As the financial system’s life blood has become digital, it has become more vulnerable to hackers. The latest example is an alleged five year operation run by five Russians and a Ukrainian, who stole (and later sold) 160 million credit and debit card account numbers.
The U.S. Attorney’s Office for New Jersey claims that the computer networks of over a dozen major corporations were broken into. One estimate for the damages to those companies is in the $300 million range, with the estimated losses by account holders in the hundreds of millions of additional dollars.
These losses may be a small amount compared to what may happen in the years to come.
The group allegedly managed to hack into a NASDAQ server, but it’s unclear why or what the group intended to do. The Christian Science Monitor reports this systematic hacking may be a warning of much more sophisticated cyber-attacks to come.
“The worst cyber threats that the financial sector will soon be facing may not be thefts of money,” wrote Scott Borg, director and chief economist of the US Cyber Consequences Unit, a think tank advising government, in a recent report.
Future cyber-attacks could target the information that financial service corporations and their clients use “to create and capture value and to maintain market integrity,” he wrote. “Some of the new cyber-attacks will simply aim to steal this information. Others will attempt to alter or manipulate it to create business and market effects.”
Law enforcement authorities echoed that view Thursday.
“As today’s allegations make clear, cyber criminals are determined to prey not only on individual bank accounts, but on the financial system itself,” said Manhattan US Attorney Preet Bharara in a statement.
If in the future hackers are able to move markets by manipulating data contained in vulnerable computer networks, the potential liability could be in the billions of dollars. Hackers could short the market, make it crash, profit by the market falling, leaving investors holding the bag.
Based on these predictions, the future is bright for computer security experts and the attorneys who work with them. The experts will be needed to fend off these attacks, but if they fail, the litigation potential is enormous. If a group of hackers, exploiting inadequate computer security systems, can cause stock markets to take a plunge. The impact on pension plans, banks, mutual funds, hedge funds and investors could be huge. Insurance companies could get hit twice, by losses in their investments and having to pay out negligence claims on policies held by organizations who were hacked.
Those taking a multi-billion dollar hit due to an organization’s negligence will get their attorneys on the phone to plan the next step to recover their losses. Attorneys working on both sides of the litigation will need their computer security experts to evaluate what went wrong and whether negligence was the cause.
Though the future of computer security may look uncertain, the attorneys and the computer security experts who work in this area will be in high demand.
By: Rodney Warner, J.D.