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CLIMATE CHANGE IS A TECHNOLOGICAL CHALLENGE

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By Professor Frédéric Fréry, ESCP Business School

 

Even as climate change threatens our prosperity and, in the long-term, global peace, a disastrous trend rooted in ecologism is promoting asceticism and degrowth. We must stop fighting the wrong battle! Rather than stifling scientific ambitions and rejecting all technological solutions, we must mobilize our ingenuity and pursue the solutions that will enable us to overcome this formidable obstacle.

In 1969, in one of the most astounding technological feats in human history, the United States succeeded in sending men to the Moon, less than seven years after John Fitzgerald Kennedy announced this ambition. Now humanity is facing an even more extraordinary technological challenge: that of climate change, which is threatening our habitat, food, prosperity and, in the long-term, global peace. In order to respond to this daunting challenge, we must mobilize the ingenuity of millions of men and women and massively invest in technological solutions to an even greater extent than JFK’s space race. Yet politicians and the media seem tempted by frugality and degrowth, advocating the precautionary principle and sobriety over mobilization and boldness. However, choosing to back down rather than face the obstacle would mean fighting the wrong battle.

 

Promising technology

Technology can and must be developed to fight the rise in temperatures. The most promising non-greenhouse gas emitting energy sources include geothermal and hydrothermal energy, synthetic fuels, nuclear fission and soon nuclear fusion, as opposed to solar and wind power, which cannot sustain our way of life due to their intermittent nature.

This low-carbon power generation will lead to more virtuous solutions for our needs for transport, habitat and food: electric cars and zero-emission aeroplanes, more environmentally-friendly building materials and energy-efficient housing, protein alternatives to livestock farming. Finally, quantum computing will increase the potential of our artificial intelligence.

All of these technological advances, including those linked to recycling, are crucial in safeguarding our future. However, these innovations will require collective global mobilization.

 

The doom and gloom movement

Rather than seeing these technological advances as solutions, supporters of doom and gloom ecologism see them as part of the problem. The environmentalist collapsology trend is inherently anti-tech: it paints an idealistic view of organic agriculture, rejects advances such as GMOs, and plays on the public’s fears in advocating the closure of nuclear power plants, despite the relativity of the hazards (cigarette smoking is responsible for more deaths in France per month than civil nuclear energy has caused since the 1950s).

Far from being the “blind optimism” or “Promethean dream” that critics depict, a pro-technology approach is a progressive and daring ambition. This political, scientific, and financial momentum is not based on blind trust or technological utopianism from another century. It involves making informed decisions from among the multiple opportunities created by technological progress.

 

Two threatening dystopias

This doom and gloom perspective reflects a lack of faith in humanity, and threatens to paralyze us with fear, causing us to abandon any pursuit of enlightenment, falling instead into modern-day Malthusianism, as witnessed in the GINK (green inclinations, no kids) movement which discourages people from having children to avoid producing more “little polluters.” Ecologism of this nature is not humanist. It negates human creativity, the spirit of adventure, and curiosity. It seeks to use a stern sense of guilt to constrain the momentum that has always driven humanity.

Furthermore, it is hardly realistic to imagine peaceably convincing hundreds of millions of human beings to give up the comfort and prosperity they enjoy or to which they aspire. Sooner or later, there is a danger of this commitment to degrowth moving from conviction to constraint and prompting dictatorship, a temptation inherent in any group convinced it has the monopoly on truth.

The collapse of society is therefore like a self-fulfilling prophecy. It either paralyzes innovation efforts through fear (obscurantist withdrawal), or provokes a populist response to environmental tyranny (widespread Trumpism). In order to avoid these two dystopias, and truly fight climate change, we must not let ecologism gain the monopoly.

 

The case for capitalist ecology

When ecologism condemns technological solutions, it is in reality attacking capitalism. When it denounces the commodification of nature and consumerism, it is in essence declaring that “green” growth is impossible.

Yet this anti-capitalist position has two limits:

  • First of all, environmental damage is not specific to capitalism. We only need to consider one recent example to realize this: the impacts of the Soviet Union.
  • Secondly, refusing capitalism means refusing its number one strength: it is the most tremendous catalyst of human energy in all of history. While the concept is not morally attractive, the lure of individual gain is an extraordinary driver of collective prosperity.

 

In short, rather than fighting capitalism, we must make it our ally. How? By making the protection of biodiversity and the fight against climate change lucrative activities that could attract ambitious entrepreneurs and interested investors. The human energy that will be released in pursuit of a fortune to be made in protecting the environment will be infinitely greater than any response to calls for restraint. Ecology must embrace capitalism’s energy in order to achieve its goals. The story has yet to be written, but we should choose ambition over resignation, energy over contrition, and science over degrowth.

