If there’s one cybersecurity story that dominated the headlines more than any other in 2019, it was the surge in high-profile ransomware attacks on the US public sector. Municipalities all over the country were caught out, leading to major disruption of local schools, emergency services, courts and other public services. It was a reminder, if any were needed, of the absolutely critical role IT systems now play in society.
But what can IT security chiefs learn from the travails of the past year to improve resilience as we head into a new decade? I spoke to several experts recently for an upcoming Infosecurity Magazine feature.
Drowning in ransomware
According to estimates from Emisoft, 103 municipalities and 759 healthcare providers, along with 1,224 schools, may have been impacted by ransomware as of December 2019. These include major cities such as Baltimore and New Orleans, as well as countless other smaller local authorities like Pensacola and Riviera Beach.
Why are these organisations suffering in such great numbers? According to the experts I spoke to, it’s a combination of under-investment in cybersecurity, and the propensity of some high-profile targets to pay-up — encouraging copycat attacks.
“Public sector bodies have been very heavily targeted by ransomware lately. This trend has likely been helped by some public sector entities paying substantial sums to ransomware criminals,” said SANS Institute dean of research, Johannes Ullrich. “Access to information is also very important to public sector entities to conduct business, and under-investment in business recovery plans has led to a lack of backups or other fallback mechanisms.”
According to Scott Styles, data orchestration and resiliency lead at Raytheon Intelligence, Information and Services, current security systems are struggling to keep pace with evolving threat techniques.
“Ransomware is designed to avoid detection and exploit the social nature of the network by hiding in files or hyperlinks that businesses need for day-to-day operations. In addition, ransomware only has to be executed once to be successful and it must be detected as well as removed quickly before it can lock or overwrite files. This is unlike other malware that may need to remain in a system for a significant amount of time, or evade detection within a vulnerable system, allowing more time for detection and removal,” he told me.
“While the time-sensitive value of data and services within these organisations makes them prime targets, the main challenges are not much different than other sectors. Vulnerabilities are numerous, people make mistakes and the threat evolves quickly, creating a perfect storm.”
Weathering the storm
The good news is that a defence-in-depth approach utilising key best practice controls can make a big difference, he added. These include AV, up-to-date patching and configuration management, regular backups, and employee security awareness training.
“They should also consider a multi-dimensional approach that integrates hardware, software, network, and behavioural monitoring into a zero-trust resilient solution,” explained Styles. “These solutions typically have the ability to remain operational even if the threat has defeated perimeter defences or is an insider threat.”
For Kevin Lancaster, general manager of security solutions at Kaseya, one of the biggest threats to US public sector bodies is their use of legacy systems. This makes prompt patching more challenging, but also more important than ever.
“The US Department of Homeland Security (DHS) recently issued a new Binding Operational Directive (BOD 19-02) instructing government organisations to patch critical vulnerabilities within 15 days, and high severity vulnerabilities within 30 days,” he told me.
“Patching on time helps reduce the attack surface and ensures vulnerabilities are mitigated quickly. Automating patch management is moving a step ahead. With tight budgets and limited manpower, government agencies can make sure that patches are not missed across the entire network with an automated patch management solution.”
Local governments must get proactive, by developing and testing incident response and business continuity/disaster recovery plans — if necessary, in concert with third-party providers. However, city staff are also a vital asset in helping to mitigate the threat, Lancaster added.
“For government organisations to be fully prepared to tackle cyber threats, IT directors should have a long-term vision which includes up-skilling their employees in areas of cybersecurity,” he concluded. “With budget constraints always at the forefront of concerns, it might not be feasible to routinely train every member of the team. Instead, areas to focus can be prioritised and worked upon to implement effective up-skilling.”
When we talk about ethics in cybersecurity, it’s largely a matter of where researchers should draw the line so that their behaviour doesn’t start to resemble the black hats their tracking. But there are also serious choices to be made by the security vendors they work for in terms of who ultimately gets to use their products. After all, in the wrong hands, legitimate tools could make the world a darker place, and expose vendors to potential fines and reputational damage.
I spoke to some experts about this for an upcoming Infosecurity Magazine article.
