Global Internet Interruption will Cause Worst Economic Crisis
Global events can have serious economic ramifications as we witnessed with the Corona virus pandemic. An extended global Internet interruption will cause even a bigger economic crisis leading to financial sector meltdown, business bankruptcies, mass layoffs and unemployment, and many other unforeseen consequences never witnessed before.
In current times where there is huge reliance on global online connectivity, an event in one part of the world could affect the entire world. Recently, the global COVID-19 pandemic has demonstrated how much the global economy can be affected by a large scale event. The pandemic has slowed down economies and forced businesses to change their operating procedures. Most brick and mortar businesses felt the full effect of the pandemic. Smaller businesses were mostly affected while digital businesses like Amazon and Zoom flourished, however, an extended Internet disruption will have a much bigger affect in all areas of business and personal lives. During Corona virus or COVID19 crisis, restrictions on movement and gatherings to minimize contact forced many of the brick and mortar businesses to close, resulting in huge losses and layoffs. The biggest beneficiaries in these challenging times have been businesses that had invested in online infrastructure. They have enjoyed greater number of new customers, and increasing revenues. Looking into the future, many people will continue to work from home increasing online activities, and businesses are going to invest more on their online presence and business strategy as most transactions are likely to be online. However, while that is a progressive step, it also exposes businesses, and the world economy at large, to a new kind of risk.
Technology and the Risk of Cyberattacks
Presently, many businesses are making efforts to make their brands and products accessible online. Market trends and customer preferences indicate a rise in online transactions. From mobile money transfers to online payment methods, many economies across the world are relying more on internet connectivity. The innovations in technology continue to make transactions convenient for both businesses and their customers. However, the same technology that benefits global businesses and economies also exposes them to the risk of collapse. Increased dependence on the internet for transactions increases the risk of cyberattacks. A cyberattack has the potential to bring business operations to a standstill. If it goes on for long enough, it can cripple a country’s economy and bring affected businesses to their knees. The economic effects in one country could spiral into other countries across the world, depending on the scale of the attacks and connections with the affected targets. A cyberattack on a global scale could have devastating effects across the world.
The Impact of a Global Internet Interruption on the Global Economy
The world economies have faced economic crises and overcome them many times. However, there is need to reevaluate the current strategies to face an eventual Internet interruption crisis. “Our world has become digitally inter-connected to a point of no return making many countries and businesses targets of counterattacks.” says Henry Bagdasarian. “At some point, an attack on the Internet or select infrastructure will succeed. What will businesses do? Traditional disaster recovery plans will not save affected businesses. Will businesses revert back to non-digital operations if at all possible? How will businesses and consumers communicate with one another?” Bagdasarian asks. Businesses have benefited immensely from the technological innovations and advancements. For instance, businesses and people can complete transactions instantly despite the distance between the different parties involved in the transaction. Online payment methods and mobile money transfers have been a key development in technology that has enhanced global trade. This trend and advancement is highly dependent on a robust internet infrastructure. Thus, global internet interruption would have a massive impact on businesses as well as governments.
A couple of decades ago, it was possible for people to go about life without the internet. However, today, many things rely on the internet. Many people are constantly online working, transacting, studying, and communicating with others. This puts the world in a precarious position where a lot would be at stake if there were to be a critical infrastructure cyberattack or even accidental disruption.
Financial institutions have always been a common target for cyber criminals. The biggest motivation for most of the cyberattacks in the past have been financial gain. The criminals have always targeted these institutions to siphon money out of them. The attacks are rarely on a large scale. However, as cybercrime advances, the financial institutions are going to be casualties in most cyberattacks. Where the cyberattack is of significant magnitude, the effects would definitely spiral to financial systems whether they were the direct target or not.
The financial world today has put up infrastructure to facilitate faster transactions. The installation of ATM machines has reduced the need to visit banking halls for cash transactions with the bank. Similarly, debit and credit cards have become highly popular in trade and daily transactions. All of the platforms that facilitate financial transactions rely on the internet to function. For one to withdraw cash from the ATM machine, there has to be internet connectivity. Otherwise, the transaction would not go through. Similarly, to charge a transaction to a credit card, there has to be internet connectivity. As such, using the modern platforms that support cash transfers depend on the availability of the internet. A global internet disruption would have a major impact on the ability of people to transfer cash or make payments. “To the extent that businesses offer digital services and people embrace them, an internet disruption would have a direct and proportionate affect on businesses and their consumers” says Bagdasarian.
