President Obama soon will meet with corporate leaders to discuss the problem of cyberattacks on companies and governments. His national security adviser, Tom Donilon, recently chided China for its attacks on U.S. interests, although the warning had no teeth.
In the midst of all of this, the website of the largest U.S. bank by assets, J.P. Morgan Chase & Co. (NYSE: JPM), was taken down through a number of "denial of services" efforts. The action shows just how easy it is to compromise the online operations of huge American companies, and how little these companies can do to prevent it. The problem likely will get much worse as defense continues to fall to offense in the world of cyber warfare.
Chase admitted the significant extent of the problem but did not estimate how long it would persist, or whether similar issues will recur in the future. Some experts guessed that the Chase attacks originated with a group that might be tied to Islamic interests with objections to a video that cast the Prophet Muhammad in a bad light. In reality, the attack could have come from a number of places, including North Korea, China or hackers in the United States.
The concern about the cyber war, at least among American financial services companies, should be that denial of service attacks are just the beginning. Next, hackers may be able to break into accounts or steal passwords. At that point, bank security claims for customers would lose their validity. Companies and individuals eventually would question the strength of bank systems' chances to protect their assets. Then the financial services industry would confront a measure of chaos.
It is easy to believe that cyberattacks are limited and that they cannot become sophisticated enough to make a real difference to the daily operations of companies or the average American. That is true until it isn't. Not too long from now, people may put money back into their mattresses.
Filed under: 24/7 Wall St. Wire, Banking Tagged: featured, JPM