Complexity is everywhere
Discussions around ethics and cybersecurity came to a head recently when WhatsApp launched legal proceedings against a well-known Israeli ‘cyber intelligence’ firm, NSO Group, alleging it had helped to develop and deploy malware that was subsequently used to spy on civilians in the Middle East and elsewhere.
Firms like these notoriously operate in a grey area, claiming they only sell their wares for legitimate law enforcement and intelligence uses. Yet what about the much larger market of ‘regular’ cybersecurity vendors? What controls have they, or should they have, in place to limit who gets hold of their kit? After all, deep packet inspection tools could be subverted by despotic regimes to monitor legitimate internet traffic, and IP address filtering to enforce rigorous state censorship, for example.
Trade association techUK has developed a lengthy guidance document for organisations not sure of where their legal obligations stand, and how to comply. But even then, programme manager, Dan Paterson, told me that it can be difficult for especially smaller vendors to conduct due diligence effectively, particularly in the tricky area of dual-use technologies.
No cause for concern?
Even if they can’t, there may be no cause for concern, according to Privacy International’s state surveillance program lead, Edin Omanovic. He told me that, in fact, current UK export rules rely too much on “non-binding and unenforced risk assessments”, which makes it easy for unscrupulous vendors to sell to hostile nations.
It’s a point echoed by Luta Security CEO, Katy Moussouris, who is helping the US government negotiate the global control regime known as the Wassenaar Arrangement. She suggested when I spoke to her that export controls in tech aren’t even really there to restrict the flow of goods outwards, but merely to give domestic governments a better understanding of what its companies are producing.
If that’s true, then what’s the harm? Well, there are still major risk calculations that organisations must undertake — and it’s not just about selling to authoritarian regimes, according to Amanda Finch, CEO of the Chartered Institute of Information Security (CIISec).
“As with any other aspect of security, vendors need to consider risk when choosing their customers. Selling to the wrong customer might mean that a vendor has no way to support its product or resolve contractual disputes, resulting in wasted resources. It might mean that the vendor loses its unique IP, and ultimately its market position,” she explained to me.
“It might mean that the vendor loses the trust of many customers, if a new line of business opens those customers up to new threats. Even if there is no direct risk to the vendor itself, dealing with customers seen as unethical can still damage a business’s reputation. The vendor may still feel that going ahead with a sale is the right decision, but it needs to have weighed the risks beforehand.”
As with most things cybersecurity, therefore, it all boils down to risk management. And with CSR increasingly important in what is a crowded marketplace, ensuring you’re seen to be acting ethically is vitally important, even if export controls aren’t.
Last week, the world’s oldest travel agent, Thomas Cook, collapsed, leaving around 150,000 holidaymakers stranded. But the demise of one of the UK high street’s best-known brands didn’t just end up costing the government, which had to foot the bill for repatriation. It resulted in another opportunistic phishing campaign of the sort that often follow major news events.
In this case, reports soon emerged of consumers targeted with phone calls and emails purporting to come from ‘refund agents’ who just needed their bank/card details in order to reimburse them for their holiday. I spoke to some security experts to find out how far brands are exposed to such campaigns, and what they can do about it. The consensus is that communication with customers is key.
“Organisations and users are at their weakest, post-incident, when it comes to fraud. As we’ve seen time and time again, hackers almost immediately distribute phishing attempts to try and capitalise on an incident,” Proofpoint cybersecurity strategist, Adenike Cosgrove, told me by email. “The repercussions are huge: it will affect customers as well as financial institutions dealing with the aftermath, as their contact centres are inundated with calls from concerned consumers.”
The primary impact of such scams is on customer confidence and trust in the brands they do business with, according to Gemma Moore, director at security consultancy Cyberis. However, they’re almost impossible to stop, she told me.
“What brands can do is manage their customer communications closely and ensure that their customers are well-briefed about how the brand will communicate with them and under what circumstances,” Moore continued.
“Brands can work to educate their customers to treat communications with a sceptical eye. Many banks, for example, regularly remind their customers that they will never contact them asking for sensitive information like card details by email or telephone. Ultimately, vigilance is the best defence for people who are targeted in this way and brands can help this by maintaining clarity.”
