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Global Risk Report: Cyberattacks Rank As A Growing Global Threat

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The Internet has changed the way we live, for better and for worse. As the world has become smaller thanks to new technology, it has become necessary to assess new risks and identify ways to respond to them.

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World Economic ForumTo better understand evolving risks, the World Economic Forum recently sponsored its 11th annual Global Risks Report. The 103-page report is based on the annual Global Risks Perception Survey, completed by nearly 750 members of the World Economic Forum. The members come from academia, business, the public sector and civil society, spanning various geographies and areas of expertise.

The preface by Klaus Schwab, founder and executive chairman of the World Economic Forum, states that advances in rapid digitization and technology are transforming societies, which is sometimes referred to as the Fourth Industrial Revolution. While this presents great opportunities, it also involves risks related to rising cyber dependence, along with changing employment patterns and widening income inequality.

The survey asked respondents to consider 29 global risks over a 10-year period and rate them according to perceived likelihood of occurring and what impact they would have. The most impactful risk cited was the failure of climate change mitigation and adaptation, followed by weapons of mass destruction and water crises.

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Cyber Attacks Rise

Cyber attacks were cited among global risks that remain serious, along with fiscal crises in key economies, high unemployment and social instability. There are five risk categories covered: economic, environmental, geopolitical, societal and technological.

Cyber attacks are cited as the greatest risk in North America, followed by extreme weather events and data fraud and theft. North America is the only continent where technological attacks – cyber attacks and data fraud and theft – are predicted.

Major risks in other regions include involuntary migration, water crisis, energy price shocks, internal conflict, failure of national governance and profound social instability.

The technological risks cited in the report include adverse consequences of technological progress, a breakdown of information infrastructure, major cyber attacks and massive data fraud and theft.

Critical information infrastructure breakdown is cited as one of the 10 most challenging global risks. The leading global risks are a failure of climate change mitigation and large-scale, involuntary migration.

Technology’s Downside

While there is hope that emerging technology will improve productivity, the spread of technologies is giving rise to individual innovations and disrupting business models. Internet-related technologies like automation of knowledge work, the Internet of Things, the mobile Internet and cloud technology will be the most disruptive. But the failure to understand and address risks related to technology could impact national economies, especially the cascading effects of cyber risks.

Cyber attacks have emerged as the most likely and potentially most serious risks for the last two to three years in North America. Incidents have increased both in scale and frequency.

To date, most cyber attacks have been isolated, focused on a single nation or entity. But the Internet of Things will lead to more connections between machines and people. This rising interaction will lead to cyber dependency, which survey respondents cited as one of the most important global trends. This dependency will raise the odds of a cyber attack.

In the U.S. and Canada, the two risks cited as the highest concern for doing business are cyber attacks and asset bubbles. Cyber attack is the top U.S. risk, followed by data fraud and theft. The risks related to the Internet and cyber dependency are regarded as the highest concerns for doing business.

Cyber Attackers Target Businesses

Public and private services are becoming more vulnerable to cyber attack. Cyber attack includes cyber crime, espionage and state-sponsored exploits. The attacks are increasingly made against businesses. Cyber crime alone cost the global economy $4.45 billion in 2014. Companies in all industries and sizes have been impacted. Consequences have ranged from reputational to legal and economic.

Cyber attack is viewed as the risk of greatest concern to eight economies: The U.S., Germany, Japan, Estonia, the Netherlands, Malaysia, Singapore and Switzerland. In two countries, public sector organizations have suffered cyber attacks: The U.S. Office of Personnel Management and the Japanese Pension Service.

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Efforts to address and detect attacks are challenged by their evolving nature. Perpetrators constantly find new ways to execute attacks. Companies trying to match this speed in developing prevention and response are often held back by a weak understanding of the risk, inadequate security capabilities and lack of technical ability.

The responsibility of these attacks is unclear to many CEOs. It is uncertain who within an organization actually owns such a risk. There are many “C” level owners, but each has a different interest and often the players do not cooperate. Defining roles for cyber risks is crucial.

Outdated laws undermine governments’ ability to capture cyber criminals and expedite effective legal and regulatory frameworks.

Also read: Cyber warfare: the new arms race

Government-Sponsored Attacks Rise

The threats of government-sponsored espionage surpass the defensive capabilities of many businesses. Companies are accepting the fact that they cannot hope to prevent all cyber attacks. Preventing these attacks is just as hard as identifying and mitigating them. Many attacks are not immediately discovered.

An emphasis is needed on streamlining mechanisms for early detection, response and recovery, and to better manage the consequences.

Cyber crime cannot be fought unilaterally. While companies can follow standard practices or adopt tailored ways to address it, cooperation throughout the value chain with law enforcement is needed. One reason is that attacks can be made through supplier systems.

