TEL AVIV – I just got back from the 9th edition of Cyber Week in Tel Aviv, a global cybersecurity conference that drew 8,000 participants, and it is clear that Israel is at the forefront when it comes to cyber attacks of all kinds.

I’m not sure if the breach of client data at Mouvement Desjardins in Quebec could have taken place in Israel, given the unique ecosystem that has been put in place there since 2002 to support this growing sector of the country’s economy.

Israel is half the size of Switzerland, but has a population of 9 million, which is slightly greater than that of Quebec. The high-tech sector accounts for 8.4% of employment, 12% of the annual gross national product and 43% of exports. In fact, Israeli exports in cybersecurity reached USD 6 billion in 2017.

The Israel Innovation Authority alone invests over USD 500 million each year in startups in the country. In total, nearly $940 million were invested in cybersecurity in the country in 2018, mainly by large multinational companies that have created research centers there. The 752 cybersecurity companies identified in Israel at the end of 2018 (including the 367 companies created between 2013 and 2018) benefitted from $3.9 million in investment. That means 20,500 employees in this sector, half of which are private startups.

Israel focuses on research and development (R&D) and dedicates nearly 4.3% of its annual GDP to it, which is double the average of OECD member countries (2.4%). Canada is weak in this area, with a meager 1.6%. It’s through R&D that Israel gave birth to the Waze, ICQ and Sodastreams of the world.

Israel uses a capitalist approach in this sector. It’s a simple idea: 95% of startups fail, but the right to fail is a foundational principle in the country’s ecosystem.

10% of projects funded by the Israel Innovation Authority are in the area of cybersecurity. A number of the projects are risky, and a part of the private venture capital comes from the United States or from major players like Jerusalem Venture Partners. Just in 2018, the stock value of companies that left the private sector or were part of mergers reached USD 12.6 billion in Israel.

This ecosystem also relies on mandatory military service. For a minimum of three years, a number of young people between the ages of 21-24 are integrated into research units in defense and cybersecurity, such as Unit 8200. Once they leave the army, a percentage of these people create private cybersecurity startups with the help of state-owned companies. Over time, this is what led to the creation of flourishing publicly-traded companies like Check Point Software Technologies and CyberArk.

In fact, Israel devotes 5% of its annual budget to defense because of regional threats posed by Iran, Saudi Arabia and Syria, for example.

When you talk about cybersecurity in Israel, it means cyber attacks against national infrastructures (including nuclear and other power plants, trains and planes), websites, social media, applications, emails, the Internet of things, artificial intelligence and the population in general. In our connected world, everything is susceptible to being hacked because of the massive expansion of data. Piracy is THE new modern battlefield and between now and 2023, there will be 80 billion connected devices, such as fridges, home vocal assistants or other gadgets. The cost of all this cyber crime? USD 600 billion, according to Lior Div, CEO of the Israeli company Cybereason.

It should be noted that there is a shortage in the workforce in the area of cybersecurity in Israel due to the rapid growth of private startups. For those who are interested, Israel needs to hire 800 employees per year in this area and has difficulty finding enough talent, according to the daily newspaper Haaretz.

One of the structures in this industry is Cyber Israel: the Israeli National Cyber Directorate (INDC), led by Yigal Unna, who used to work in the office of the prime minister. This will give you an idea of how important cybersecurity is in the country. This agency is located in the middle of the desert in Be’er Sheva, the country’s cybersecurity and research nerve center, with a command center that is active 24/7 (the Israeli CERT). Dozens of multinational corporations are located there, such as PricewaterhouseCoopers (PwC), Apple and McAfee.

At Tel Aviv University, one research center on cybersecurity has over 250 researchers. The Blavatnik Interdisciplinary Cyber Research Center is led by expert Isaac Ben Israel. Proof that the academic world is deeply involved in the country’s entire ecosystem, alongside the government and the private sector.

Over the past week, I was able to observe companies like Cylus (rail cybersecurity), NsKnox (fintech security), Check Point (cybersecurity solutions) and Checkmarx (application security). I was able to see how behind Canada is in this crucial cybersecurity sector, and I feel strongly that closer collaborations between the two countries will lead Canada to wake up. It’s not too late, because Israel has already established partnerships with 80 countries. But the growth of the Internet of things will pose a real security threat over the next five years, according to specialists in Tel Aviv and Be’er Sheva. The worst is yet to come. Kinetic attacks are possible and could wipe out entire databases.

“All of us are attacked. Cyber crime is on the rise, said the CEO of Check Point, Gil Shwed. Most of the threats are global.”

Patrick White was a guest at Cyber Week 2019 in Tel Aviv.

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