Banks add confusion
So, organisations need not only to have a clear communications strategy but also to remind customers what this is, so that any phishing attempts that deviate from the norm will be easier to spot. With the Thomas Cook incident, however, UK banks added to the confusion by texting their customers with messages containing links and phone numbers to call. Some recipients understandably believed these to also be phishing attempts, especially as some claimed not to have even bought a holiday with Thomas Cook recently.
Once again, transparency and consistency is key to keeping customers safe.
“How the banks communicate is key. There is an argument that they should not use text messages as SMS phishing is rife and would potentially confuse consumers,” said Cosgrove.
Brands must not only try to mitigate the impact of attacks on consumers, of course, but also attempts to phish their employees, which could lead to serious data breaches, ransomware infection or other threats. At the same time, and backed by a global cybercrime economy built on stolen data and dark web sites, cyber-criminals are constantly evolving their tools and tactics to trick both employees and consumers.
One technique gaining in popularity is “angler” phishing, where fraudsters set up Twitter accounts masquerading as brands’ customer service operations. They monitor complaints from customers and then jump in to hijack the conversation, often requesting additional personal info and financial details from the victim.
“Another key trend we are seeing is an increase in domain fraud, where criminals leverage domains to target a known brand or company by sending phishing campaigns that look like genuine communication,” Cosgrove explained.
“Recent research shows that 96% of organisations found ‘lookalike’ domains posing as their brand, with registrations of fraudulent domains growing by 11% last year.”
This is where brand and domain monitoring services could come in handy, although as with any cyber-threat, defence-in-depth is recommended. Phishing campaigns are relatively easy to launch and have a decent success rate, so don’t expect any major change in tactics anytime soon. Ultimately all organisations can do is educate their customers about the dangers, create clear, careful communications policies, and closely monitor abuse of their brands and domains online.
The Domain Name System (DNS) is one of the least understood but most crucial parts of any IT environment. Although it’s operated via a global network of servers under the control of ISPs, non-profits, registries and others, attacks can strike to the heart of any organisation. DDoS, phishing, malware downloads, C&C communications and even data exfiltration can all take place via DNS channels.
Because it’s always on and running in the background, converting domain names to IP addresses so users can surf the web, it’s a great conduit for attackers. But that also makes it a useful place to gain advanced insight and control. I spoke to a range of industry experts on the key challenges and opportunities facing firms.
A new favourite
DNS attacks are becoming increasingly popular with nation state hackers. Sea Turtle and DNSpionage campaigns over the past couple of years have targeted Middle Eastern governments and military organisations. They typically compromise key DNS servers, and change the queries stored in them to enable man-in-the-middle phishing attacks designed to secretly steal important passwords. Part of the problem, according to Nominet’s head of IT security, Cath Goulding, is that the protocol is decades old.
“DNS was designed nearly 50 years ago. The people who created it could not possibly imagine the threats that we face today,” she tells me via email. “The advanced malware that we see could not be conceived 50 years ago, so DNS was not designed to defend against it. Humans simply can’t manually monitor the amount of data that passes through it, so we must rely on algorithms and machine learning to keep us safe.”
Gary Cox, technology director for Western Europe at Infoblox, adds that DNS is increasingly being targeted by hackers as other avenues are blocked.
“DNS has become more and more popular as a result of other security gaps being filled – by things like next-gen firewalls, IDS/IPS systems, highly capable endpoint protection going well beyond just basic Anti-Virus,” he explains to me. “New attack vectors are continually explored and exploited, and the latest twist from a DNS perspective is that DNS over HTTPS (DoH) is now being used to circumvent DNS security controls.”
According to DNS pioneer and Farsight Security CEO, Paul Vixie, services like DoH “are well intentioned but policy-ignorant, and many threats to the user or to the rest of the user’s network are able to bypass security controls when the user bypasses the local name service.”
Another example of a DNS bypass attack which has garnered an increasing number of headlines over the past year is DNS rebinding. In this attack, hackers first get victims to click on malicious links or online adverts, with rebinding techniques enabling them to bypass the network firewall and use the victim’s browser as a proxy to target any devices on this network. It’s predicted that this type of attack could become increasingly popular in compromising IoT endpoints.
