Hi Friends, Hope you are doing well.

Welcome back. Q2 2026 insights coming a bit late (apologies), here it is.

If Q1 was a quarter industry consolidated, Q2 had to show its receipts.

Themes we've been tracking as warnings, became case files.

And if you read ST #86 — Cybersecurity: Before & After Mythos, you already know that AI-assisted vulnerability discovery story that broke in Q1 fundamentally reshaped the threat calculus this quarter.

Its downstream effects i.e., CVE volume surge, NIST database overload, compressed exploit window, are a thread through what follows below.

This edition covers key IT, OT/ICS, AI Cybersecurity insights from Q2 2026:

Each section includes expert analysis grounded in Q2 data, rather speculation, to give you actionable intelligence, and not just headlines. Hop on to the section that interests you more.

In case you missed previous quarterly editions, you can find them here:

→ Q1 2026 | Q4 2025

But before we begin, do me a favor and make sure you "Subscribe" to let me know that you care and keep me motivated to publish more. Thanks!

Ready? Let's dig in.

Yours truly.

— Yousuf.

♻️ If you know someone in your professional circle who will benefit from these resources, I'd really appreciate if you'd forward it to them. Thanks 🌟

Together with (Sponsor):

He has a newsletter on beehiiv. So do Codie Sanchez, Jay Shetty, David Begnaud, Colin & Samir, and Joanna Stern.

They could publish just about anywhere. They chose beehiiv to build a direct connection with the people who want to hear from them most. And you can do the same, whether you’re world-famous or just at the start of your plan for world domination.

Get started for free.

I am running a free workshop coming Tuesday and the following topic: “AI in OT (already on plant floor). Who approved it? AI Readiness Assessment”. To see details and register click → here.

A certificate of attendance will be awarded for those who attend and participate during the workshop.

One of you is also going to win a free training as part of the following announcement.

I am also announcing a pre-launch of Securing Things Academy!

I am looking for at-least 15 to a max. of 25 founding members who’ll be interested in joining first cohort of IT/OT Cybersecurity Transformation course focused on Securing Things for Your Digital Factory!

Those who have registered for the waitlist will have preference. I am going to restrict it to 25 people only. The goal is to transform 2 things:

IT & OT CySEAT (Cyber Security Education and Transformation) course is designed for IT + OT cybersecurity practitioners.

Join waitlist → here.

Crunchbase's H1 2026 analysis confirmed that cybersecurity startups raised $10.6 billion in the first half of 2026. (Crunchbase News)

Eight rounds exceeded $100M in Q2. Investor conviction in the sector remains intact.

European picture: Axeleo Capital's Q2 2026 Cybersecurity Index (July 9) confirmed European startups raised €185M across 27 deals. A 38% drop from Q2 2025's €294M. Early-stage rounds dominated at 59% of transactions, with 6 exits.

Notable deal: Tsuga (France) raised €32M Series A backed by DST Global, Singular, and General Catalyst. Despite the Q2 dip, Dealroom's tracker shows European cybersecurity on pace for a record $1.81B annual high in 2026. (Axeleo Q2 2026)

Top Q2 Global Funding Rounds:

Gartner projects global information security spending at $244.2 billion in 2026, up 13.3% year-on-year. (Gartner, February 2026)

Monthly deal counts tracked by SecurityWeek:

By mid-June, SecurityWeek had catalogued 190 cybersecurity deals year-to-date — including 20 in identity security alone.

The pace eased from Q1's record highs but recovered sharply in June. Buyers who paused for deeper diligence in April and May returned to close. The harder, more deliberate deals — those requiring more than simple bolt-on logic — are now working through.

Quarter's gold Transaction: Accenture + Dragos + runZero + NetRise

On June 18, Accenture announced it would acquire a majority stake in Dragos (OT threat detection, valued at ~$3.25B), 100% of runZero (attack surface intelligence), and 100% of NetRise (firmware and software supply chain visibility). Combined deal value: ~$4.175 billion.

The three companies together generate ~$208M ARR as of June 2026 — up 53% year-on-year. Accenture estimates the broader OT cybersecurity software market at $27B today, growing to ~$59B by 2031 at 16% CAGR. Closing expected August–September 2026.

(Accenture Press Release) | (SecurityWeek) | (Industrial Cyber)

Other Notable Q2 Transactions:

The pattern across all three months is consistent: buyers want identity governance, AI-agent security, OT visibility, and data security. Platform plays are beating point solutions.

MCF Corporate Finance's Q2 sector analysis notes the key implication is "not simply higher cyber risk, but a shift towards integrated, platform-led security solutions... isolated point solutions risk losing relevance unless they remain clearly differentiated or mission-critical." (MCF Corporate Finance, June 2026)

Before individual incidents, the infrastructure story matters.