Public-private partnerships are often difficult due to lack of trust and misaligned incentives. Businesses fear exposing data and practices to competitors and law enforcement.

Governments need to balance their investments in cyber offensive weapons to enhance capabilities for cyber security.

The growing interdependence between machines and people can diminish organizations’ ability to protect their enterprises. Organizations may not fully understand cyber security risks. Particular focus is needed in mobile Internet and machine-to-machine connections. It is important to integrate physical and cyber management.

Regulatory Structures Must Adapt

Another important concern is the growing exchange of data between countries and stakeholders. The current regulatory framework is underdeveloped and lacks the needed legal certainty in transparency, encryption control, privacy, intellectual property, and the impact of proprietary data on competition.

Technology also plays a role in international security. Daesh, also known as Islamic State in Syria, has recruited fighters from more than 100 countries partly by using social media.

While new technology is creating new tools for international security, such as improved capacity to 3D-print weapons from digital templates, technologies are creating new uses not immediately apparent. In addition, innovation typically outpaces regulatory oversight. Advances in robotics, nanotechnology, genome sequencing and artificial intelligence could destabilize world security.

In the Fourth Industrial Revolution, small groups and individuals can inflict large-scale damage.

A New Warfare Frontier

The Internet has opened a new warfare frontier. The “darknet” allows criminals and terrorists to trade. Future conflicts will contain a cyber element.

Darknet

The sea and outer space are likely to become more militarized as both private and public entities have gained the ability to establish satellites or mobilize underwater vehicles that can disrupt fiber-optic cables and satellite traffic. Criminals are already using off-the-shelf drones. Autonomous weapons capable of identifying targets will become more feasible and possibly change the laws of war.

Terrorist and criminal groups will exploit this security deficit and leverage new technologies against security forces. States may choose to double down on security issues and disengage from multilateral collaboration, undermining the effectiveness of global institutions. In some areas, the lines blur between states and violent non-state actors. The area between South America and Mexico, Iraq and the Levant and parts of West Central Africa are areas pressured by civil wars, extremism, crime and humanitarian crises.

To establish order, effective regional powers may emerge. New forms of cooperation could assume roles of trade, finance, security and the Internet. In such a scenario, cyberspace becomes neither global nor open. States will have to exert control over the Internet, building proprietary capabilities in data storage, and infrastructure.

Images from Shutterstock and WEC.

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1 Comment

  1. Real Anti-Racist Action

    January 17, 2016 at 9:56 am

    Hmm, if governments need to safeguard files, do it the Modern Russian way.
    They went back to Type writers, and paper file storage. Easy and simple.
    This all is just Mi6, Mossad and CIA created security problems. It is the Hegelian dialect of…
    #1 Creating the problem in the first place.
    #2 Then marketing that you are the only solution, to the problem you created in the first place to begin with haha.
    This is insanity to buy into their blatant deception. https://www.eff.org/
    http://ihr.org/

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iComply ICO Adds Blockchain Thought Leader “ThePiachu” to Its Management Team

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iComply Investor Services Inc. made a big move this month by landing the services of  Piotr Piasecki, known by many in the blockchain community as “ThePiachu”. Piasecki will serve in the leadership capacity of decentralization manager for the iComply platform ahead of its beta launch in the new year.

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Piasecki’s Track Record

Active on the blockchain scene since 2011, Piotr Piasecki is one of bitcoin’s earliest backers. In 2012, he delivered his Master’s thesis on bitcoin security to the Technical University of Lodz in Poland. Just one year later, he received the first Bitcoin Foundation grant. That same year, he published a paper on smart contracts in Ledger, the first academic journal dedicated to blockchain.

In joining iComply, Piasecki will leave his previous role at Factom, a blockchain services company based in Austin, Texas.

iComply: Right Place at the Right Time

iComply ICO is a platform for token compliance that helps investors and startups navigate the legal and regulatory maze of the ICO market. Investment in ICOs reached $2.3 billion in the first nine months of 2017, surpassing early-stage venture capital. However, the outlook on ICOs has grown murky since the Securities and Exchange Commission (SEC) ruled that token sales can be classified as securities and therefore subject to federal regulation.

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The SEC made a landmark ruling in July that tokens offered by The DAO venture capital fund were securities and therefore subject to federal laws. ICO issuers and investors have been scrambling ever since.

Against this backdrop, iComply seeks to bring more regulatory clarity to the ICO market. It has already engaged with international governments, regulatory bodies and financial institutions in pursuit of a common framework around ICO regulation. Matthew Unger, the company’s CEO, was recently invited to attend the annual meetings of the International Monetary Fund (IMF) and World Bank in Washington.

The timing of iComply’s ramp-up is what attracted “ThePiachu” to the company in the first place.

“After the the recent SEC ruling on ICOs and securities, a new market opportunity arose to help these various companies adhere to compliance guidelines,” Piasecki tells Hacked.com. “And as they say – in a gold rush, sell shovels.”