What can we do?
So how can IT security leaders hope to mitigate the risk of a DNS-based attack? After all, with the DNS servers themselves usually out of their control, there’s a limit as to what they can do, right? Well, yes and no. Goulding argues that by using analytics services that search DNS traffic, organisations can turn the ubiquity of DNS to their advantage, using it as an early warning system to spot and block attacks before they’ve had a chance to impact the organisation.
“Utilising a DNS monitoring tool is the first step to mitigating the DNS risk,” she explains. “And while not every firm can afford high-level DNS protection, taking steps to ensure staff education is crucial, too. For many workers, they might not be clear what is and what isn’t a malicious link or malicious add. Ensuring staff have the tools they need to work out what might be malicious and what not be malicious will ensure company safety.”
ISACA board director, Asaf Weisberg, adds that DNSSEC should be rolled across the industry “to strengthen authentication in DNS, by using a DNS Zone’s private key to digitally sign the DNS data, and allowing the resolver to confirm the validity of the DNS data through a corresponding public key that is being retrieved as part of the DNS query.”
However, efforts thus far have been poor. It’s claimed that less than 20% of DNS stakeholders have adopted the specifications – a figure ICANN wants improving urgently. Without this kind of cross-industry response, DNS could remain a security blind spot for organisations for many years to come.
The news coming out of the latest G20 summit in Japan has been largely focused, just as Donald Trump likes it, on his trade war with China. But has the self-styled Dealmaker-in-Chief made a tactical error by appearing to relax punitive rules imposed on one of the Middle Kingdom’s leading tech firms, Huawei?
While the details are still to be hammered out, the announcement would appear to be good news for US tech firms, in the short term at least. But it will only serve to buy Chinese firms more time as the country accelerates towards tech self-sufficiency, while failing to resolve the question of who builds America’s 5G networks.
A good day for Huawei
Trump’s announcement over the weekend came after he and Chinese President Xi Jinping met at the meeting of world leaders in Osaka. The two agreed to resume trade talks, halting the imminent imposition of tariffs on a further $300bn of Chinese imports to America as well as relaxing rules preventing US firms from selling components to Huawei. The latter agreement effectively reverses a decision made last month to stick Huawei and 70 subsidiaries on an “entity list”, although even this had been subject to a subsequent 90-day delay. That decision was touted as one made on national security concerns about the Shenzhen-based network equipment and smartphone manufacturer, although Beijing officials have claimed it was more aimed at constraining the global rise of China’s tech giants.
National Economic Council chairman Larry Kudlow subsequently clarified that these US national security concerns “are still paramount”, and that the new agreement did not amount to a “general amnesty”. Instead, it will only “grant some additional licenses where there is a general availability” of the parts needed by Huawei. These include key processors and software produced by US firms. Huawei was hit for six by the US Commerce Department order in May, which imperilled the supply of key smartphone kit from Qualcomm as well as Intel server and laptop chips, Xilinx and Broadcom networking kit and even Google Android support.
Kicking the 5G can
US technology firms will certainly be happy with the G20 decision. Losing one of their biggest Asia clients – one of the world’s top three smartphone producers – would have been a major financial blow. But it does nothing to address the other key China initiative taken by the Trump administration in late May: declaring a national emergency preventing the supply of IT services and equipment from firms (like Huawei and ZTE) considered under the direction of foreign adversaries.
There is therefore still a huge question mark over how the US competes with China more broadly when the only viable supplier of 5G networks at present is Huawei. Its kit is said to be cheaper and as much as a year more advanced than rivals like Nokia and Ericsson. Washington’s decision to block on national security grounds threatens to stall progress in IoT and smart cities, autonomous vehicles and other sectors which are waiting for 5G to accelerate to the next level of development. More important still, there may be significant military advances being held up by these 5G delays.
Former Pentagon official and visiting fellow at The Heritage Foundation, Steve Bucci, is optimistic that homegrown solutions can be found.
“Trump’s comments do not lift these [5G] restrictions, which is spot on. We cannot lift them safely,” he told me by email. “The answer is to challenge US companies to pick up the baton. They can do it technologically, and just need a little assurance their investments will not be in vain. Additionally, it would probably give our allies and friends a few more options.”