AI is now discovering vulnerabilities at machine speed. As covered in depth in ST #86 — Cybersecurity: Before & After Mythos, the announcement of Claude Mythos Preview (April 7, 2026) confirmed that frontier AI can autonomously discover thousands of high-severity zero-days — including 17-year-old and 27-year-old flaws that survived millions of automated tests — and write working exploits without human direction.

The Q2 downstream effects were measurable:

Beazley Security Labs tracked more than 20,700 new software vulnerabilities in Q2 2026. A 36% increase from Q1, following 18.5% growth in Q1 itself. Of those, ~5,600 were classified high-risk, 44 were confirmed actively exploited (CISA KEV), and Beazley issued 21 advisories for the most severe — a 40% increase over Q1. (Beazley Q2 2026 Quarterly Threat Report)

Kaspersky's vulnerability research traced the surge directly to AI-assisted discovery tools proliferating across the security research ecosystem. (Kaspersky Securelist Q2 2026)

On April 15, 2026, NIST announced a fundamental change to the National Vulnerability Database (NVD). The CVE submission volume has grown 263% since 2020. The NVD's enrichment model.

The CVSS scores, product metadata, and CWE classifications that industry patch-prioritization workflows are built on — can no longer scale to keep up. NIST moved to a risk-based triage model, enriching only CVEs on the CISA KEV list, those affecting federal government software, and those under Executive Order 14028.

Around 29,000 backlogged CVEs published before March 1, 2026 have been reclassified as "Not Scheduled" — no committed enrichment timeline.

If your patch prioritization process relies on NVD CVSS scores, you now have a systematic blind spot. Threat-intelligence-driven prioritization, using actual exploitation telemetry, replaces NVD-metadata-driven patch queues as the operational standard. (Black Duck Blog) | (Proofpoint)

Verizon's 2026 Data Breach Investigations Report — 19th edition, 31,000+ incidents, 22,000+ confirmed breaches, 145 countries. (Verizon DBIR 2026)

For the first time in 19 years, vulnerability exploitation (31%) overtook stolen credentials (13%) as the #1 initial access vector.

Read alongside the Beazley CVE data and the NIST NVD shift above, and the pattern is coherent: attackers are exploiting unpatched systems faster, and defenders are losing their tooling to keep up with the volume.

Other key findings:

That last finding is the most operationally important of the quarter. Infostealer infections are ransomware early-warning signals, not background noise. Treat them with the urgency of an active intrusion.

The trackers don't agree with each other on exact counts, which is itself useful context, for how messy ransomware statistics really are.

Brandefense CTI tracked 2,509 confirmed ransomware victims across 91 distinct groups in Q2 2026. 17.5% increase from Q1. June alone produced 919 victim posts, the highest single month in their tracking window. (Brandefense Q2)

BlackFog recorded 2,027 undisclosed attacks. 40% increase year-on-year from Q2 2025. Publicly disclosed attacks reached 306, up 16%. (BlackFog Q2 2026)

The gap between disclosed and actual attacks is large. It is getting larger.

Top ransomware groups in Q2 2026:

(ReliaQuest) | (Emsisoft)

Black Kite tracked 7,551 publicly disclosed ransomware victims in the 12-month window ending March 2026. 24.9% increase year-on-year. Active groups reached 146 by June 2026, more than double the 61 tracked in 2023. (Black Kite 2026)

US absorbed roughly 49% of all global victims. Professional, Scientific & Technical Services was the #1 sector for the fifth straight quarter.

The quarter's theme from Fortian's Q2 review is the right frame: "attacks on trust." Supply chain, identity, and third-party compromises, not perimeter breaches. (Fortian Q2 2026)

ShinyHunters ran the most sustained multi-target campaign of the quarter:

📌 Instructure / Canvas LMS (May 2026). ~275 million records claimed. One of the largest education-sector breaches on record. (Malwarebytes)

📌 Oracle PeopleSoft (late May – early June). Exploitation of CVE-2026-35273, a critical unauthenticated RCE zero-day, compromised 100+ organizations, ~68% universities. (Fortian Q2 2026)

📌 One Medical / Amazon (June 8–13). 8.8TB of clinical and demographic data from legacy Iora Health / One Medical Seniors patients claimed. (PKWare)

📌 Aflac (June 2026). Roughly 22.7 million customers, beneficiaries, employees, and agents affected. (Bright Defense)

