GENEVA — U.S. companies are increasingly vulnerable to hacking and other cyber attacks, a senior U.S. official said Thursday and warned a system-wide attack could cause global markets to plunge and trigger widespread chaos.
“It’s one of the biggest headaches for executives, and it’s only going to grow. One of our declassified intelligence estimates put the price tag at the loss to American businesses alone last year at $115 billion,” said Alec Ross, senior adviser for innovation to the U.S. Secretary of State. “This does not even count the forward investments they need to make to harden their IT infrastructure.” This is one of the “new cost centers for business,” Ross said and added, “and what’s worse, if you are a chief executive, one of the problems is you are investing, and you are often doing so with no guarantees.”
Ross said there is an increasing level of cyber conflict and elaborated that “most cyber conflict today isn’t state-to-state government facility; it’s increasingly state to corporation. Most of the cyber attacks that we’re aware of are largely rooted in the extraction of intellectual property from private interests.”
He declined to name companies, but noted a big part of the intellectual property theft also included databases of companies.
“It is easier today to steal intellectual property than it has ever been in the history of mankind. And tomorrow it will be a measure even easier. So, I think that is the most difficult thing,” he said.
Companies need to be aware, he argued, that no matter how big their information technology outlays, all are vulnerable because “the level of sophistication that’s coming out of Shanghai, or that’s coming out of Moscow, is going to exceed the level of defenses that they have to protect their intellectual property.”
Turning to major impediments holding back even faster growth in global e-commerce — which last year saw digital consumer sales for the first time top $1 trillion, according to estimates by eMarketer — Ross singled out the lack of a globally accepted digital signature and problems related to electronic payments.
“There does need to be a harmonized structure globally around a digital signature,” he said. “And, second, the electronic payment system has so much heterogeneity that it lends itself to wide-scale inefficiencies.”
Ross said a complaint that he hears all the time from entrepreneurs all over the world “is their inability to effectively engage with electronic payment systems.”
“The electronic payment system is not harmonized globally. So, I think digital signatures and universal payment systems, if those two things can take significant steps forward, it would do a great deal to increase e-commerce,” he said.