Increase in Cyber Attacks will Disrupt Global Economy

As people, businesses, and governments approach a more digitally dependent way of life, the risk of breached technological security becomes much larger of an issue. Cyber attacks are rapidly increasing in frequency, targeting celebrities, large businesses, and financial institutions. In mid June of this year, hackers gained access to JPMorgan’s internet servers that contained user information of current and former customers who accessed the bank’s websites. The bank didn’t discover the attack until about two months later, but they promptly found and closed all access paths to the vulnerable servers. A few days ago, JP Morgan stated that contact information for 76 million households and 7 million small businesses were compromised in this attack. This included information such as names, email addresses, and phone numbers. Fortunately, no financial information such as passwords, social security numbers, and account numbers were taken, and there were no signs of irregular fraud. Although the investigation isn’t final, there is speculation that the attack emanated from Russia through malware. JPMorgan is now planning on spending around $250 million this year to protect itself from future cybercrime. The day after the amount of people affected by the cyber attack was released, JPMorgan and Chase’s stock took a 1.56% fall, bringing its value down to about $58.84 per share.  CEO Jamie Dion stated in his annual letter to shareholders:

“Cyberattacks are growing every day in strength and velocity across the globe. It is going to be continual and likely never-ending battle to stay ahead of it—and, unfortunately, not every battle will be won.”

JP Morgan isn’t the only company that is stressing out about external cyber attacks. According to a report by McKinsey & Company, nearly 80 percent of technology executives said that they don’t feel like they can keep up with the increasingly sophisticated cyber attack strategies. It is estimated that by 2020, cyberattacks could slow the pace of technological and business innovation at a magnitude of as much as $3 trillion on a global economic scale. A trade-off will occur for many companies due to the fact that money that would be spent on improving products or business practices will have to be allocated to cyber security. This looming issue has grabbed the attention of many CEOs. Unfortunately, they are quite pessimistic about the state of their ability to combat cyber attacks both within the company and through government relations. A survey by the World Economic Forum asked 200 companies and agencies about what impact government regulation has on their ability to manage cyber security related risks. A majority of the representatives answered that although the regulations take a lot of time and effort to conform to, but they don’t actually make the company more secure. In September, the United States instated that a company is legally required to immediately notify the Department of Defense if their information system is a victim of a cyber-attack. In addition, the company must provide the Pentagon with access to the breached computer systems for investigation and forensic analysis. The Department of Defense plans to spend $23 billion through 2018 to combat cyber attacks. Although the United States government is beginning to take action, the global economy as a whole has yet to find an adequate defense against the rise of cyberattacks. For the sake of both business innovation and maintaining good consumer relations, prompt and effective action on cyber attacks will be vital in the next few years.

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