📌 NAIC (National Association of Insurance Commissioners) (June 2026). ShinyHunters compromised credit rating data from Moody's, S&P, Fitch, KBRA, and Morningstar DBRS. The NAIC suspended investment risk designations. Systemic disruption to US insurance capital markets. This was the quarter's most significant financial-sector impact. (CSIS)

📌 Kodak (June 15). ShinyHunters claimed 2.2 million records. Kodak confirmed unauthorized access to "a limited amount of company data." (Bright Defense)

📌 Klue (June 2026). Competitive intelligence platform breached, exposing enterprise Salesforce instances, including those of cybersecurity firms. (Beazley Q2 Quarterly Threat Report)

📌 Foxconn North America (May 12). Nitrogen ransomware claimed 8TB of schematics and project data tied to Apple, Dell, Google, and Nvidia. (Bright Defense)

📌 DHS Homeland Security Information Network (HSIN) (Breach: late May – early June; Disclosed: July 1). Attackers breached the federal platform used by DHS, FBI, state and local agencies for real-time threat intelligence sharing. HSIN was actively supporting FIFA World Cup 2026 security operations across 16 US cities at the time.

DHS confirmed breach of both HSIN servers and a connected SharePoint environment. Attackers remain unidentified. Senator Mark Warner described the exposed data as "highly sensitive." (TechTimes)

📌 24 billion credential records. A publicly accessible Elasticsearch database holding 8.3TB of stolen credentials was discovered. (RSecurity)

📌 Microsoft June 2026 Patch Tuesday. The largest in the program's history: 200 vulnerabilities patched, including an actively exploited Exchange Server flaw. (RSecurity)

📌 Novo Nordisk (June 16). Unauthorized access to a limited number of internal IT systems. Non-public information copied externally. (Industrial Cyber)

Q2 produced the most significant coordinated law enforcement action against phishing infrastructure in recent memory. Threat actors adapted within days.

Tycoon2FA:Disrupted in Q1, Rebuilt Quickly, Then Faded Through Q2

On March 4, 2026 (Q1), Europol coordinated the disruption of Tycoon2FA. Dominant MFA-bypass PhaaS platform. 330 domains seized.

At its peak, it accounted for 62% of all phishing attempts blocked by Microsoft, sending emails to 500,000+ organizations monthly, and enabling unauthorized access to ~100,000 organizations globally. (The Hacker News) | (BleepingComputer)

Activity dropped to 25% of pre-disruption levels on March 4–5, then returned to normal within days. (CrowdStrike)

Through Q2, however, the sustained effect was real. By end of June, Tycoon2FA-linked phishing was running at 8% of its H2 2025 baseline. 92% total decline. Its share of CAPTCHA-gated phishing fell from 41% in March to 12% in June. (Microsoft Security Blog, July 23)

The lesson: infrastructure takedowns work better than critics suggest — but only over time, and only when arrests follow.

Kali365: The Replacement Arrived in April

Kali365 appeared in April 2026 and drew an FBI public warning on May 21. It uses device code phishing, abusing Microsoft's OAuth 2.0 Device Authorization flow. No password theft required. No MFA interception. The victim unknowingly authorizes persistent attacker access to their M365 environment.

Subscribers pay $250/month or $2,000/year and receive AI-generated phishing lures, automated campaign templates, real-time victim tracking dashboards, and OAuth token capture. Device code phishing detections surged 37.5x in early 2026 as at least 11 competing kits entered the market. (FBI IC3 PSA) | (BleepingComputer)

FBI defensive recommendations: Block device code authentication flow with Conditional Access policies, audit existing device code usage, and deploy phishing-resistant MFA (hardware security keys).

Outsider Enterprise / Operation Ghost Hook: FBI + Google Take Down $1.9B Phishing Empire

In June, the FBI, Google, and Black Lotus Labs dismantled Outsider Enterprise. PhaaS coordinated through Telegram. (SecurityWeek) | (BleepingComputer)

The FBI seized administration servers, phishing domains, a Shopify storefront, and ~$100,000 in crypto. The operation was dubbed Operation Ghost Hook, part of the FBI's broader Operation Riptide.

Two numbers tell the whole story: $88/month subscription. $1.9 billion in losses. That asymmetry explains why AI-assisted PhaaS keeps growing.

The OT picture in Q2 leaned heavily geopolitical — and operationally real.

A recurring theme in Industrial Cyber's Q2 coverage: adversaries are visibly shifting from data theft toward operational disruption as the primary objective. The stakes on every advisory below are availability and safety, not just confidentiality.

