Digital connections bring world closer to Cybergeddon

2014-05-20 08:00

In today’s hyperconnected world populated with smart electricity grids and logistics networks depending on the internet, the threat of a crisis on the scale of the 2008 global financial meltdown looms large.

This was the warning issued in a joint report last month by the Zurich Insurance Group and the Atlantic Council think-tank, which identified seven related risks facing organisations dependent on information and communications technology (ICT).

Left unchecked, the risks could balloon into what Zurich Insurance calls “cyber subprime”, a situation that shares certain characteristics with the global financial meltdown of 2008.

According to the report, many organisations tend to parcel out their ICT functions among different providers of software as a service (for example, Google Docs or Microsoft Office 365) and infrastructure as a service (storage services like Dropbox)?–?similar to the way banks chopped up the risk of subprime mortgages into securitised tranches that were sometimes recombined down the line.

If these cloud service providers are attacked by hackers, this could have ripple effects for other organisations.

The report follows the World Economic Forum’s Global Risks Report published in the run-up to the Davos, Switzerland, gathering earlier this year.

It warned of a “Cybergeddon”, where hackers, national military groups or organised crime groups could disrupt the internet so badly, it would “cease to be a medium for communication or commerce and would be increasingly abandoned by consumers and enterprises”.

A Cybergeddon would cost the world an estimated $3?trillion (R31?trillion) by 2020.

The findings were hot topics at the Davos gathering with McKinsey & Company partner James Kaplan saying: “Check-the-box compliance-based approaches simply don’t work any more.”

Christoph Leuzinger, global corporate boss at Zurich South Africa, said the findings of the report were relevant to the country because “the threat of cybercrime is closer than ever before globally and in South Africa.

“According to the US Federal Bureau of Investigations, South Africa is the sixth- most active cybercrime country in the world,” he said.

He said the recent Global IT Security Risks Survey by ICT security company Kaspersky Lab found that 93% of local participating companies had experienced at least one IT security incident in the past year.

Leuzinger said: “All of the seven interconnected risks are relevant in South Africa, in particular the risk of outsourcing service providers, [a] common practice for many South African firms.

“We see a large number of firms outsourcing [IT] systems and storing their data on cloud- based services?–?a potential cyber-risk if the correct precautions are not taken.”

He advised companies to be aware of the risks and ensure that they had robust systems.

They should also ensure they were fully covered for cybercrime with an insurer that understood this risk.

Organisations could also incorporate the best ideas from the financial governance sector such as creating a G20+20 cyberstability board to enhance cyber-risk management and identify and improve the governance of important global internet organisations.

The SEVEN interconnected risks

1 Risk associated with the cumulative set of an organisation’s (mostly internal) IT hardware, software, servers and related people and processes

2 Risk from dependence on, or direct interconnection (usually noncontractual) with an outside organisation

3 Risk usually from a contractual relationship with external suppliers of services, human resources, legal or IT and cloud providers

4 Risks to supply chains for the IT sector and cyber-risks to traditional supply chains and logistics

5 Risks from unseen effects or disruptions to or from new technologies, either those already existing but poorly understood, or those due soon

6 Risk from disruption to infrastructure relied on by economies and societies, especially electricity, financial systems and telecommunications

7 Risks from incidents outside the system and outside of the control of most organisations and likely to cascade

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.