Cybersecurity

By | Updated March 24, 2016 7:20 PM UTC

State-sponsored cyberwarriors are infiltrating nuclear power plants and blackmailing multinational companies. Hacking gangs are breaking in to ATMs. Safety advocates are hijacking cars wirelessly — taking control of steering and brakes from drivers — as a warning about onboard vulnerabilities. Has the Internet ever seemed scarier? Maybe not, but wait. Yes, elite professionals are finding ingenious ways to gain entry to government, industrial and financial networks. Cybersecurity lapses have left some companies shockingly exposed. Still, when it comes to everyday security — of bank accounts and credit cards — the good guys actually have the upper hand.

The Situation

In March, hackers stole more than $100 million from Bangladesh’s foreign reserves; only $20 million has been recovered. In June 2015, U.S. officials reported that Chinese hackers had breached the computers of the Office of Personnel Management, stealing records of as many as 21.5 million current and former federal employees. China was also tied to data thefts from health-insurance providers Anthem and Premera earlier in the year. In summer 2014, intruders dodged sophisticated JPMorgan Chase security systems, then spent two months siphoning off customer information before being discovered. Investigators said the attack originated in Russia. That was bad news that was really bad. Other bad news has turned out better. In April 2014, Web denizens went into a panic after security researchers discovered Heartbleed, a software flaw that left passwords and other personal information on websites exposed. The actual damage? Only a little that anybody could document. In May 2014, Target was first beset by revelations about the theft of 110 million payment-card numbers. Mostly, though, the numbers were useless to the thieves because the PIN codes were encrypted and banks swiftly cancelled most compromised accounts. Experts issued stern warnings of more mayhem to come after a security company reported in June 2014 that cyber-attackers had disrupted a hedge fund’s high-speed trading network. On closer inspection? The attack never happened.

The Background

The first famous hacker was Robert Tappan Morris, the son of a National Security Agency computer scientist, who in 1988 unleashed an Internet attack that crashed thousands of computers. He said a research project got out of control. More than 20 years later, a computer worm called Stuxnet disabled almost 1,000 centrifuges at an Iranian nuclear facility. It was traced to U.S. and Israeli intelligence. Now hackers and the governments that hunt them buy programming code on the same global black markets. Talented hackers can make hundreds of thousands of dollars or more selling a single, well-crafted attack program. Still, breaches like Stuxnet are beyond the capacity of all but the most elite specialty hacker, usually state-sponsored, and the vast majority of threats can be blocked.

The Argument

Effective data security involves up-to-date technology, but also expensive human monitoring of voluminous logs and alerts. Technology can stop low- and medium-level threats. It can’t do much to neutralize inattentive people who use easy-to-steal rudimentary passwords. Hardware and software makers have added more encryption since 2013, when Edward Snowden revealed the extent of the U.S.’s ability to monitor computer data. Because some encryption techniques can make evidence impossible to retrieve with a warrant, they may not ultimately survive court tests. Even in serious breaches, such as the hacking attacks on JPMorganconsumer protections are likely to prevent individuals from suffering financial losses. And banks can reverse or block fraudulent charges instantly so consumers can keep spending. So what’s the current state of cybersecurity? It’s both the worst it’s ever been — and the best it’s ever been.

The Reference Shelf

  • Bloomberg News articles describe U.S. military preparations for cyberwar and Chinese hacking into U.S. utilities.
  • Bloomberg Businessweek chronicled a 2010 attack on Nasdaq computers and the U.S. government’s response.
  • NATO’s history of cyber-attacks.
  • The New York Times traced the origin of the Stuxnet attack against Iran and the National Security Agency’s penetration of the Chinese network-equipment maker Huawei.
  • The security expert Bruce Schneier blogs about cyberwar and online espionage.

First published July 10, 2014

To contact the writer of this QuickTake:
Jordan Robertson in Washington at jrobertson40@bloomberg.net

To contact the editors responsible for this QuickTake:
Jonathan Landman at jlandman4@bloomberg.net
Anne Cronin at acronin14@bloomberg.net