Global Risk Report 2014–Digital Disintegration


“As the Americans learned so painfully in Earth’s final century, free flow of information is the only safeguard against tyranny. The once-chained people whose leaders at last lose their grip on information flow will soon burst with freedom and vitality, but the free nation gradually constricting its grip on public discourse has begun its rapid slide into despotism. Beware of he who would deny you access to information, for in his heart he dreams himself your master.” —from Sid Meier’s science fiction strategy game Alpha Centauri

1. Introduction

After the general discussion of global risks, including their ranking based on probability, potential impact, and a combination of these two factors, the Global Risk Report 2014 discussed how the most interconnected of all 31 global risks is that of Global Governance Failure.

It then went into a discussion of how this “central risk” of Global Governance Failure is related to the following three sets of risks:
•Geopolitical and Societal Risks (Instability in a Multipolar World)
•Economic Risks (The Digital Natives Are Restless)
•Technological Risks (Digital Disintegration)

This particular post goes into the third nexus listed above, the link between Global Governance Failure and Technological Risks, in particular, the risks posed by cyber attacks, data fraud/theft, and critical information infrastructure breakdown.

2.  Cyber attacks

The decentralized structure of the Internet creates a dynamic that makes the system vulnerable to cyber attacks.   As it says on page p. 39 of the report, “an attacker needs only to find a single way through defences at a single point in time, while the defender must defend all vulnerable points forever.”

Since more and more of the infrastructure of society is hooked up to the digital infrastructure of the Internet, the vulnerability of the system to cyber attacks creates an ever increasing potential impact.   The Smart Grid, is the online connection of electrical power generation and transmission, increases the potential of cyber attacks to affect power infrastructure.

3.  Cyber attacks–something to CHEW on

An acronym used to summarize the types of cyber attacks is CHEW which stands for Crime, Hacktivists, Espionage, and War.   Here’s a chart which contain some relatively well-known examples of each type of cyber attack:

Cyber Attack

Type

Examples
Crime Target had 40M payment cards stolen between Nov. 27 and Dec.15, making the breach of 11GB of data one of the largest on record.
Hacktivists Sheldon Adelson’s Las Vegas Sands   property hit by a cyber attack this week, crippling a number of the   casino giant’s websites and compromising  employee records.
Espionage A Chinese hacking group dubbed   ‘Hidden Lynx’ has targeted hundreds of organizations around the world since 2009, with more than half of its targets in the US.
War Stuxnet virus, discovered in June 2010 , which launched an attack against Iranian nuclear facilities that almost ruined one-fifth of their nuclear centrifuge capability.

3.   Other risks to the Internet

Besides cyber attacks, there are risks to the Internet in the form of other disruptions of critical information structure breakdown. Here are some examples of possible sources of this kind of risk.

  • Earthquake in San Andreas fault in California (home of world’s technical center in Silicon Valley)
  • Solar flare (disruption of Global Navigation Satellite Systems or GNSS)

4.  National Security Organizations

The decentralized structure of the Internet also spreads the risk of attack  to all countries that are connected to it, as mentioned in paragraph 2 above.   National Security Organizations are in charge of defending their countries from cyber attacks.   However, their use of the Internet as a platform to launch cyber espionage on rival countries complicates the matter, by making the entire system more vulnerable.

5.  From Digital Democracy to Digital Feudalism

The danger of attacks of increasing frequency and severity is that users will be scared away from reliance on the Internet.   The other danger to the Internet is that the current equilibrium state of “Net Neutrality” may dissolve, changing the access to the Internet from its current democratic structure, to a several-tiered system where your access to money dictates how much access to information you have.

If this occurs, the danger is that the world will go from a digital democracy to a series of feudal fiefdoms, with information asymmetry exacerbating the already existing trend towards economic inequality.

6.  Conclusion

Global governance failure is a problem associated with technological risks because the stakeholders that benefit from the information infrastructure (national governments, businesses) are not only defending against those forces that want to attack the system, but are using that system to attack other stakeholders.   This is a short-sighted strategy that may enrich some of those in the temple, with the long-term risk that their activities may end up pulling down the temple over everyone’s heads.

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