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The Heightened Cyber Risk Environment and the Implications for Commercial Real Estate

By Mitchell Wickland, Chief Information Officer, Global Occupier Services

cyber risk environment

Demand for modern, efficient, and secure data storage is disrupting data center footprints, pricing models, and location selection tactics on a global scale.

Markets and industries across the globe are becoming increasingly integrated due to the improvements in infrastructure, technology, connectivity, and accessibility of information. While this greater integration undoubtedly presents opportunities for companies, it has also increased the risks of doing business. Cushman & Wakefield – in conjunction with CoreNET Global – undertook a survey of global occupiers across different industries to understand their perceptions of risk and to find out how important security issues are to them in this progressively integrated world.

Cyber Risk Identified as the number one risk vector among global corporates

Cyber risk was identified by 53% of the corporate respondents as the top risk facing their organization.

While the results of the Cushman & Wakefield/CoreNet survey are consistent with PWC’s global CEO survey from January 2017, which revealed 61% of global CEOs are concerned or extremely concerned with cyber threats, interestingly despite the increasing levels of cyber breaches, the Cushman & Wakefield/CoreNet survey found that operational security was of significantly lower concern to many. This is surprising when we look at some of the other survey findings.

With the widening gap between threat and protection becoming a growing concern, especially with specialist security expertise in short supply, many corporations are now increasingly looking outside of their own infrastructures to third party cloud service providers for secure storage solutions. A trend that is re-shaping the demand for data storage facilities across the globe.

  • 76% of respondents believe that a comprehensive security plan and a secure working environment were very important or critical (30% indicated that it is critical) in raising brand reputation, improving the quality of life for employees and helping to attract and retain skilled staff.
  • 93% of all respondents indicate that a robust security infrastructure – if deployed correctly – can create an advantage over competitors at times of increased risk.
  • 63% of respondents described their work security infrastructure as good or excellent, but 40% indicated that their organization only offered adequate or poor training and guidance to staff in relation to implementing these plans and on how to deal with security risks or breaches appropriately.
  • 25% of occupiers were either unsure if a risk strategy was even in place or felt that there was actually no mitigation strategy for risk.

Data for Ransom

In the era of digital business, timing is everything. The ability to launch applications quickly and add capacity as soon as the need arises is critical for corporations that want to compete with data-driven peers and fast-moving startups. Infrastructure that enables
business agility and the ability to upscale quickly to meet growing data needs remains critical to business success or failure, while the requirements to future proof networks in a secure manner against a rising number of risks continues to challenge traditional means of operation. But, too often static infrastructure remains a stumbling block for many organizations.

Demand for cloud-based storage and service providers and their superior technologies that promise low capital output and high business value is therefore a trend that is escalating at pace. Traditional data center demand, as a result is coming into question with the asset class “losing some of its stickiness” for investors seeking to capitalize on occupier expansion, with many now relocating and capitalizing on efficiencies of cloud operator procured space at lease renewal as more data is stored online.

Hyperscale cloud-service operators typically have hundreds of thousands of servers in their data center networks, while the largest, such as Amazon and Google, have millions of servers. These new data centers typically require a lower footprint than traditional centers
to cater for storage, due to enhanced server utilization and efficiency, but crucially greater IT loads. While these efficiencies allow for a more productive footprint the rise in data being generated on a global basis has meant that cloud provider requirements are now however on an industrial scale, given the sheer volume of data in today’s society. The relatively limited supply of stock to meet demand has meant build to suit is often becoming the only route to new supply.

The above is an excerpt from the Fifth Edition of the Occupier Edge. To learn more about cyber security risks and their potential impact on commercial real estate, download the full magazine here.

 Mitch Wickland is the Chief Information Officer for the Global Occupier Services group at Cushman & Wakefield. 





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