Defending Against the Biggest Threat of the Fourth Industrial Revolution

Matthew Carr By Matthew Carr, Emerging Trends Strategist, The Oxford Club

Market Trends

Technology is at the heart of everything these days. And I love it. It creates a lot of exciting investment opportunities…

We’ve all witnessed online retail and mobile commerce dismantle traditional retail. Well-known chains are struggling to survive, heading toward the same fate as Woolworths and Blockbuster.

We’ve seen the rise of robots and automation. These technologies are not only affecting traditional manufacturing… They’re also changing mining and drilling.

Komatsu’s (OTC: KMTUY) autonomous hauling vehicles have boosted efficiencies – while lowering costs – for miners like Rio Tinto (NYSE: RIO).

Drones are buzzing over farms. Cloud computing, the “Internet of Things” and big data analytics are necessities for modern oil fields and mines.

What we’re seeing is a “Fourth Industrial Revolution” (4IR), which I’ve been watching closely…

All of this technology offers a lot of benefits, including improved efficiencies, lower costs and increased productivity.

These are all things we like to see as investors.

Plus, we get to enjoy the fact that science fiction is becoming a reality as companies embrace new technologies to transform their businesses and industries.

But for every light, there’s a shadow…

The Dark Side of 4IR

The more technology and connected devices are used by miners and oil and gas companies, the greater their need is for security.

And here, the energy sector is finding itself in an uncomfortable spot.

In recent years, this has emerged as a serious issue.

Starting in November 2009, “Night Dragon” stole bidding and exploration data from oil giants, including Exxon Mobil (NYSE: XOM) and BP (NYSE: BP). This went on for years.

Then there was “Operation Aurora,” a malware attack launched from China.

In 2012, Stuxnet attacked the networks of Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), Marathon Petroleum (NYSE: MPC), Baker Hughes (NYSE: BHI) and others.

As we’ve seen, disk-wiping malware and Trojan horse attacks can cripple oil and gas companies in the Middle East and Europe.

Just yesterday, Danish shipping and oil giant A.P. Moller-Maersk (OTC: AMKBF), Russian oil company Rosneft (OTC: RNFTF) and other organizations in Ukraine were among the more than 200,000 companies disrupted by a global cyberattack.

It’s another strand of a ransomware attack that emerged last year, in addition to the global “WannaCry” ransomware attack that affected countries around the globe in May.

Last year, I touched on this topic here in Energy & Resources Digest.

The situation is not getting any better…

According to a report from Deloitte, three out of four exploration and production companies were victims of at least one cyberattack last year.

That’s right… 75% of all oil and gas drillers were hacked at least once last year.

As we’ve seen, cyberattacks are constantly evolving. And the motives are evolving right along with them…

It’s not always about money. There’s cyberterrorism, industrial espionage, “hacktivism,” boring old theft of data and simple anarchy – disrupting operations just because.

Earlier this year, a study by the Ponemon Institute and Siemens (OTC: SIEGY) found that 68% of oil and gas companies either had confidential information stolen or operations disrupted by an attack in the previous 12 months.

Now, here’s where it gets scary. Some attacks grab headlines and become global news. But the Ponemon/Siemens study found that, on average, oil and gas respondents believe 46% of cyberattacks go undetected.

Think about that for a second: Nearly half of all breaches aren’t detected.

With 4IR effectively digitizing the energy and resources sectors, security is and must be a priority. The same is true for energy and resources investors.

Expectations are for oil and gas companies to spend $1.87 billion on cybersecurity in 2018… I think it could be more than that, especially with these recent attacks.

Investors can start by looking at cybersecurity ETFs like the PureFund ISE Cyber Security ETF (NYSE: HACK), as well as individual companies. Just remember…

Cybersecurity is a huge and growing trend. Investors must pay attention because soon it will be a major concern of every company – even those in industries that have been largely ignored by hackers up to this point…

Because that’s about to change.

Good investing,


P.S. The Fourth Industrial Revolution is here, and it’s creating once-in-a-lifetime opportunities for investors. In fact, two companies are already capitalizing on the sea changes we’re seeing in the mining and agricultural sectors…

But 4IR is just getting started… and these two companies are going to explode in the coming months.

I’ve just added them to the portfolio in the July issue of Oxford Resource Explorer – which hit inboxes today.

It won’t be long until 4IR is in full swing. You’ll regret not investing in these companies before they truly take off. Click here to sign up for Oxford Resource Explorer.