As the world grows increasingly connected, moving towards both the Internet of Things and the 4th Industrial Revolution, greater cybersecurity is needed. In recent years, cyber attacks against companies have been increasing in sophistication, with their damage ranging from brand damage to irreparably destroying the lives of consumers.
However, it not merely about ensuring the safety of consumer data, but rather guaranteeing the integrity of systems as well. As the world moves into a new golden age of technology – AI and connectivity – cybersecurity should be a main focal point. One such nation, China, has announced a 2030 vision for AI development and seeks to achieve an unprecedented level of technological integration in its citizens’ lives.
Having everything attached together in the Internet of things (IoT) will monumentally increase the vulnerabilities present in any given network. With more nodes, connections and burden of connectivity, systems are going to have to be more secure. Rev 4.0 will usher in more calls for greater cybersecurity.
Placing more of one’s processes online, digitising what would be manual tasks, for example, places a bigger target on one’s back for attackers. Whilst the motivations of assailants cannot be controlled, companies must match their automation and digitisation of processes with stronger and smarter cybersecurity practices.
To take one criterion as an example, using big data to augment digitised processes (such as using data to predict buying trends that then feeds a factory’s production queue with quotas) presents a unique challenge. Companies have a duty to protect that data and thus must secure all transmissions of that data, ensuring all nodes on the network (from the manufacturing robots to the data controller’s terminal) are secure.
Ultimately, AI systems will rely on large datasets, hosted either locally or externally (through the cloud or otherwise) to analyse incoming data from a vast amount of sensors, from heat to motion, and make quick decisions about what needs to be done. Take a smart home AI for example. Acting as a personal house servant, the AI will rely on cloud technology to predict outcomes using existing data about the family. Should you purchase milk every Friday, the AI could use machine learning to create a goal to remind you of it. Whatever the purpose of the AI, cybersecurity needs to be considered alongside the development.
Skills Shortage: Critical Issue
Venture capital firms invested close to $3.1bn in 300 cybersecurity start-ups in 2016, according to research firm CB Insights, presenting large platforms for cyber development. However, whilst the ideas are plentiful, the talent is somewhat lacking. ESG research (2017) found that 45 percent of organizations which took part stated they have a problematic shortage of cybersecurity skills.
A further study conducted by ESG in association with ISSA found that of 343 cybersecurity professionals, 70 percent of organizations were affected by the cybersecurity skills shortage, with 63% believing the shortage increases the workload for existing staff, with 41% believing existing professionals rely on a culture of emergency threat response rather than cultivating security.
Such a skills gap is causing existing professionals to take on workloads that are larger than they can manage, overwhelming them and decreasing their efficiency. Consequently, there is less time for training. Furthermore, the overwhelming workload is also caused by a shortage of working staff in the area, causing professionals to target emerging threats rather than actively patrolling the company’s environment.
Ultimately, a deepening skill shortage will lead to bigger data breaches in the future as attackers become more sophisticated as Jon Oltsik, senior principal analyst at ESG, opines:
‘The cyber-security skills shortage represents an existential threat to our national security and this year-over-year comparison data bears out this fact. We are not making progress, cybersecurity professionals can’t scale, and the implications of the skills shortage are becoming more pervasive and ominous.’
On the other hand, the lack of talent is weakening several areas of cybersecurity, from threat identification to computer forensics. To combat the gap, companies should expand their recruitment area. Whether this includes looking beyond traditional universities to expanding into existing professional backgrounds with applicable skills, talent can be found in a range of environments beyond IT and training on the job can increase the talent’s sophistication in dealing with threats.
Moreover, working closely with cybersecurity firms to create specialised partnerships, talent-swaps (by having teams move in and out of offices of the other firm) and sharing working best practice is key to maintaining a key grasp of emerging trends. What’s more, simply acquiring talent is not suitable for the rapidly advancing working world – companies need targeted and pervasive training to enhance talent and integrate them into the working culture.
Combatting the skills gap should be a priority for companies looking to implement new technologies that have no forerunner in the company; for example, if a company is already using AI, using a new iteration will not require as much training as using automation for the first time. Workshops and skills courses that update workers can be used for re-training on the job.