Internet Disruption Scenarios
A global internet disruption can develop in a few ways. First, it can result from an internet backbone attack by a terrorist group or rogue nation. For instance, a terrorist group may decide to cause an internet infrastructure disruption so that it can advance its agenda. It may need an internet blackout to commit other terrorist activities. The disruption may provide the terrorists a chance to carry out criminal activity unabated as nations work to restore internet connection. Nation states may also resolve to cyberattacks to resolve geopolitical conflicts. In an ongoing conflict, a nation may decide to settle scores by causing an internet blackout. The aim may be to cripple the rival nation. However, such an action by a nation may be counterproductive as if the attack were to have a global impact, it would eventually affect the perpetrator state.
Another way the world could face a massive internet disruption would be through the actions of hacktivists. Hackers may use malicious programs to make their points or settle score with a selected target. However, they may fail to foresee the full effect of their activity. A chain reaction of events may result from such hacks and go beyond what the hackers intended. It may spread to affect several countries, or even the entire world.
If hackers were to release malicious software or shut down servers, there would be a massive internet interruption and crisis. It would disconnect people and businesses across the world and cause a massive panic and chaos.
Impact of Global Events on Economies
The financial services and online businesses will not be the only casualties of an internet disruption. Internet business disruption could also result from the impact of cyberattacks on critical infrastructure. For instance, an attack may result in an interruption of the electric grid that could lead to a massive national electricity blackout. That would be debilitating to any economy.
Further, an internet disruption will definitely affect communication channels globally. It will throw the entire world into a communication blackout. That could potentially have a huge impact on economies because of the panic and chaos likely to result from it. Crippling communication lines together with financial systems is a sure recipe for economic disaster. People are likely to react to such a situation with radical measures that may throw the world economy into turmoil.
In the event of an internet disruption of a global magnitude, companies that will bear the biggest impact are likely to be in the financial sector as well as online retail stores. That is because these businesses deal with virtual money most of the time. Most of the transactions involve movement of cash from one account to another. The money transfers are only possible if the internet is on and running. Disrupting internet communication would inflict massive disruptions to the operations in the financial sector. Similarly, the online retail businesses face a huge risk in terms of loss of revenue. Customers will not be able to access such businesses. Unlike brick and mortar businesses where a customer can walk in to make cash purchases, online stores do not necessarily have a physical store. Thus, if they were to be inaccessible online, their services would be unavailable completely.
Regardless of the cause of an internet disruption, the impact would be substantial. The inability to transact or access information is going to cause a lot of panic. Many businesses will ground to a standstill, incurring major losses, healthcare patients will not access medical services, basic services such as water, electricity, gas, and telecommunication will be disrupted. The effects will be far-reaching and it may take a long time to recover. The faith that people have in online businesses will be shaken and some people may not be able to recover from the catastrophe.
It is imperative that organizations and nations take steps to put in place robust infrastructure to mitigate the risks of an internet disruption. Companies need to have an effective online business continuity plan that will ensure they can weather the impacts of an internet cyberattack. While the financial institutions have used their experiences with minor cyberattacks to develop plans for combating cyberattacks, an attack on the internet would require a different approach altogether. Organizations and countries need to collaborate in order to mitigate the impact of a global disruption of the internet. A coordinated response would be key to containing such an attack within the shortest time possible to minimize the impact.
Most businesses today have adopted technology and digitized their operations. That means that they have most of their operations online. The internet has made it possible for businesses to access a bigger market. The recent trend has been to move away from traditional business structure that relied on physical brick and mortar stores to virtual online stores. Given the inter-connectivity of businesses on the internet, an online business disruption would have a catastrophic impact on the businesses. First, customers will not be able to access online stores to make their purchases. Secondly, payment methods will be frozen. Most online businesses depend on the internet for completion of transactions. Online payments require internet connection for approval. A delay in payments by customers and to suppliers would greatly hamper the operations of a company. Businesses are bound to lose revenue due to such a blackout. Moreover, patients will not be able to access medical services and people will be left without basic services. Depending on how long the internet blackout lasts, the online business interruption resulting from the blackout would potentially cause an economic crisis of global significance.
“As digital businesses benefited form the Corona virus pandemic, can brick and mortar businesses with barter transactions benefit from an Internet interruption?” asks Bagdasarian.