📌 Iran-linked Handala → Cal Water (June 2026). Handala targeted California Water Service, exposing IT-to-OT pathways in US water infrastructure. (Industrial Cyber)

📌 Black Shadow → US and Middle East (May 29). Gambit researchers linked the Iran-linked Black Shadow group to a destructive campaign targeting US and Middle East organizations. (Industrial Cyber)

📌 Poland Energy Sector Wiper (Incident: December 2025 / CISA Alert: February 2026). Attacker gained access via internet-facing edge devices and deployed wiper malware on RTUs at Polish renewable energy plants and a combined heat-and-power plant. (CISA Alert)

📌 CISA + ATG Systems Advisory (June 4). CISA and international partners urged operators to secure automatic tank gauge systems against ongoing exploitation. (Industrial Cyber)

📌 Phoenix Contact PLCnext vulnerabilities (June 2). Privilege-escalation flaws enabling root access to widely deployed PLCnext controllers. (Industrial Cyber)

📌 US Coast Guard Maritime Cyber Guidance (June 16). Baseline cybersecurity requirements issued for US-flagged vessels, port facilities, and OCS facilities. Maritime now has its own OT cyber rulebook alongside energy, water, and rail. (Industrial Cyber)

📌 ENISA Cyber Europe 2026 (June 10–11). 8th edition of Europe's flagship coordinated incident response exercise. (Industrial Cyber)

The most consequential AI-security document of Q2 wasn't a vendor report. It was OWASP.

OWASP GenAI Security Project published v2.01 of its State of Agentic AI Security and Governance on June 11. The 2025 edition catalogued hypothetical threats. The 2026 edition catalogues actual CVEs. (Help Net Security)

📌 LiteLLM Supply Chain Attack (March 2026 — documented through Q2) — Autonomous bot hackerbot-claw exploited a misconfigured GitHub Actions workflow and pushed backdoored versions of LiteLLM (used by CrewAI, DSPy, Microsoft GraphRAG) to PyPI. ~47,000 downloads before removal. No human direction after launch. (TechTimes)

📌 CVE-2026-22708: Cursor Coding Agent. Attackers poisoned the execution environment so allowlisted commands could deliver arbitrary payloads. The allowlist meant to restrict became the attack vehicle. (OWASP v2.01 via Help Net Security)

📌 Prompt injection attacks surged 340% year-on-year, now the fastest-growing attack category globally. (AI Magicx)

Agentic AI security is no longer a governance slide. It has a CVE number.

President Trump signed "Promoting Advanced Artificial Intelligence Innovation and Security". Most consequential US AI policy action of the quarter.

Three core components: (A&O Shearman) | (Latham & Watkins)

1. Federal & critical-infrastructure cyber hardening Establishes a voluntary AI Cybersecurity Clearinghouse (Treasury-led) and expands AI-enabled defensive tools to state, local, and critical-infrastructure operators, explicitly naming rural hospitals, community banks, and local utilities.

2. Voluntary frontier-model pre-release framework AI developers may provide 30-day early government access to "covered frontier models" before release. Framework design deadline: August 1, 2026. Explicitly not a mandatory licensing regime.

3. Criminal enforcement directive Attorney General directed to prioritize prosecution of AI-enabled unauthorized computer access and data exfiltration.

Political agreement on the first amendment to the AI Act since June 2024. Not all deadlines moved. (Inside Privacy) | (European Commission)

If you've been planning to the original timeline, check which specific obligations apply before adjusting any compliance roadmap. The 16-month Annex III deferral is the headline, but several deadlines are unchanged.

The NIS2 Cooperation Group adopted standardized templates at its 39th Plenary (Cyprus). Organizations no longer need to file in slightly different formats across member states. Aligns with the Digital Omnibus push toward a single EU entry point for incident reporting. (NIS2-Directive.com)

The most significant geopolitical-regulatory development for multinational security and procurement teams this quarter.

On April 7, 2026, China's State Council published and immediately enacted:

On June 18, the CAC, MIIT, and MPS jointly issued China's first dedicated operational rulebook for Network Data Security Risk Assessment — effective August 20, 2026.

On June 22, MOFCOM issued Investigation Measures implementing Decree 834, also effective immediately.

(National Law Review) | (White & Case) | (Morgan Lewis)

These rules restrict supply-chain information gathering inside China and cross-reference PRC data security, cybersecurity, and national security laws.

If your TPRM or due-diligence processes involve gathering information about Chinese supply chain participants, legal review is not optional.

September deadline. Cryptographic inventory must be built now.

Q2 2026 is the quarter regulators stopped debating whether to govern agentic AI and started arguing over how fast and how binding.

US and EU are now visibly diverging:

Multinational teams need both playbooks running in parallel.