Ultimately, CEOs should look to re-train rather than hire fresh talent if the skills can be learned on the job as better company experience with new knowledge would outweigh new skills without company or work knowledge. A major impediment to generating business value is companies treating business and IT departments as entirely different organs of the company. For years, firms have hired IT specialists to maintain their networks. Not communicating efficiently leads to a lack of shared understanding. Ensuring that IT specialists regularly communicate with their business compatriots to ensure cross-pollination of ideas is key.
Cybersecurity has suffered from a lack of prioritisation – either resulting from other interests garnering more attention or CEOs not understanding their role in promoting security, this could be caused by the unclear responsibility that has been put on companies to hold cyber standards. CEOs need to consult experts and facilitate better tech adoption by securing their internal infrastructure.
CEOs would do well to understand how the Internet of Things and cybersecurity will impact their business model, from incorporating routine maintenance and updating to regularly consulting experts for ways to secure networks. As the IoT comes to fruition, there will be better technologies available, cutting down expenditure and effort. Staying afloat of these developments will catapult CEOs to the forefront. However, simply treating this as another ‘factor’ in business would be to create a grave injustice; security now underpins all business. Setting up clear policies for data handling and security will help keep things running smoothly.
China: Tightening Cyber Standards
China is also suffering from a talent drought. In pursuit of its larger 2030 AI dream, China has cultivated research areas to better develop practice and AI, including the recruitment of cybersecurity professionals. Yet, at the moment, China is still lagging behind in talent acquisition.
On the legal front, however, the message is different. The Standing Committee of the National People’s Congress, on November 7th, 2016, formally passed China’s first comprehensive, all-inclusive security regulation for cyberspace and took effect June 1st, 2017. China’s approach of using the law as a cyber regulatory tool is attached to its using the internet to build up a domestic information economy and secure network infrastructure that directly benefits national economic development and political stability.
By applying tight controls over its domestic internet to advance its economic, political, and military interests, the approach to what is required shifts from protecting consumers’ data to preventing attacks that threatened party objectives. For China, protecting domestic structures is at the heart of cyberlaw reform and one can certainly see such a move in the latest pronunciation of CSL.
The advent of these new laws has prompted responses from both domestic and international companies, notably Apple, who recently opened a new data centre to comply with laws surrounding the hosting of Chinese data. Furthermore, EY expects its headcount of cybersecurity professionals in China to grow, with Paul van Kessel, global head of cybersecurity services at EY, stating that EY is in, ‘a hyper-growth mood.’ Such a hyper-growth mood comes at a time when greater pressures are mounting on foreign firms, particularly those that deal heavily with domestic Chinese data.
The Second Draft of the E-Commerce Bill confirms the cybersecurity stance and supplements the earlier bill. The issue however, is not that a restriction applies with the data localisation, as that has been known for months. Rather, it is the fact that because the cybersecurity law considers, ‘any company selling goods or services to Chinese consumers as being a covered domestic operation,’ foreign companies beyond China may be liable for security screening of any data collected from users in China. This is certainly a contributing factor for Amazon’s sale of specific operating assets of Amazon’s Web Services in China to Beijing Sinnet Technology. Sinnet has clarified such a move was carried out in further compliance with the local laws and regulations.
Primarily, auditing your company’s cybersecurity to highlight weaknesses and provide solutions to fix them is a key starting point for firms covered by China’s new extra-territorial laws. Further, overlapping projects in preparation for several cyber initiatives, including Europe’s GDPR and China’s new cybersecurity law, will save companies time and money. On this point, complying with China’s law presents unique challenges and could be argued to be costly in the beginning, yet the cost of being unable to access the Chinese market could be far higher.
For companies seeking to combat the skills shortage, recruiting cybersecurity professionals from IT and elsewhere, whilst simultaneously investing in better training will kickstart the drive to better cyber standards. Maintaining talent with career development advice and services, as well as ensuring high levels of job satisfaction, will enable the company to become competitive and retain talent.
