Cyberattacks to increase as technology aids criminals
Rapid advances in technology will accelerate the pace and widen the scope of cyberattacks on the island’s businesses, a Bermudian expert has predicted.
Ryan Benevides is principal at WestCap, the New York-headquartered strategic operating and investing firm.
The 31-year-old leads investment activity across cybersecurity, payments and enterprise software. He was recently a finalist in GrowthCap’s Top 40 Under 40 Growth Investors of 2023 awards.
Mr Benevides said the digitised economy had increased the “attack surface” for cybercriminals.
Banks, for example, used to require clients to visit a branch to do business with them but now allow customers to log into their accounts online and also let employees work remotely and access critical banking resources from their wi-fi or a coffee shop.
He said: “Those are all touch points or areas that hackers can exploit.”
Mr Benevides said that more nation-state actors – Russians, Chinese, Iranians – had entered the cyberthreat landscape over the past five years and the emergence of artificial intelligence platforms such as ChatGPT had provided another tool for them to carry out more sophisticated attacks.
“I can use ChatGPT and put in a prompt to say ‘go read all of Duncan's articles and write a hyper-tailored e-mail to Duncan telling him to do X, Y & Z’.
“It could come off as someone that knows you very well, that has been part of the Bermuda community for a long time because they're talking as though they've been reading your articles – and in reality, it's someone from Russia or China trying to get sensitive information from you.”
Cybercriminals can now use artificial intelligence to “spoof” the voices of trusted colleagues, a phenomenon known as “deep fakes”.
Mr Benevides said: “If you have five minutes of someone talking that you can pull from a podcast or YouTube video, these generative AI models can now take that five minutes of talking and create large monologues or texts of sentences that sound exactly like you or the person you're trying to impersonate.
“We're just in the early innings of this. In three to five years, it's going to be a huge, huge problem.
“It's going to be coming at you from all directions. You're going to be getting text messages, you're going to be getting e-mails, phone calls, personalised videos.”
Businesses of all sizes must be on guard against cyberattacks said Ryan Benevides, the Bermudian principal at WestCap.
“Because [cybercriminals] are using technology and automation to carry out these attacks, they're not just focused on the biggest companies any more.
“It's going to be small and medium-sized businesses, even in a place like Bermuda, which may feel like they are totally off the grid. I think you would be surprised at the fact that they are also targets for sophisticated hackers.”
Mr Benevides said the island’s insurance industry had a critical role to play in this heightened risk environment – protecting companies or at least alleviating some of the financial burden from these cyber-risks.
“One of the themes that we're most focused on currently is just the growth of cyber insurance. We encourage all of our portfolio companies to take out cyber insurance policies.
“Ransomware is a real threat that businesses of all sizes have and we expect the cyber insurance market to increase in size by two to three times over the next five years – and I think Bermuda is going to play a key role in that growth.”
He added that insurance-linked securities were “an area where we actually have an investment as well, independent of our cybersecurity work. And we think cyber insurance-linked securities are going to be a critical unlock for the growth of that market”.
Mr Benevides studied mathematics and economics at Rice University in Houston, where he played NCAA division one golf.
He then spent two years at JP Morgan, the investment bank, and five years at Blackstone, the world’s largest alternative investment manager, before joining WestCap about 2½ years ago.
At the 80-employee firm, he developed WestCap’s investment thesis in the cybersecurity space and has led due diligence on the cybersecurity companies Human Security, Bishop Fox, and Dragos, all of which seek to play a role in combating cybercriminals.
Dragos raised $74 million last year in Series D round extension funding led by WestCap; in November 2022, Bishop Fox announced $46 million in growth funding from WestCap; and in January 2022, Human Security raised $100 million in a growth funding round led by WestCap and NightDragon.
WestCap’s other notable investments include Airbnb and StubHub.
Mr Benevides said WestCap became involved at the growth stage of the venture capital ecosystem after a company had a product in the market.
WestCap typically targets a minority position in these earlier stage, high-growth technology businesses, where they own ten to 20 per cent of the company and have a seat on the board, making them influential from a governance and decision-making perspective.
Mr Benevides said he spent hours every week with WestCap’s portfolio companies.
He said: “We provide the capital and the operating resources to help build the operating infrastructure to get that product to the masses and operating resources to help founders scale their businesses.
“We have a six-person talent team who will help you hire a management team, but will also coach CEOs on how to effectively manage that team.”
Mr Benevides is keen to get more involved in the tech community on-island.
“I have significant expertise in areas like insurtech, fintech, cybersecurity, and I would now love to start getting reintegrated into the Bermuda ecosystem.
“I've been very focused on New York and the US and building my relationships and network here.
“I think we're going to do a better job of getting involved in some of the conferences and panels that occur on the island, especially as it relates to insurtech.”
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