The Big Chill: Don’t Let Cybersecurity Threats Slow Productivity & Economic Growth


William H. Saito

August 4, 2016

Trust is an essential underpinning of life in the digital age. We trust our friends on Facebook not to share our private family photos. We trust our email clients and antivirus software to keep viruses and spam at bay. But for many people, the risks of using the internet are scary enough to curb their online activities.

Earlier this year, the U.S. Department of Commerce’s National Telecommunications & Information Administration (NTIA) looked at the results of a survey by the U.S. Census Bureau in 2015. Out of 41,000 U.S. households, 19% reported security breaches, identity theft, or other malicious activity in the previous 12 months. Among households with mobile data plans, 22% had experienced an online security breach. The most pressing concern, cited by 63% of online households, was identity theft, followed by credit card or banking fraud, and various forms of data collection.

What’s of greater concern is the chilling effect this has had on online activities. Nearly half of online households said that their worries had stopped them from engaging in financial transactions, buying goods or services, posting on social networks, or commenting on political issues online; 30% refrained from at least two of these activities. It’s not surprising that if users were concerned about a particular risk, they would avoid a related activity. Thus, 35% of households worried about identity theft had decided not to conduct financial transactions in the 12 months prior to the survey.

“Privacy and security concerns deterred each of these important activities in millions of households,” the NTIA’s Rafi Goldberg wrote. “In addition to being a problem of great concern to many Americans, privacy and security issues may reduce economic activity and hamper the free exchange of ideas online.”

This is a disturbing finding; imagine if larger groups of people or even entire business sectors curtailed their online activities so significantly. The importance of information and communication technologies (ICT) to economic prosperity cannot be overstated. ICT accounted for some two-thirds of U.S. total factor productivity growth between 1995 and 2004 and about one-third since then, according to the Information Technology and Innovation Foundation (ITIF), a nonpartisan think tank in Washington. Here in Japan, companies, universities and R&D centers have developed advanced technologies but many firms still use outmoded, inefficient means of communication such as fax machines. Japan hasn’t been among the top 10 most developed ICT nations since 2012, according to an International Telecommunication Union ranking. It’s no wonder that the country has lagged its G7 peers in productivity growth, and its service sector is only half as productive as that of the U.S. Japan should be looking at ICT and cybersecurity as a business enabler, a topic I took up earlier this month.

If ICT is key for economic health, we ought to be paying closer attention to when security risks discourage users from regular online activity. Security must not only be incorporated into the basic design of ICT products and services, it must be easy to use. My mantra is that cybersecurity is a balance of cost and usability. Unfortunately, most developers stop at cost and sacrifice usability. This results in clunky, inefficient security measures that are more trouble than they’re worth and ultimately slow users — and businesses and governments — down thanks to how much hands-on maintenance they require. ICT is just now starting to directly affect productivity, with everything from cloud computing, big data, fintech, blockchain and AI becoming increasingly important due to these advances in both ICT and cybersecurity. The time to build security into design, not as a cumbersome add-on, is now.

We can’t let fears about the internet and ICT put a damper on its tremendous potential for boosting economic growth and social welfare. As businesses, we also need to encourage users toward proactive security, rather than sell on fear, uncertainty and doubt. And as an ICT community, we have  to do more to help those who are worried about potential problems like identity theft. An important part of this is educating users and encouraging proper cybersecurity hygiene, as I wrote in this column in May. Avoiding suspicious online messages and links, using two-factor authentication, and updating apps and operating systems are a first step toward better overall cybersecurity.

So go ahead and make that online purchase or write that social media post, but always exercise caution. Don’t be overly cautious to the point of not using these great ICT technologies in the way they were meant to be used. Just like with any innovation or advancement, the latest ICT innovations bring a lot of changes and not all of them are good. With more and more of our lives online, hackers can do more and more damage. But just like we can’t make unbreakable cars or cars that will never kill people, as a society the benefits of automobiles clearly outweigh the negatives. ICT is the same, if not more beneficial. We haven’t reached the level of maturity yet seen in the automobile industry, with its international standards and accountability. We will reach it with ICT, whose proper security will enable business, government and personal productivity. Don’t bury your head in the sand: embrace these changes and the interesting technological times we live in, and become resilient.


This article was written by William H. Saito from Forbes and was legally licensed through the NewsCred publisher network.

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