Cyber Security And Finance - An Introduction

 

The relationship between cyber security and the economy has only been growing stronger, with cyber attacks on the rise. Cyber attacks have brought a new recognition of the importance of cyber security efforts. Attacks have now become widespread, common, and expected in some firms. New attacks are emerging within weeks due to an underground economy that has seen specialists create built-to-sell malware to a waiting list of cyber criminals. The impacts of cyber attacks have been felt and there are reports that these attacks are only going to get worse. The current and forecasted impacts are a devastation to the global economy. Here, we will introduce cyber security and link it to cyber attacks and the global economy.

What is cyber security – a brief technical description

 Cyber security can be summarized as efforts aimed at preserving the confidentiality, integrity, and availability of computing systems. It's the practice of affording security to networks and systems to protect them from cyber attacks.

Cyber attacks have been on the rise and are targeted at accessing, modifying, or deleting data, money extortion, and the interruption of normal services. Cyber security is of great concern to today's businesses since there has been a high adoption of information technology to achieve efficiency and effectiveness in business operations. The current business environment is such that there are many devices, systems, networks, and users. All these are targeted by cyber criminals, and multiple techniques have been devised and used against them. Cyber attacks are only becoming more effective and sophisticated. Therefore, cyber security is becoming a survival mechanism rather than a luxury for many businesses. Cyber security has multiple layers, which cover devices, networks, systems, and users. These layers are intended to ensure that these targets are not compromised by attackers. In organizations, these layers can be compressed into three categories: people, processes, and technology.

 

People

This is the category that includes users. Users are known to be particularly weak in the cybersecurity chain. Unfortunately, cyber criminals are aware of this and often target them rather than systems during attacks. Users are the culprits in creating weak passwords, downloading attachments in strange emails, and easily falling for scams.

 

Processes

 

 This category encompasses all the processes used by the organization. These can include business processes, such as the supply chain, that could be exploited by attackers to get malware inside companies. Supply chains are, at times, targeted in organizations that are well secured against other methods of being attacked.

 

Technology

Technology relates to both the devices and software used by an organization. Technology has been a prime target for cyber criminals and they have developed many techniques to compromise it. While security companies try to keep abreast of the threats facing technology today, it seems that cyber criminals have always had the upper hand. Cyber criminals can source new types of malware from underground markets and use them in multiple attacks against different technologies.

 

The scope of cyber  security

 The importance of cyber security can't be overstated. The world is in a state of interconnection, and therefore an attack on one host or user can easily become an attack against many people. Cyber attacks can range from the theft of personal information to extortion attempts for individual targets. For companies, many things are always at stake. There is, therefore, a broad scope of what cyber security covers for both individuals and corporate organizations

 

Critical infrastructure security

Critical infrastructure is systems that are relied on by many. These include electricity grids, traffic lights, water supply systems, and even hospitals. Inevitably, these infrastructures are being digitized to meet current demands. This inadvertently makes them a target for cyber criminals. It is, therefore, necessary for critical systems to have periodic vulnerability assessments so that attacks that can be used against them can be mitigated beforehand. There have been several attacks on critical infrastructures in different countries. Commonly-targeted sectors include transport, telecom, energy, and the industrial sector. The most significant one was on Iran's nuclear facility. The facility was targeted using a speculated state-sponsored malware called Stuxnet. Stuxnet caused the total destruction of the nuclear facility. This just highlights the effect of cyber attacks against critical infrastructure.

 

Importance of cyber security and its impacts on the global economy

 Cyber security has of vital importance today ever since the world was networked. Many processes in organizations are enabled by interlinked technologies. However, the penetration of technology into normal lives and organizational processes has introduced people to cyber threats. With every improvement in technology, the threat of cyber attacks increases. New technology, such as IoT, have met the harsh reality of cybercrime. However, current cyber security efforts ensure that the use of technology is not hindered by cyber criminals. There are several reasons why organizations and individuals are emphasizing cyber security; they are outlined here.

 

The number of cyber attacks is growing

With the rapid development of technology, the number of cyber attacks has been growing exponentially. Cyber security reports show that, each year, there is a rise in the number of threats that have been detected for the first time. There are specialists in underground markets that have focused on creating new types of malware that they sell to hackers. Cyber criminals are spending long hours doing background research on individuals and organizations to find weaknesses that they can target. Social engineers are perfecting their manipulation tactics to help them net more victims. At the same time, users have not significantly improved or taken individual responsibility for their own security or that of the companies they work for. The only hope in securing individuals' data, money, and systems lies in enhancing cyber security.