Other key Q2 AI-governance data points:

KPMG's 2026 Cybersecurity & Technology Risk Survey found only 24% of organizations have fully integrated AI into their cyber programs — even as AI-powered attacks accelerate. 83% reported an increase in cyberattacks over the past 12 months. (KPMG, June 2026)

Kiteworks 2026: 41–44% of organizations have not implemented basic AI governance controls like human-in-the-loop oversight. 55–63% lack kill switches, purpose binding, or network isolation for AI agents. (BabyBots / Kiteworks analysis)

Industrial Cyber analysis (June 16): AI is quietly dissolving the foundational segmentation assumptions of Purdue Model architecture underlying most OT security programs. The air gap is no longer the default assumption. (Industrial Cyber, June 16)

The gap between AI adoption speed and AI governance maturity is the most significant structural vulnerability entering H2 2026.

For more comprehensive coverage checkout, the following Global AI Regulations Roundups from Securiti:

Together with (Sponsor):

Supercharge your productivity with HubSpot's comprehensive guide to Chat GPT. This free resource is your fast track to AI mastery:

Plus, in-depth sections on email composition, content creation, customer support, and data analysis.

Get The Free Guide

Splunk / Oxford Economics 2026 CISO Report — 650 global CISOs: (Cisco Newsroom)

One in four CISOs considered leaving their role this quarter. Specifically because of AI governance pressure. (Cybersecurity Insiders)

Q1 surveys showed expanded mandate as abstract, Q2 made it concrete.

In a compressed window, CISOs were handed:

→ A DBIR showing patch speed is the #1 breach-risk variable and that infostealer infections are a ransomware early-warning signal — meaning identity hygiene and vulnerability management feed the same risk model.

→ A NIST NVD announcement telling the industry that the central database underpinning vulnerability prioritization can no longer keep up — requiring every scanner-dependent patch queue to be rethought from the baseline.

→ An OWASP report converting agentic AI risk from a governance slide into a CVE patching queue with real advisories against tools developers are already running.

→ A federal EO creating an AI cybersecurity clearinghouse that critical-infrastructure CISOs may be expected to engage with.

→ China supply chain regulations that require legal review of TPRM processes involving PRC-based suppliers.

→ A PQC deadline now 8 weeks away.

None of that is abstract "AI governance." It's vulnerability management, regulatory compliance, and incident response preparation — with "AI" as a modifier on each, not a separate department.

The Hitch Partners Global CISO Leadership Report identified the governance gap — the distance between AI adoption speed and AI governance maturity — as the most significant structural vulnerability CISOs are managing into H2 2026. (Hitch Partners 2026)

Based on field guidance from Splunk, Dragos, KPMG, and Hitch Partners:

1. Patch speed is your #1 breach risk. DBIR's vector reversal is the clearest signal in 19 years of data. Vulnerability exploitation beat credentials. Patching speed and exposure management deserve at least the budget that identity got in 2024–2025.

2. The NVD is no longer a complete baseline. NIST said so explicitly. Threat-intelligence-driven prioritization replaces NVD-CVSS-driven patch queues as the operational standard. Build that capability in Q3.

3. OT/ICS security has its biggest buyer yet. $4.175B for Dragos + runZero + NetRise. A $27B market size estimate. Geopolitical threat actors naming specific utilities. "OT security is underfunded" narrative has a limited shelf life.

4. PhaaS is an industrialized economy. $88/month subscription. $1.9 billion in losses. 37.5x increase in device code phishing. Every MFA strategy that doesn't account for session token theft and device code abuse is incomplete.

5. The regulatory map is now genuinely multinational and diverging. US: voluntary, fast process deadlines. EU: binding, deferred substantive deadlines. China: immediate-effect supply chain rules with extraterritorial reach. Security and compliance teams spanning more than one jurisdiction need all three playbooks running simultaneously.

6. Agentic AI security has a CVE number. OWASP's 2026 catalog changed the conversation. Treat coding agents, agent frameworks, and MCP-style integrations the way you treat any internet-facing software.

Stay ahead. Stay secure.

Until next time — keep the lights on (and the attackers out).

Questions or topic requests for Q3 2026? Hit reply.

Here’s a list of sources used and for further reference reading:

Whenever you are ready - I can help you with:

A: IT & OT Cybersecurity Advisory/Consulting services for businesses.

B: Security Awareness Training & Phishing Portal - Enroll your staff.

C - Securing Things Academy (STA) - trainings for IT & OT practitioners.

Reach out: info[at]securingthings[dot]com or DM me via LinkedIn.

D - Sponsor ST Newsletter - showcase your brand globally or subscribe.

Reach out: newsletter[at]securingthings[dot]com or DM via LinkedIn.