‘Hugely destructive’ Russian cyberattacks could cost billions of US dollars in economic damage, Goldman warns

Topline

As Russia’s invasion of Ukraine heightens tensions with the United States and its allies, Goldman Sachs economists warn that both sides could resort to malicious cyber activities targeting critical businesses and infrastructure as a way to inflict significant economic damage while avoiding direct military conflict, although there are indications that the United States may have an economic advantage that helps deter risk.

Highlights

Although no Russian-based cyberattacks targeting the United States have been identified since the invasion of Ukraine last month, Goldman economists led by Jan Hatzius said in a research note on Monday that tensions Growing outbreaks have “raised the risk” of malicious cyber activity between the two nations, particularly since nearly 60% of state-sponsored cyber attacks last year were attributed to Russia.

Of the 16 sectors, the Department of Homeland Security has identified being of critical importance to the economy and national security of the United States, Hatzius asserts that the energy, financial services and transportation sectors are particularly exposed to Russian attacks given their high economic importance.

Government-led cyberattacks have always sought to steal intellectual property, sensitive financial plans and strategic information, but there have also been cases of attacks on critical infrastructure, according to Goldman, who adds that Russia the month last pirate Ukraine’s largest financial institutions in the country’s largest cyberattack.

While unlikely, criminal cyber activity targeting US critical infrastructure is still technologically possible and could be “extremely destructive”, Goldman notes, noting that an attack that targets the northeastern US power grid and plunges the region’s 15 states into darkness could cause between $250 billion and $1 trillion in economic damage.

A “high degree of dependence on digital technology” makes the United States particularly vulnerable to cyberattacks, but there are reasons for optimism: high private sector investments in cybersecurity, strict regulation and a strong higher education system helps reduce the country’s vulnerability, Hatzius said. .

Additionally, the threat of US retaliation is “probably a powerful deterrent” against a Russian cyberattack, and frequent attacks in the past by both criminal organizations and state actors have also bolstered the nation’s ability deal with adverse behavior.

crucial quote

“The United States is less vulnerable to cyberattacks than most countries because it invests more in cybersecurity and has stricter regulatory requirements, especially in the financial sector,” Goldman said Monday, adding that Russian attacks from last month, including spam text messages falsely affirming ATMs were broken, left no lasting damage. “However, the United States’ high degree of reliance on digital technology increases the opportunities for disruptive cyberattacks, and experts say it would be difficult, if not impossible, to fully defend against an extreme escalation of cyberattacks. .”

Surprising fact

As part of the decades-long conflict between Russia and Ukraine, the most destructive individual cyberattack to date occurred in 2017, when malware dubbed NotPetya infiltrated a widely used accounting program in Ukraine, destroying tens of thousands of computers belonging to companies like the pharmaceutical giant Merck. The attack, blame on the Russian government, would have inflicted more than $10 billion in damage, or just over 10% of Ukraine’s gross domestic product at the time, according to Goldman.

Large number

$945 billion. This is what the Center for Strategic and International Studies estimates malicious cyber activity costs the world each year.

Key Context

Goldman joins a growing chorus of pundits and government officials warning that cyberattacks are now among the biggest threats to US national security. Federal Reserve Chairman Jerome Powell has long warned that the central bank fears cyberattacks could trigger a market meltdown of similar magnitude to the Great Recession if financial institutions’ ability to track payments is compromised – a risk that the International Monetary Fund estimates could cost banks around $100 billion annually. Meanwhile, President Joe Biden’s national security team has would have made an effort to deter such attacks a top priority following reports that software vulnerabilities were being used to potentially compromise US organizations.

To monitor

Although the White House last month refuse reports that Biden had been presented with a menu of options to execute cyberattacks on Russia, the president then told reporters that the nation was “ready to respond” if Russia pursued its own cyberattacks on U.S. companies or critical infrastructure. “For months, we have been working closely with the private sector to strengthen our cyber defenses, [and] also strengthen our ability to respond to Russian cyberattacks,” Biden said.

Further reading

Cloudflare rejects Ukraine’s call to stop protecting Russians from cyberattacks (Forbes)

Fed Chairman Powell warns that cyberattacks and the spread of Covid-19 are the biggest risks to the economy (Forbes)

Cyberattacks on US infrastructure ‘here to stay’ after 100-gigabyte colonial pipeline hacked, Biden official warns (Forbes)

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