Cyber attacks are getting worse

Cyber crime has evolved from what it used to be. The aftermath of a cyber attack today is often devastating, as can be seen from the companies that have fallen prey to cyber criminals. Yahoo lost its value after it was confirmed that cyber criminals had penetrated its systems and stolen the data of 3,000,000,000 users. Ubiquiti Networks lost over $40,000,000 to cyber criminals that executed a social-engineering attack on its employees. Many other top companies have lost sensitive data to hackers. Individuals are not spared either. The WannaCry ransomware indiscriminately encrypted individuals' and organization' computers in over 150 countries. In general, cybercrime is getting worse. More money is involved, and huge chunks of sensitive data are being stolen. The targets are not limited to small organizations, since big companies, such as Uber and Yahoo, have already fallen victim. Cyber security is therefore essential for organizations and individuals.

 

Impacts on the global economy

The economic implications of cyber attacks are being felt on a global scale. Organizations are losing billions of dollars to attacks every year. Forbes has estimated that with the current pattern, cyber crime will cost the globe $2,000,000,000,000,000,000 in 2019. In 2015, this number was only at $400,000,000. Prior to the estimate from 2015, early estimates done in 2013 reported that cyber crime only costs $100,000,000 globally. As can be seen, the pattern has been such that the cost keeps growing. The World Economic Forum has taken note of this, and with concern. It has warned that the figures could be higher since a large percentage of cyber crime goes undetected. It has identified industrial espionage as one crime where many victims don't even know that they're victims.

Estimation of financial losses related to cyber crime

The financial losses related to cyber crime are incomparable to the cost of cyber security. While cyber security costs remain almost constant, cyber crime costs increase every year. In 2017, it was estimated that annual breaches had increased by 27.4%.

 

The time it takes to resolve a cyber attack is becoming longer than ever. It now takes an average of 23 days to recover from a ransomware attack. Insider threat attacks take up to 50 days to recover from. DDoS attacks take only a few days to recover from, but by then a lot of damage will have been done. In general, the attack duration has increased and that adds to the effects on the victims. The financial consequences can only go higher with more exposure time to an attacker. Globally, the US has witnessed the highest average cost of cyber attacks. The country's average has been higher than the global average since 2017, when it was estimated at $21,000,000. This estimate has grown from $17,000,000 in 2016. The second country in the ranking of those with the highest cost of cyber crime is Germany; it jumped from $7,800,000 in 2016 to $11,500,000 in 2017. Japan is third, with an estimated cyber crime cost of $10,000,000. The UK, France, and Italy follow with estimates of $8,000,000, $7,900,000, and $6,300,000, respectively.

 

Finance and cyber security

There is a strong relationship between finance and cyber security. Finance can be viewed in two perspectives in line with cyber security. Finance is used to procure cyber security products that can be used to prevent cyber crime. Finance is also a direct victim of cyber attacks. Therefore, it continues to be linked to cyber security. There have been attacks targeted specifically at the finance departments in organizations. Other than this, Chief Finance Officers (CFOs) are having to work closely with Chief Information Security Officers (CISOs) in organizations to ensure that they adequately fund their cyber security endeavors. Today, the links between finance and IT are closer than ever.

 

Critical dependency of business, processes, and IT infrastructure

 Today, business is run through computer systems that coordinate processes from different business lines, while making the individual processes more efficient and effective. For instance, in a production company, the supplies department has to be linked with the production department, which then has to be linked with the sales department. This type of chain will ensure that the supply department has already procured input before the production department depletes the ones it has. The production department will control its output depending on the sales such that there is no over-production. To ensure that these three departments continue to operate smoothly, the organization might acquire enterprise resource planning (ERP) systems that will be integrated. The ERPs will ensure that the supplies department automatically gets notified when the production department needs more input. The production department will get actual and forecasted sales to ensure that it doesn't overproduce products that may go to waste. The ERP solution will be the backbone of all this coordination between departments.

Economic loss

As a consequence of the increasing cost of cyber crime, there has been a resultant loss in global and local economies. Based on estimates from McAfee, it is expected that 2018 will see 0.8% of the global economy gross domestic product being lost to cyber crime. This is estimated at $600,000,000,000. Estimates for 2019 show that the economic loss will hit the trillion-dollar mark. This shows that the economic impact of cyber crime is only getting worse. In 2014, the estimated loss was at 0.7% of the global economy. The US has seen a relatively constant increase in the number of cyber crimes reported. Europe, however, has seen the highest rise in cyber crime. It might appear that cyber criminals were once not particularly focused outside the US market. With time, there has been an influx of hacking activity, and the hacks have sporadically grown in the previously-unexplored Europe region. Also, since the US has seen consistent cyber crime, organizations have been preparing themselves for the attacks. Europe is now facing the highest economic loss to cyber crime. An estimated 0.84% of its regional gross domestic product has been lost to cyber crime. In the US, the percentage is at 0.78%