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Davos report: Cyber-attack risk to global stability is real

Not as menacing as the sharpening economic pyramid though

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Cyber-attacks against governments and businesses are among the top five risks in the world in terms of likelihood, according to the startlingly obvious World Economic Forum's (WEF) Global Risks for 2012 report.

According to the international organisation, famous for its annual conferences held in the Swiss resort of Davos, cyber-attacks come in at number four of the risks most likely to materialise: just behind economic fears about income disparity and fiscal imbalances, and concern about rising greenhouse gas emissions.

After holding a mix of interviews, surveys and workshops with experts, the WEF's Risk Response Network penned the pretty document, which weighs up what's pressing on the minds of nation states and top firms.

In the technological sphere, the experts are most afraid of cyber-attacks that spark some sort of devastating malfunction in power plants, water supplies and other critical systems, but they figure that has a relatively low likelihood of happening.

Steve Wilson, chief risk officer for general insurance at Zurich and a member of the project, said the biggest concern for the WEF was the complexity of internet security. He said: "We don't even really understand the risks yet."

The report, which tries to look at the next 10 years of risk, pointed out that technology moves so fast, it's difficult for anyone to keep up with:

Only ten years ago, the dot-com bubble burst, and claims about the internet’s potentially transformative benefits seemed to have been wildly overstated. We can now see that they were not so much overstated as premature. It is worth considering whether the same could prove to be true of current alerts about the internet’s potentially transformative risks.

The WEF dossier concludes: "A healthy digital space is needed to ensure stability in the world economy and balance of power." While this is nothing new to folks in the technology sector, the issue is creeping up many political agendas, and the the report calls "urgently" for new mechanisms to get private investment into exploring system vulnerabilities.

The report also said that information about cyber-attacks and cybercrime is hard to come by:

Research into cyber threats against governments and the private sector has largely been funded by those who are in the business of selling internet security solutions – a potential bias that causes scepticism. Academic and policy papers are based largely on anecdotal case studies.

Vendors of online security products have an interest in talking up the threats of cybercrime, while victims of cybercrime often have an interest in remaining silent. It is therefore very difficult for firms and organisations to get a clear picture of the true levels of the risk and needs for investment. Correcting such information asymmetries should be at the centre of policies to improve global cyber security and to ensure an efficient market.

Although technological concerns are featuring in the top 5 most likely risks this year for the first time since 2007, the experts are still most worried about the ongoing financial crises around the world.

The risk with the most likelihood of happening, according to the experts, is severe income disparity.

While most of us don't feel that wage inequality is quite as bad as when the world had serfs (which is up for debate really), those 1 per cent statistics are nevertheless bringing people down. The report said:

On an unprecedented scale around the world, there is a sense of receding hope for future prospects. Gallup polling data in 2011 reveal that, globally, people perceive their living standards to be falling, and they express diminishing confidence in the ability of their government to reverse this trend.

Their discontent is exacerbated by the starkness of income disparities: the poorest half of the global population owns barely 1 per cent of the global wealth, while the world’s top 1 per cent owns close to half of the world’s assets.

Knowing that a lot of folks earn more than them can be an incentive, but if people, especially the yoof, think that they can't get anywhere no matter how hard they work, they get pretty hacked off. The report warned:

The social unrest that occurred in 2011, from the United States to the Middle East, demonstrated how governments everywhere need to address the causes of discontent before it becomes a violent, destabilising force.

You can read the full report on the potentially bleak future awaiting mankind here (64-page PDF/6.8MB). ®

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