 

Frédéric Fréry is a Professor in the Management Department at ESCP Business School. He teaches on strategy, organization, and innovation management. He has authored numerous books and articles, speaks at conferences, and is a columnist in the financial press. His research focuses on strategic innovation.

 

This article was originally written as part of the ESCP Business School’s “Better Business: Creating Sustainable Value” series. https://escp.eu/faculty-research/erim/Impact-Papers/Better-Business-Creating-Sustainable-Value

Finance

HOW FINANCIAL ORGANIZATIONS CAN PROTECT THEIR DATA

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Yuval Wollman, President, CyberProof and Chief Cyber Officer, UST

 

Top executives from Wall Street’s largest banks pinpointed cybersecurity as the greatest threat to America’s financial system, at a Congressional hearing that took place in May.

The concern of financial industry leaders with cyber-attacks is neither surprising, nor new. The attraction of cybercriminals to banks and other financial institutions makes sense, given the fact that the financial sector functions as gatekeepers – not just of financial assets, but also of valuable Personally identifiable information (PII).

Threat actors are attracted to attack financial institutions to earn a profit through increasingly sophisticated attacks that range from ransomware attacks to identity theft. But while the threat continues to grow, there is much that can be done to mitigate the risks.

 

The Downsides of Digital Banking

The number of attacks on financial institutions increased sharply in the last two years due to the upheavals wrought by COVID-19, which prompted a dramatic rise in the number of online transactions.

With so much of today’s financial transactions done on both web and mobile devices, threat actors have more opportunities than ever before. Take, for example, the growing importance of Man in the Middle (MITM) Attacks, which impersonate another party online and give criminals access to personal data, passwords, and banking details.

With the widespread adoption of digital banking, consumers have become increasingly worried about cyber-attack. As a result, there’s growing demand to create better consumer protection laws that respond to the rapidly evolving technology. The U.S. Federal Trade Commission (FTC), for example, recently strengthened security safeguards for consumer financial information.

 

It’s Not “Just” About the Money

Financial organizations are at risk not just from threat actors looking for profit, but also from nation-states and hacktivists acting out of idealistic motives or as a means of achieving specific political ends.

The most famous examples of this type of attack include Russia’s 2016 attack on Ukraine’s electric grid and North Korea’s 2017 attack on Britain’s National Health Service.

Because of the extent of the damage that this type of attack could cause, NATO established cyberspace as the “fifth domain of warfare” in 2016. It developed a definition of when foreign factions are banned from attacking financial institutions, due to the fear that this type of attack could directly lead to a country’s destabilization.

 

Recognizing Risk Factors

The digital transformation of financial services helps banks and other financial institutions provide more a more convenient customer experience.

And while significant customer demand has led many banks to implement changes such as the transition from legacy to cloud-based solutions, these shifts also have the potential to create additional security risks.

For example, if we’re talking specifically about cloud migration, there’s need for additional security layers to protect organizations working with public cloud providers from the range of attacks targeting the financial sector: ransomware, account takeover, data theft and manipulation, phishing attacks, identity theft, and more.

Another example is the extensive use of third-party vendors, which has increased the risk of attack for organizations in the financial sector. Because third-party vendors enlarge the attack surface, they create more entry points to the system and make it harder to protect customer data.

 

Accelerating Detection & Response

By adopting an agile approach that supports continuous improvement, financial organizations can facilitate proactive identification of evolving threats and vulnerabilities in the wild. More specifically, by placing an emphasis on use case optimization – which starts by mapping out an organization’s threat detection gaps to a framework such as MITRE ATT&CK – enterprises can prioritize threats and invest their time and resources in mitigating risk more effectively.

For organizations transitioning to the cloud, what’s key is managing the migration process in a way that provides optimal visibility in the cloud and supports ongoing optimization at the enterprise level. Digital playbooks are a crucial tool in providing improved detection and response, creating automated or guided responses that allow faster, more effective, collaborative action.

The development and regular review of incident response plans similarly allows for efficient response in emergency situations and helps reduce the business impact of cyber-attacks.

 

Targeted Threat Intelligence

Threat intelligence that’s tailored to the financial services sector is another key component of timely detection and response. By working with expert Cyber Threat Intelligence (CTI) services, organizations can obtain up-to-date information about industry-specific threats in real time – information that is a highly valuable tool in strengthening the defense of an enterprise.