SALT – A Technology Bringing New Opportunities?
One goes to a bank, asks to take out a loan, but is denied – Bitcoin is not accepted as collateral. Given its price fluctuations, it seems natural that a bank declines such a request. Then comes SALT (Secure Automated Lending Technology) – the “first asset-backed lending platform to give blockchain asset holders access to liquidity without them having to sell their tokens”. Where the banks are not willing to get their hands dirty, cryptocurrencies seek to find an opportunity; lenders and borrowers are brought together with blockchain assets. Yet could this platform shake the foundations of a stable economy?
How SALT Works
A SALT coin is purchased for $25, which grants the user one-year access to a loan of up to $10,000. The more SALT coins one has, the larger the loan capacity. An amount of cryptocurrency is given as collateral, where the user pays periodic instalments for the loan. This framework creates a base demand for the coin, which can be defined as the underlying driver for its price.
This sounds very convenient for the blockchain asset holder, yet there is one catch: if the value of the crypto falls below the margin requirement, the borrower receives a margin call, and if not fulfilled, the asset is liquidated to cover the remaining part of the loan. If a payment is missed, a portion of the collateral is liquidated.
Everything appears to be in order. Yet when one considers that many investing in cryptocurrencies devote their entire savings – where they would also be inclined to leverage their position – SALT paints a scary picture.
No Credit Checks
Another attribute – or perhaps shortcoming – of SALT is that it requires no credit checks. So anyone can take out a loan; SALT has the collateral, where the lender can liquidate to cover its unpaid loan. The problem affecting society does not arise from a structural weakness of such a system, but from the borrower’s final state.
Stories of Past Misery
As it was observed in recent crises such as the housing market bubble, society fails to learn from its mistakes when it comes to leveraging and investing. This risk of a bubble is exacerbated when combined with a boom in credit.
As former Federal Reserve Chairman Alan Greenspan stated:
“All of us knew there was a bubble. But a bubble in and of itself doesn’t give you a crisis… It’s turning out to be bubbles with leverage”.
The Great Recession happened at the hands of the informed investors. Even though the financially innovative products used at the time were vague, they were created and traded by those informed investors, where the credit ratings of those products were given by well-respected organizations.
Today, when we gaze at the cryptocurrency peninsula, they are either lagging behind, declaring their lack of interest or outright calling everyone to avoid them. Wounds still fresh from the crisis, the average citizen is inclined to ignore their statements, if not completely stand against them. All of these factors brew the pot for a bubble enforced with leverage.
A Scary Tale
Although the market capitalization of all cryptocurrencies is a mere drop in the sea of investible assets, as the penetration of cryptocurrencies deepens, so will the risks along with it. As of now, no one knows how far the price of bitcoin or any other cryptocurrency can rise. But as long as they do, people will be attracted to the idea of depositing bitcoins for a loan to enable them to buy more, and to cover the loan along the way. As for when the bubble bursts, this is a tale with a well-known end.
Bitcoin Futures Hit the Market
The new futures soared 20% on their debut yesterday, which forced exchanges to halt trading.
The most recent chapter in the bitcoin saga finally landed yesterday as the markets welcomed the world’s first bitcoin futures. However, Wall Street was seemingly unprepared for the wild price swings that lay crypto investors have come to accept as normal. Cboe Global Markets, one of the world’s largest exchanges, was forced to halt trading twice due to “heavy traffic”. So far, due to tight risk limits, only a handful of investors have been permitted to purchase the new futures. Next week, Cboe’s rival, CNE Group will launch its competing bitcoin contracts, which should further stir up the market.
Venezuela: Could It Become Cashless Before the US?
An irony is in the making. The basket-case economy mismanaged by near-dictator Nicolas Maduro in Venezuela is short of currency. The Bolívar fell to 108,279 against the dollar on Dec 4. Its plummeting value, coupled with regulatory caps on ATM withdrawals, finds citizens queuing hours for paltry disbursements.
