The Mother of All Hacks
by James Rickards
DailyReckoning.com
Jul 8, 2015
Computer hacking is commonplace. Barely a day goes by without some company or government agency announcing that one of its systems has been compromised or attacked.
These attacks can take many forms. The most common is a distributed denial of service, or DDOS. In this type of attack, a system is overwhelmed with malicious message traffic so that legitimate users of a website cannot gain access. A DDOS attack does not actually penetrate the system or steal information. It simply obstructs normal access so that the target site is effectively shut down.
Attacks that penetrate firewalls and get inside a system are more serious. These are often conducted by criminal cybergangs who steal credit card and password information that can then be used to conduct unauthorized purchases of goods and services.
This is a more serious kind of breach, but the damage is usually limited by cancelling compromised credit cards or accounts and issuing new ones to affected customers. This can be annoying, time-consuming and somewhat costly, but not life-threatening to the parties involved.
In addition to financial losses, such attacks can cause enormous reputational damage to the entity whose systems were breached. The 2013 hack of Target Corp. (NYSE: TGT) was executed just ahead of the Thanksgiving-to-Christmas shopping season and involved the theft of 40 million credit card numbers and 70 million pieces of personal information, such as customer addresses and phone numbers.
Target’s stock crashed, and the company was subject to over 90 lawsuits alleging negligence. Target spent over $60 million in damage control immediately following the attack, but final damages will total in the billions. Many customers closed their Target accounts and refuse to make further purchases there. The reputational damage to the Target brand continues to this day.
Similar attacks have been launched against JPMorgan Chase, Home Depot and Anthem Health Insurance. Many more have happened, and many more are yet to come.
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