30-01-2018 | POINT OF VIEW
Davos Diary: insights from the 2018 World Economic Forum

This is the second in a series of insights from the 2018 World Economic Forum, Davos. Dr Alastair MacWillson, Parker Fitzgerald’s Chief Technology Advisor, gives his personal account of his week at Davos.

Cyber seen as big a risk as the Middle East situation

I arrived here at 1am this morning after a bumpy flight and a challenging, snow- and ice-filled journey from Zurich to Klosters. Never seen such tight, multi-layered physical security here: someone important must be coming!

We had the launch announcement of the WEF Global Centre for Cyber Security (GCfCS) at 8am which I have been involved with. Of all the technology topics here, it seems that everyone wants to talk about cyber security, so the opening was full to bursting (despite the unfriendly kick-off time!). The new GCfCS will open in March in Geneva, and as highlighted by Alois Zwingg, Managing Director of WEF, the centre is intended to aid collaboration between governments, international organisations, and key industry players for dialogue and real-time action on cyber threats.

Cyber threat is a truly global phenomenon which needs a coherent and coordinated response. Siloed, national initiatives will not be sufficient going forward. It is therefore encouraging to see a consensus this year, at least among WEF members, of the desperate need for a global security platform that combines governmental and private-entity resources to counter the challenges emerging on the threat horizon. This is what the GCfCS is all about.

There has been lots of commentary here that the banking system is ill-prepared to cope with new state-sponsored threats and cyber crime. The sector is in the firing line because of a weak understanding of the way risks are mutating and poor defensive investments, as criminals gain access to more sophisticated cyber weapons. Professional cyber criminals are after high-value targets such as banks while state-sponsored activities are now adding to the growing array of cyber crimes.

Having attended the WEF for the past five years, this is the first time I’ve heard commentary on cyber security being bandied about with a similar risk emphasis to the Middle Eastern situation, protectionism and political interference. Perhaps it is because data integrity, reliability and confidentiality are threads that run through many of the topics under discussion here! It’s also the first time that the growing alarm over cyber warfare and the cyber defence arms-race is evident as a backdrop to conventional topics.

The looming death of Moore’s Law?

It has been a busy day for me here at the WEF. This morning, I was a privileged guest at a fireside chat billed “The Digital Radar”. It was a “by invitation event” just after breakfast and was very well attended. We were discussing the challenges of digital transformation for established businesses, especially financial institutions, and my host asked me if 2017 produced any Black Swans – events that could not have been anticipated or predicted – in the digital world.

I said the demise of Moore’s Law was probably the most profound event of the year, whose implications will echo for years to come.

I was referring to the revelation that there are fundamental design flaws in many of the mainstream processor chip sets that have been exposed through security hacks. Those billions of processors, out and operating, are hugely vulnerable, and will require “band-aid” firmware fixes to address the vulnerabilities, requiring businesses to implement a massive patch programme, to reduce the cyber risks. The implications of the patches and the redesign include an immediate, substantial (30%+) performance reduction in processing capacity across the board. This could be the end of Moore’s Law, to the detriment, and at the cost, of highly connected businesses – banks included.

The frightening thing about this is that the vulnerabilities have been known about for some time, but are something we have lived with, mostly unaware, until hackers got wind of the weaknesses and exploited them to steal data. More frightening still, the tools used to perpetrate these attacks originated as governments created, offensive cyber-attack tools, which were exposed to the world by WikiLeaks and reverse engineered. This is an example of sophisticated cyber weapons getting in the hands of bad guys! A new strategy for security is urgently needed. Shoring up cyber resilience is not only a matter of security and trust, but is also fundamental to realising the promise of the digital economy in lifting growth and productivity.

Doing well by doing good

I went from there to listen to Prime Minister Theresa May’s talk on how big technology companies need to play a more active role in tackling the use of social media platforms for nefarious purposes. This reinforced a noticeable shift over the past few years – the emphasis on digital responsibility. Much greater scrutiny has been placed on BigTech’s ethics and conduct – much like the banks in the wake of Global Financial Crisis.

Data responsibility is a key element. Later that day, I attended a very good session on this topic, titled “Data Responsibility in a Fractured World”. Ginny Rometty, CEO of IBM, was one of the panellists. Her main message offered promise and concern in equal measure. The promise lies in the value of vast amounts of data we have not harnessed: we currently search only 20% of all data stored. The potential of that remaining 80% will be truly transformative for decision making, new business, jobs, trade chains, health and safety. The concern is the associated risks that come with unlocking the value of that remaining 80% of data. Mass data breaches and intentional manipulation of online platforms challenged the data economy in 2017. Guarding while growing the value of data will be key for 2018.

The final day of my Davos visit was spent more in listening than in participation. President Trump delivered his much-anticipated remark on Friday morning. “America First doesn’t mean America alone” was his key message. This appealed to a globalist audience, though details were light on how this could be realised.

I got in some early morning skiing on Saturday before heading off for home. It has been colder, so less slushy, and blessed with a bit of sunshine. There were just six of us on the whole mountain, perhaps proof that Davos is genuinely about making the world a better place, rather than indulging in selfish pastimes!

Click here to read the first in a series of insights from the 2018 World Economic Forum, Davos.

For more information contact:

Dr Alastair MacWillson
Senior Adviser
Email: amacwillson@pfg.uk.com
Phone: +44 (0)207 100 7575

@p_f_g - Parker Fitzgerald