Friday, February 22, 2008

4 Ways that Online Terrorists are Impacting Your Portfolio.

The threat of online terrorism has become a reality in the increasingly digitized world of high finance. The US economy has become more and more reliant on computerized functionality, as has the global economy to a certain extent. Moreover, companies that conduct the bulk of their business online have become major players in a variety of financial venues. A physical storefront on Main Street is no longer a prerequisite for starting a new business, but a virtual storefront has become a necessity.

As more people look to the web to purchase goods and procure services, an ever-increasing amount of money is being poured into digital ventures. Real money is put into the creation of these enterprises and real money is being made by them. It is inevitable, then, that terrorism has followed this widening cash trail into the virtual world. Online terrorism has increased exponentially in recent years and has started to have a real affect not only on individual business, but on entire industry sectors and financial markets. It is important to be aware of the impact that cyber-terrorism can have on the economy. Learn about these four effects of online terrorism and maybe you’ll be able to prevent them from terrorizing your wallet.

1. Threats to trade secrets and intellectual property: Online terrorists have already made a number of sophisticated attempts to gain access to trade secrets and intellectual property in a variety of industries. While they have not always been successful, the threat is very real and is only getting worse. Almost every IP - laden industry relies upon the security of its confidential information to gain stronger footholds in the market, and any breach in this defense can result in huge losses. As online terrorists become increasingly adept at accessing privileged data, companies become less willing to risk huge sums of money on research and development that might only end up benefiting the enterprise with the best hackers.

2. The prevalence of pirated software: In 2004 alone, software companies experienced a loss in revenue of over 30 billion dollars due to pirated software. In this day and age, it is far too easy to find cracked versions of software online, often for free or at a severely discounted price. This cuts into the profits of software producers and again reduces the push for innovation. Moreover, the prevalence of software pirating has made this entire sector a questionable investment, hurting publicly traded software companies and those who invest in them.

3. E-commerce sites closing their doors: As huge portions of the economy now operate entirely in the virtual world, the market has become increasingly vulnerable to online terrorism attacks. Sites such as Amazon,, and eBay conduct millions of transactions every day and are responsible for massive amounts of money changing hands. Therefore, these sites have become popular targets for cyber terrorists. Coordinated attacks on such sites could cause these industries to shut down and retool, causing inconvenience for consumers and staggering financial losses for the companies involved. Even if just a handful of these websites were shut down for even one day, it could result in billions of dollars in lost revenue. These damages would not only be felt by the businesses directly involved, but would be felt throughout the worldwide economy.

4. Direct cyber attacks on financial markets: In December of 2006, al Qaeda moved into the digital world. In their statement, al Qaeda called for denial of service attacks on a variety of financial web sites, including sites that allow for online stock trading. Fortunately, the threat itself had little immediate effect on the markets. However, if such actions were eventually carried out, it would wreak havoc on the way stocks are traded. Financial organizations and individual investors could be devastated by such a move. Trade brokers and consumer banks would not only experience outages and lose important data, but more importantly, any trust that they had earned from their customers might be lost forever.

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Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address


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