He adds: ““I believe the ICO landscape will see a new wave of ICO-securities, bringing both renewed interest and a chance for new types of products that we haven’t seen yet in this space to emerge.”

Piasecki believes that the growth and widespread adoption of cryptocurrency will lead to more efficient payment methods put in place. This means having the ability to transact between several currencies without the friction we currently experience. When this happens, the currency you are transacting won’t matter as much as the value it represents.

The shifting regulatory landscape will challenge this paradigm from emerging, as evidenced by the recent crackdowns in China and South Korea. However, markets like Japan are embracing digital payments, with regulators there seeking to streamline and regulate the cryptocurrency system. Russia is taking an entirely different approach by centralizing blockchain mining and allowing digital currency holders to exchange their assets for fiat money.

Featured image courtesy of Shutterstock. 

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Gold Still Beats Bitcoin, According to Goldman Sachs… But What About Price Independence?

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Goldman Sachs has expressed interest in starting a bitcoin trading operation, but it’s not drinking the Kool Aid just yet. In a note to clients, the Wall Street investment giant said gold beats bitcoin in almost every way.

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Gold Wins, Says New York Bank

“Gold wins out over cryptocurrencies in a majority of the key characteristics of money,” Goldman said this week in a note to clients, as reported by CCN and others.

The company also described bullion as being the “best long-term store of value,” as demonstrated by its long history as a unit of value.

“The use of precious metals is not a historical accident – they are still the best long-term store of value out of the known elements,” it added.

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Although bitcoin clearly isn’t gold, the two asset classes share similarities. They are both finite , and can be converted into fiat currencies rather easily. They are also portable and offer anonymity. Some analysts have also compared bitcoin’s store-of-value capability relative to gold’s.

Bitcoin’s Advantage

One of bitcoin’s primary advantages over gold is correlation – or lack thereof. This is actually an astonishing feature of the digital asset, and one of the strongest arguments in its favor.

Whereas most asset classes are correlated, bitcoin’s price movements are completely independent. This essentially means it isn’t impacted by other markets. Stocks, commodities, currencies and commodities have nothing to do with how bitcoin is priced. Bitcoin’s price independence was discussed at length in Ark Invest’s whitepaper Ringing the Bell for a New Asset Class.

According to authors Chris Burniske and Adam White, “Given its unique politico-economic characteristics, bitcoin’s price should behave differently relative to other assets as it is pushed and pulled by distinct market forces.”

This suggests that investors who swap a small percentage of their holdings into bitcoin can lower their exposure to pricey correlations over time.

Of course, price independence doesn’t mean there’s no volatility. Bitcoin, like other cryptocurrencies, is highly volatile. This has actually worked in favor of the bulls over the past ten months, as they’ve purchased the dips every single time.

This also aligns with the findings of the ARK researchers, who studied bitcoin’s risk-reward profile using the Sharpe Ratio. This ratio measures returns based on per-unit risks. Using this as a methodology, the BTC token has exhibited a superior returns in three of the five years examined.

Featured image courtesy of Shutterstock. 

 

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Jamie Dimon May Hate Bitcoin, but J.P. Morgan Is Embracing Blockchain

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J.P. Morgan Chase CEO has made it abundantly clear that he hates bitcoin, but that hasn’t stopped his firm from adopting the technology that underpins the digital currency system.

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J.P. Morgan Launches Pilot Program 

On Monday, America’s biggest bank rolls out the next phase of its blockchain pilot program. The effort will facilitate a faster, more secure transfer of cross border payments between J.P. Morgan and other banks, including Royal Bank of Canada and Australia and New Zealand Banking Group.

Although the new program will not trade cryptocurrency, it will use the landmark record-keeping technology that underpins it. The Wall Street Journal reports that J.P. Morgan will use the same blockchain technology behind digital currency Ethereum.

Despite widespread concern over cryptocurrency, financiers are enamored with blockchain. They, like many others, say the technology can significantly increase the speed of cross-border payments. The system currently in place is extremely complex, and requires multiple streams of communication between various participants. The blockchain has the potential to cut down transaction time from as much as 15 days to mere hours.

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The pilot program aims to achieve a secure distributed ledger across financial institutions, enabling banks to work together to process transactions. Connecting transaction data through a shared network will greatly reduce the number of steps it takes to verify and process transactions.

J.P.’s embrace of blockchain doesn’t mean he’s going to warm up to cryptocurrency. His latest criticism of bitcoin came on Friday when he said it had “no actual value” and that “governments are going to crush it.” He did, however, give a glowing review of blockchain.

“We actually use it. It will be useful for a lot of different things,” Dimon said at a conference in Washington, as quoted by The Wall Street Journal. “God bless the blockchain.”

Featured image courtesy of Shutterstock 

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