An uncertain future
Yet given the hundreds of billions Huawei and China have spent in gaining an advantage in 5G, it’s unlikely at present that US firms can catch up. That could mean long-term decline for its telecoms sector and missing out on a huge economic dividend.
“The leader of 5G stands to gain hundreds of billions of dollars in revenue over the next decade, with widespread job creation across the wireless technology sector,” a Pentagon report warned in April. “The country that owns 5G will own many innovations and set the standards for the rest of the world. That country is currently not likely to be the United States.”
In the meantime, the Trump administration’s initial decision to put Huawei on a trade blacklist will only have strengthened Xi Jinping’s arguments at home that China is still too reliant on the US for key technology components.
Roslyn Layton, co-creator of ChinaTechThreat.com, member of the Trump Transition Team for FCC, argued via email that “Huawei is in a death spiral”.
“If Huawei doesn’t have access to the essential patents from Qualcomm, Huawei is out of business. Huawei can’t make 5G equipment without these patents,” she added.
This may be true. But you can be sure that it and more generally the Chinese state will be working hard to become self-sufficient in these components. Deals like the G20 one simply buy them more time. The long-term picture for US tech suppliers with major markets in China and the many thousands of businesses waiting for 5G networks is far from rosy.
Credential stuffing has been around for years. But the signs are that 2019 might well be a stand out year, as the black hats start to monetise the huge volumes of breached identity data flooding the dark web. While historically many firms’ response has been to blame customers for poor log-in security, this approach is not going to wash going forward. To protect the brand and bottom line, they need to be more proactive.
I spoke to some experts for an upcoming Infosecurity Magazine feature to better assess the scale of the challenge, and what can be done to tackle it.
At its heart, credential stuffing is a pretty straightforward attack. Take large volumes of username/password data from dark web troves, many of which are now arranged in easy-to-use “combo lists”, and feed them into bot-powered automated programmes designed to try and unlock other accounts. Because users share passwords across multiple sites, the hackers will usually succeed: which is bad for consumers and possibly enterprises, if those accounts are corporate ones.
“I’ve seen password reuse on corporate accounts many times and it’s a standard operation to check our password leak database during the reconnaissance phase in every red team engagement,” SANS Institute certified instructor, Matthias Fuchs, explained to me. “Still, many organisations allow outside access to some corporate services like webmail. If they don’t use MFA there, the accounts are at equal risk as on private platforms. After all it’s just another website to try the creds on.”
Experts were agreed that credential stuffing will only grow as we head through the year.
“The sheer volume of credential stuffing attacks since the start of 2019 is alarming. The success of recent attacks against consumer services — TurboTax and Dunkin’ Donuts, to name a couple — is just continuing proof that protecting data instead of protecting identities and people is a failing security model,” Ping Identity CCIO, Richard Bird, told me.
“Unfortunately, organisations are not taking even the most basic steps necessary to thwart these types of attacks, so it’s likely that they will continue to proliferate. Companies must come to the table with better security solutions for their customers. Leveraging available technologies like MFA, device fingerprinting and artificial intelligence to detect anomalous behaviours are just a few steps that can be taken to protect customers and their data.”
Shape Security director of engineering, Jarrod Overson, claimed that credential stuffing would increase “at the rate that bandwidth and hardware allows.”
“Credential stuffing, like all attacks, involves a cost/value justification for the attacker and, right now, it costs virtually nothing to execute an attack that can take over thousands to millions of accounts,” he told me. “Without automated defences in place then an attacker’s best interest is to execute an attack as rapidly as possible to get results before the company recognises and puts in countermeasures. Even with protections in place, Shape recorded its biggest attack ever in January with nearly three billion attacks against one customer in one week against one user flow (the login).”
The bad news is that the black hats continue to evolve their tactics.
“Attackers are getting more creative in how they use personal information to either reset accounts, gain trust or establish online access to accounts. I think one big issue is that attackers are getting smarter in how they use the information and how they monetise stolen information,” SANS dean of research, Johannes Ullrich, told me.
