Digital siege
Artificial intelligence, interconnected machines, working from home: digitization is making companies and people more productive, but also more susceptible to cyberattacks. The result: trillions of euros in damage. What Next examines how hackers operate – and how companies and individuals can protect themselves.
The attack came shortly before Christmas Eve: on December 23, 2022 at 7:30 a.m., nothing worked at the Schäfer Shop headquarters in the German city of Betzdorf. The employees of the medium-sized online supplier of office and warehouse equipment could no longer access the virtual servers, IT infrastructure or storage drives.
The webshop and telephone system were out of order, logistics systems were impaired and customer data disappeared. Instead of reviewing Christmas sales figures, the board had to deal with a ransom demand from hackers.
The company reacted quickly by cutting off all external data connections and informing employees as well as the State Criminal Police Office and the relevant data protection authorities.
90 percent of all companies affected
More and more companies worldwide are experiencing the same fate as Schäfer Shop: hackers are using increasingly sophisticated methods to attack the digital security systems of corporations, medium-sized companies, manufacturing businesses or start-ups in order to gain access to sensitive company data, sabotage operational processes or extort ransom money.
According to a study by the German digital association Bitkom, by 2022 more or less every company in Germany had already been a victim of hackers: 84 percent were directly affected and another 9 percent assumed unnoticed attacks. According to the study, 63 percent reported the theft of sensitive data, 57 percent had their digital communication spied on and 55 percent were affected by the digital sabotage of systems or operations.
Cyberattacks greatest danger for companies
And no one believes it will improve: 36 percent of all companies worldwide currently consider cyberattacks and associated data breaches to be the greatest risk for their organisation. In Germany, the figure is as high as 44 percent, according to the Allianz Risk Barometer 2024. In its annual study, the insurance group surveys almost 3,100 risk management experts, including CEOs, risk managers and insurance experts from 92 countries. Other sources of danger, such as the energy crisis or political risks, are considered much less significant.
By comparison, Germany's top managers even classify the shortage of skilled workers as significantly less of an issue for the future of their company. Here, the German economy is not alone: in 16 other countries, including Australia, France, India, Japan, Great Britain and the US, experts also rate the dangers of cyberattacks as the greatest risk for their company.
Globally connected hacker gangs
How complex the infrastructure behind such attacks has become and how globally connected the hacker gangs’ operations are, was shown in a successful investigation from the end of May 2024.
Investigators from a dozen countries worldwide cooperated under the name "Operation Endgame", shutting down six of the world's most influential networks for ransomware attacks. In this type of attack, malware enters the supposedly protected IT system of the attacked company. During this infection, droppers – something like digital spies – examine the IT environment and make sure that no anti-virus software or other security precautions are installed. In the absence of such security measures, the main components of the malware then enter the system of the attacked company to steal passwords or emails from the system.
According to German Authorities, more than 100 servers and 1,300 domains were seized worldwide and crypto wallets with a total volume of more than 70 million euros were blocked at several crypto exchanges. Law enforcement agencies from the Netherlands, France, Denmark, Great Britain and the US were involved in the operation, supported by Europol and Eurojust, as well as investigators from Portugal, Lithuania, Romania, Bulgaria, Austria, Ukraine and Switzerland.
Customer data in the sights and increasing investments into security
The financial consequences of this development are worrying: the US company Cybersecurity Ventures estimates that cybercrime caused six trillion dollars in damage worldwide in 2021. In Germany, the losses have levelled off at more than 200 billion euros per year in the past three years, doubling within just five years, according to Bitkom's calculations.
According to a study by the management consultancy PwC, 70 percent of German companies incurred costs of between 100,000 and 20 million US dollars in 2023 as a result of cyberattacks. The main causes: theft of IT equipment and data, digital and analogue industrial espionage and sabotage.
According to Bitkom, attackers are increasingly targeting third-party data when stealing digital data. In two out of three attacks, communication data such as emails were stolen, and in 45 percent customer data was targeted. The result: loss of reputation and even possible fines from the supervisory authorities. In around one in five affected companies (18 percent), the perpetrators targeted intellectual property such as patents, and in 14 percent financial data was leaked.
Cybersecurity is also crucial for banks. There is a simple reason why they also repeatedly come into the focus of cybercriminals: in addition to the company's own information, the financial industry has access to the huge treasure trove of client data, which is no less interesting for hackers.
“Cyber-attacks could impact banks, their clients and the wider financial ecosystem at any time,” says Brent Phillips, Chief Security Officer at Deutsche Bank. “Due to the dynamics and complexity of the environment we operate in, we need to continuously monitor the security threat landscape and assess developments across technology, geopolitical and economic aspects. It is essential to continually adapt security capabilities to keep pace with the evolving threats.”
Cyber-attacks could impact banks, their clients and the wider financial ecosystem at any time.
Companies in other industries have as well recognized the need to continually invest in cyber measures: According to a survey by PwC, 84 percent of German companies want to increase their investments for IT security. The expenditure is primarily intended to make the operation of the cloud, applications and interconnected machines more secure.
New dangers from AI and quantum computers
Ultimately, there is no alternative. If you look at the new challenges in cyber security that have long been in sight, the rapid development of artificial intelligence is very high on the list.
AI systems are not yet able to attack companies directly. However, they support attackers by using publicly available personal data to formulate deceptively realistic personal emails – and thus entice people to disclose sensitive information or make transfers. It is also possible to imitate voices with the help of AI or even fake people in video conferences.
And finally, quantum computers could fundamentally change the field of cybersecurity. They enable exponential speed-up for some computational problems that are infeasible to solve on any existing technology. For example, most of today's common cryptographic systems will be almost useless in the near future, because quantum systems can easily crack their keys and enable access to underlying systems – whether email systems, online bank accounts or digital signatures. What a conventional computer system takes millions years to break, a quantum computer can do in hours.
This page was published in 08/2024
Georg Berger
… is interested in what cyber security solutions will look like in the future and how emerging technologies such as artificial intelligence and quantum computers will help shape them.
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