Many now rely on their credit and debit cards for all but the smallest of purchases. This move from cash to digital money turns the Orwellian scenario of cashlessness as a step toward a totalitarian society on its head. It also reverses the argument that cash is still practical when digital systems fail to function.
The Situation in Venezuela
Some 40% of Venezuelans lack payment cards. Many of them will likely migrate to bank cards. If Bolívars sink to the point that no one accepts them, the monetary shift could have beneficial consequences. In a country racked by street crime, an absence of cash would discourage most robberies. This, in turn, would make it safer to conduct retail business. It would deter kidnappings for ransom as well as extortion and any crime in which cash plays a role.
If Venezuela’s ATMs become defunct, thugs will no longer force victims to withdraw funds from them. It would even deny cybercrooks their common means of converting hacked data into spendable money. Crooks in a cashless Venezuela, of course, might simply rob victims of bankcards instead of cash and take ransom and extortion payments in digital form.
Yet, the fact that Venezuelan authorities fail to control street crime doesn’t prevent digital payment processors from cancelling stolen cards and stopping unauthorized payments. Overall, there will simply be less crime, particularly the violent type.
Venezuela’s dire cash shortage contrasts sharply with the United States where tangible money is plentiful, ubiquitous and on course to circulate for decades. But, the two countries share common ground because a great deal of American crime is also tied to cash.
American policymakers are slow to recognize, let alone act on, the opportunity that this presents. The Fed and Treasury Department are, at most, just beginning to “think about” a digital currency. And even this belated idea doesn’t necessarily envision abolition of cash.
The incoming Fed chairman Powell has already reiterated the lame excuse for governmental disinterest in the digitization of the nation’s currency, namely, that intervention in digital money could “stymie innovation.” All the while enlightened governments around the globe are actively winding down their cash systems. America is foolishly becoming an odd-man-out.
The danger associated with cash is serious business. It’s why convenience and other store clerks keep loaded firearms aside their cash registers. One reads occasionally that a pizza deliverer or even an ice cream shop worker is shot, beaten or murdered. Some fifteen banks are robbed in the United States every day. It all adds up. America is violent, in large part, because most of its 1,000+ daily robberies target cash.
Easy to Steal
ATMS themselves are sitting ducks. Officials don’t keep statistics for this crime, but industry observers report that on an average day, thieves across the country use stolen vehicles to ram fifty or more ATMs and cart them off.
Apparently, this ‘crash and grab’ attack isn’t hard to pull off. Step-by-step instructions are available on YouTube. Structural damages to buildings, loss of the machines and cash plus public outlays for this activity alone may run some $2.5bn per year.
The greatest single economic cost of the cash system, however, lies in nonpayment of taxes “due but unpaid” per IRS syntax. It’s one of the rare areas of cash mal-usage that’s well researched. Yet, the fact that cash leaves no trail makes it difficult to estimate the deficiency.
Paying tax isn’t exactly popular, of course. But, paying someone else’s share should infuriate citizens. America’s cash-lubricated underground economy is estimated to run as high as $700bn per year – enough, if redirected, to make universal medical coverage quite inexpensive.
In the social context, the role of cash that deserves ardent attention is in drug abuse. It’s odd that health care strategists are silent about this. The fact that cash is the universal payment for street drugs and in narcotrafficking renders these activities vulnerable to disruption.
Of course, unlike the role of cash in bank robberies, for example, the essentiality of cash in drug abuse is speculative. Other means of payment, even if less secure for crooks, are available. Still, if the abolition of cash were only 10% effective, it would save some 5,000 lives annually. Given the paucity of other prevention methods and the horrific numbers of OD deaths, the ditching of cash should take centre stage.
These observations are a small window on the myriad socioeconomic benefits of ditching cash. Unfortunately, the idea hasn’t yet surfaced in serious discussion. Planning is years away and implementation is further off still. The concept is wholly suppressed by an overemphasis on payment anonymity and distrust of government – a mindset that ignores the profound costs and departs from reality.
It’s a remarkable phenomenon that economic mismanagement in the Bolivarian Utopia is set to undermine the position of American policymakers who embrace cash for its payment anonymity and fail to call for its abolition.
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