“In the past, there used to be some obvious ways to monetise stolen information, like credit card theft. But the value of this information has been steadily decreasing because first of all, there is already more information out there then can be used, and entities like banks are getting better at blocking access. But attackers are slowly discovering the social component of this. They are now better able to identify trust relationships and to use leaked data to authenticate and take advantage of these trust relationships.”
Overson and his team are seeing the same patterns as cyber-criminals look to ape human behaviour in new ways.
“These advanced attacks involve the exploitation of mobile applications, browser extensions, or third-party scripts to drive the behaviour of an application even after a user has logged in,” he said. “We’re calling the trend towards attacks that simulate human behaviour ‘Imitation Attacks’ — this is an umbrella term that encompasses all illegitimate transactions made seemingly on behalf of a real user. This includes advanced phishing attacks, credential stuffing, password spraying, and other attacks that exploit the inherent functionality of an application.”
The big question for CISOs is how to stop it. Credential stuffing could lead to compromise of enterprise accounts, enabling multi-staged info-stealing raids or BEC attacks. It could also have a devastating knock-on effect on customer confidence and brand loyalty if consumer accounts are hijacked en masse.
For Overson, the answer is rapid response, but countermeasures which should also be removed when the attack subsides. He also recommends a “variable” response, which will make it harder for hackers to predict what defensive tactics the white hats are going to use next.
“There is no silver bullet against automated attackers, because the actors behind the attacks are human adversaries who will always attempt to retool around defences. The paths attackers are taking are the same paths that our users are taking and too much security-related friction in critical user experience flows leads to loss of revenue and business,” he warned.
“Mitigation requires fast-moving collaboration across teams along with security vendors to roll out targeted countermeasures for specific attackers while leaving average users unaffected. As attackers start to retool with more artificial intelligence and machine learning then rapid, limited, variable feedback becomes even more important.”
In today’s globalised business world, what happens in Shenzhen or Singapore may be just as important as trends closer to home. To that end, I recently offered IDG Connect the following round-up of the past year in APAC, and a few notes on what we can expect from the months ahead. As Apple’s dire performance in China has shown, Asia increasingly matters to Western tech firms, their customers, shareholders and partners:
Asia’s technology market had more global exposure in 2018 than in many recent years. There’s just one problem: most of it was negative. President Trump has begun a de facto trade war with China which has now morphed into a full-fledged stand-off on several fronts, with cyber-espionage and perceived unfair Chinese trading practices at the heart of US grievances. As we head into 2019 expect tensions to increase, with other south-east Asian nations potentially benefitting as US firms pull their supply chain operations from the Middle Kingdom.
It could be an extremely nervy time for Silicon Valley CEOs.
The trade war continues
The tit-for-tat trade war started in 2018 might have so far steered largely clear of tech goods, although some firms have begun to warn of an impact on profits. But the industry has certainly been at the heart of the stand-off between the world’s superpowers. In January a deal between Huawei and AT&T to sell the former’s smartphones in the US collapsed after pressure from lawmakers worried about unspecified security concerns. Then came a seven-year ban on US firms selling to ZTE — the result of the Chinese telco breaking sanctions by selling to Iran, and then lying to cover its tracks. Although part of the ban was subsequently lifted temporarily, it highlighted to many in the Chinese government what president Xi Jinping had been saying for some time: the country needs to become self-sufficient in technology. It was reinforced when Huawei became the subject of a similar investigation.
This is about America, and Trump in particular, fighting back against what it sees as years of unfair trading practices by China. The argument goes that the Asian giant has been engaged in cyber-espionage on an epic scale to catch up technologically with the West, and unfairly forces IP transfers on foreign firms as the price for access to its huge domestic market. Thus, the coming year will see a ratcheting up of tensions. China on the one side will look to increase its espionage in areas like mobile phone processors to accelerate plans to become self-sufficient. And the US will continue to find ways to crack down on Chinese firms looking to access its market — probably citing national security concerns. There are even reports that the US has considered a total ban on Chinese students coming to the country over espionage concerns.
“Technology CEOs the world over with supply chain dependencies in China — so probably all of them — should be increasingly nervous and focused on their firms’ efforts to have viable contingency plans for a US-China technology cold war,” wrote China-watcher Bill Bishop in his Sinocism newsletter. That could spell good news for other ASEAN nations like Vietnam, where Samsung has made a major investment in facilities — although few countries in the region boast the infrastructure links and volume of skilled workers China does.
