A Cyber Compliance Economy
A recent article from the The Economist on how the Internet of Things (IoT) will change the world is astonishing. According to the report, as microchips become progressively cheaper they are being built in to almost everything.
The decline in prices of a megabyte of data storage is impressive. In 1956 it would cost around U$ 85,000 (in today’s prices) now it is only U$ 0.00002 and it is decisive for an IoT World. Another example of connected decreasing prices is the cost of a sensor normally used in an IoT device which fell from U$ 1.30 to U$ 0.60 between 2004 and 2014.
The “cheap as chips” generates the popularization of IoT devices and many advantages which can be applied in the health care, market intelligence and industry productivity-increasing. On the other hand, a connected world is a playground for hackers and we have dangers related to the hyperconnectivity.
Companies are growing more concerned with the question of corporate liability in case of cyber attacks, digital frauds and data breaches. Governance, risk and compliance are, therefore, top concerns in the corporate environment.
According to the U.S. Department of Homeland Security, manufacturing is the second most targeted industry based on the number of reported cyberattacks. Further, cybercriminals view small and medium-sized manufacturers (SMMs) as prime targets because many of these companies do not have adequate preventative measures in place.
The fear of breaches and cyber-attacks is founded in the financial cost of attacks, which is no longer a hypothetical number. Breaches cause real economic damage to organizations, damage that can take months or years to resolve. According to CISCO’s research respondents, more than half (53 per cent) of all attacks resulted in financial damages of more than US$500,000, including, but not limited to, lost revenue, customers, opportunities, and out-of-pocket cost.
New regulations and norms are expected to solve new problems. As Professor of European Law at Groningen University Sofia Ranchordás, says: “Legislators — like scientists — can be nevertheless conceived as ‘problem-solvers’ that instead of pretending to know what the world is like based on theoretical knowledge, should also gather information and evidence to support their legislative choices”.
So, Compliance rules have a special place in this new world and companies have to be prepared for that.
The global dialogue on cybersecurity regulation is evolving from a conceptual discussion about nation-states’ rights and responsibilities toward an articulation of norms of state, industry behaviour and corporate liability legal framework. According to a recent Microsoft report, stakeholders from governments, the private sector, academia, and civil society are putting forward myriad norms proposals, addressing a range of challenges caused by the exploitation of information and communications technology (ICT) systems.
Thus, for a really healthy cyber economy and sustainable development of technology we have to avoid cyber-surveillance, misuses of computer science and punish hardily cybercrimes. It will happen with cybersecurity measures, risk assessment, compliance and governance.
Private and Public sectors have to work together on new regulations, which will come from both nation-states and public authorities and a compliance culture wil have to be adopted by companies and entrepreneurs.
Joao Paro is a regulatory consultant at Compliance and Risks Image: Nick Youngson
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