 

Cyber Hygiene

Employees make mistakes; after all, it’s only human. But these errors can lead to massive data breaches. For example, when someone clicks on a phishing email or leaves passwords for a company computer on a slip of paper that’s easily seen by the wrong person, the damage can be astronomical.

Providing regular cybersecurity training programs for employees can help minimize the risk of an accidental or careless action leading to cyber-attack. To be effective, training programs should not only explain how to spot cybersecurity risks like phishing emails but should also discuss how and where it’s safe to access company information.

Aside from employee training, there are fundamental cybersecurity-related decisions that should be implemented at the enterprise level such as Zero Trust, DevSecOps, and multi-factor authentication (MFA). From a policy perspective, for example, it’s crucial to enforce MFA for all applications. Moreover, technology-related vulnerabilities can be minimized through frequent patching and updates for systems. Audits, as well as vulnerability and penetration tests, must be conducted regularly.

 

For the Financial Sector, “Best Practices” are Key

With the growth in number and complexity of cybersecurity attacks on financial organizations and the increased risk of nation-state attacks, proactively approaching the question of cybersecurity and implementing “best practices” makes the difference in reducing the degree of risk to an enterprise.

By modernizing the SOC with a carefully navigated migration to the cloud, adopting continuous improvement of use cases and the development of digital playbooks that improve detection and response – as well as by leveraging targeted threat intelligence and maintaining strong cyber hygiene – enterprises can put themselves in a stronger position to minimize the potential business impact of a cyber-attack on their organizations.

 

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IF IT’S A LOSS, YOU’RE TOO LATE – WHY THE INSURANCE INDUSTRY NEEDS TO FOCUS ON FIRST NOTIFICATION OF RISK

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Simon Dicks, Insurance Channel Manager EMEA, Lytx

 

Insuring commercial fleets can be an expensive business. Average repair costs have increased by up to 40% in the past 8 years and disputes about who was responsible can drive up expenditure for both fleets and insurers.

Part of the problem is that the insurance industry hasn’t had the tools to forecast costs and premiums accurately enough in this sector. Underwriting decisions are still made in the same way they always have been, by looking back at historical data from previous years. This approach simply isn’t giving insurance companies an accurate indication of potential risk – or a proper indication of the impact of driver behaviour.

Technology is helping insurers to an extent by providing information about First Notification of Loss (FNOL) – automatically sending notifications when unusual G-force readings are captured within a black box tracking device as a result of sudden braking or impact. This is good, but far better is the ability to use proactive technology to detect when an incident is at risk of occurring and when a driver is distracted.

The only way to address this is to put a highly accurate level of camera technology both inside and outside cabs, supported by sophisticated technologies such as Machine Vision (ML) and Artificial Intelligence (AI). This way, we can see not just that an incident has happened, but why it happened. What’s more, we can assess risk before an accident happens at all and prevent it happening in the first place. We call this First Notification of Risk (FNOR) – and it’s a whole step up from FNOL.

Machine Vision scans the internal and external environment of the vehicle to identify distracted driving behaviours such as mobile phone use, eating, drinking, smoking, inattentive behaviour or failure to wear a seatbelt. AI, comparing the behaviour against a vast bank of accumulated data, is then able to determine the riskiness of that situation and whether it needs to be flagged to the fleet manager, driver, or insurer via a short video clip. The big difference in this approach is that it’s proactive, not reactive. For the first time, fleets and insurers can identify adverse driving and distracted driving in real-time for the first time.

This includes the ability to alert drivers of any momentary slip-ups or distracted behaviours. Using the same technology, drivers will receive an audio or visual alert to help keep them on track and to lessen the likelihood of a moment’s distraction becoming anything more.

When insurers have access to these insights, they can also start to see patterns from the data over time. For example, a fleet manager might start to see that there’s a peak in risky driving behaviours on a Friday afternoon when lots of drivers are rushing to finish for the weekend. As a result, they may decide to spread the shifts differently so as to avoid that pattern of behaviour.

When insurers are only looking at FNOL, it’s already too late. A driver could be unthinkingly driving whilst smoking, on their phone, and nobody would never know. Whereas with FNOR, both managers and insurers are provided with insights that remove the guesswork, and underwriters have the information they need to assess risk with far greater precision.

There’s still a long way to go in making the move towards FNOR. With so many different companies selling cameras and telematics systems and producing information in hundreds of different formats, claims data will have to be standardised before the sector can really transform. However, by starting to embrace ideas like FNOR, the industry can move towards a solution that saves them time, money and lives.

To find out more, visit  www.lytx.com/FNOR

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