’t spent enough.” --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---