Cybersecurity takes centre stage
As mentioned, cybersecurity and online threats are at the heart of the Sino-US stand-off. The stakes got even higher after a blockbuster report from Bloomberg Businessweek which claimed Chinese intelligence officers had implanted spy chips on motherboards heading for a US server maker. Although the claims have been denied by Apple, Amazon and the server maker in question, Supermicro, they will confirm what many have feared about supply chain risk for a long time and accelerate efforts in 2019 to move facilities out of China. Further fanning the flames is a US indictment alleging Chinese spies worked with insiders including the head of IT security at a French aerospace company’s China plant to steal IP.
In a move likely to enrage China, the US also recently arrested and charged a Ministry of State Security (MSS) operative with conspiracy to steal aviation trade secrets. A major backlash is likely to come from Beijing. But more could also come from Washington after a combative congressional report from the US-China Economic and Security Review Commission called for a clampdown on supply chain risk and warned of China’s efforts to dominate 5G infrastructure and IoT production.
Aside from state-sponsored attackers, there’s a growing threat from Chinese cyber-criminals, according to one security vendor. Western firms suffer millions of attacks per year from financially motivated Chinese hackers, according to IntSights. Expect that to increase in the future as the state encourages criminals to focus their efforts outside the country, or even to team up with hacking groups at arm’s length. Also expect the country’s Cybersecurity Law to have a growing impact on how Western firms do business there. Ostensibly meant to vet such firms for interference by the NSA and CIA, the law could also serve as a pretext for Chinese officials to access sensitive IP and source code belonging to Western firms operating in China.
For other countries in the region, improving cybersecurity is vital to their efforts to attract more foreign IT investment and nurture start-up friendly environments. Although there are pockets of good practice, APAC is thought to be among the least mature regions worldwide. AT Kearney has called on ASEAN nations to increase cybersecurity spending to around $170 billion, warning that they are in danger of losing $750 billion in market capitalisation otherwise.
The threat from Chinese spies and local hackers is compounded by the growing danger posed by North Korea. Its state-sponsored hackers are acting with increasing impunity. FireEye recently identified a new group, APT38, which was responsible for the attacks on Bangladesh Bank and other financially motivated raids. Expect more attacks aimed at raising funds for the regime, as well as destructive campaigns and politically motivated information theft.
Taking a lead
On a more positive note, APAC is increasingly seen as a leader in emerging digital technologies: led by the two regional giants of India and China but also mature nations like Singapore, Taiwan, Hong Kong and South Korea. Microsoft believes that digital transformation will inject over $1 trillion to APAC GDP by 2021, with artificial intelligence (AI) a key catalyst for growth.
AI continues to be major focus for the region. Singapore is a leader in AI thanks to heavy government investment in schemes such as AI Singapore (AISG) and its AI Speech Lab, while government-owned investment company SGInnovate has recently unveiled its Deep Tech Nexus strategy. India is also is also poised to become “one of the most active centres of expertise in AI” according to experts, thanks to government backing.
Asia is leading the way on smart city projects. Investment in initiatives was set to reach $28.3 billion in 2018 in APAC (ex Japan), and is forecast to reach $45.3 billion in 2021 — partly out of necessity. The region’s cities are forecast to add another one billion citizens by 2040, which will require up to 65% of the UN’s Sustainable Development Goal targets to be met.
India’s Modi government has led the way with an ambitious plan to transform 100 cities, although 2019 will be a crucial year, given that recent reports claim 72% of these projects are still only at the planning stage. Many more examples are springing up all over the ASEAN region, however, from flood awareness programmes in Danang to a free public Wi-Fi and CCTV camera network in Phuket. IDC celebrates some of the best examples each year, showing the breadth of innovation in the region.
However, governments will need to do better in 2019 to tackle major barriers to digital transformation identified by the UN. These include excessively top-down approaches; security, privacy, and accountability problems; and digital exclusion. It claimed just 43% of APAC residents were internet users in 2016. There’s plenty of work for governments and the private sector to do next year.