Naval War College conference focuses on global economic impact of cyber insecurity

NEWPORT, R.I. – Experts from industry, government, security and academia converged on U.S. Naval War College (NWC), Dec. 7 to 9, for a workshop examining and perhaps redefining the economic impact that cyber insecurity has on the global economy.

The workshop, “Cyber, Security and Economics: Challenges to Current Thinking, Presumptions and Future Cyber Defense Transformations,” was hosted by NWC’s Center for Cyber Conflict Studies (C3S).

Conference organizer and C3S director, Chris Demchak, said the importance of the conference was looking for systemic security solutions that involve all key stakeholders, especially the private sector. 

“For years I have been attending conferences which come to the conclusion that the private sector is standing in the front lines of cyber defense for the country, but then progress is stalled.” said Demchak.

Because private sector actions are more critical than ever in national cyber defense, Demchak says that they and the government must cooperate more closely, and understand each other’s presumptions in order to find new defense strategies and policies to combat national cyber insecurity.

One of the key areas the workshop examined is whether the economic models used by economists for decades need to be changed or adapted in light of the challenges that cyber has introduced.

“This workshop asks the question: If cyber is changing international relations and national strategies, and even technology business models, shouldn’t we also look to see if it is challenging our basic economic models?” asked Demchak, who also serves as Grace M. Hopper Professor of Cybersecurity at the school. 

“If cyber is challenging our basic economic models but we continue to act as if it isn’t, we therefore continue to lose an estimated average of 1 to 2 percent of our gross domestic product annually to cyber insecurity,” added Demchak. “How will we afford the transformation that Navy and DOD are thinking about over the next 20 to 30 years? How will we have the national resources to implement the baseline capacity upgrades needed to defend the country?”

While this is a topic that may seem suited for any of several government agencies, Demchak said the Navy is the best place to examine this phenomenon.

“The Navy has a special role in national defense. We are most closely associated with the economic trading lifeblood of the nation, especially maritime trade. So much of what is trade today moves through – and is enabled by – cyber space.” she said. “Furthermore, the Navy attracts lots of attention from our adversaries through the same mechanisms and because of this particularly unique role.”

This first-of-its-kind conference is aimed at getting a conversation started about cyber insecurity and its economic impact. Attendees believed this was a solid start in getting much needed information. The topic will be a C3S ongoing project area, and a second follow-up workshop is planned in order to build on this beginning.

“We need facts,” said David Mussington, director of the Center for Public Policy and Private Enterprise at the University of Maryland, College Park. “There is problem in cyber policy, and that problem is that we can’t speak with enough specificity about the problem in order to find solutions that actually work. That’s the point of this conference. It is to have economists talk to cyber people so we can make progress toward a shared goal of understanding the environment better and measuring effects.”

Demchak added that a basic understanding of the challenges of cyberspace as a conflict substrate is needed for all types of experts as this topic moves forward.

“You have to have all these people at the table and sometimes they are operating with these deep presumptions,” she said. “Those presumptions are being undermined by the realities of national cyber insecurity. We need to lay out the disconnects in order to help innovate the strategies and policies effective systemically against the emerging and deeply cybered challenges to the Navy and the nation.”

Panels for the two-day event included: “Economic Theories, Presumptions and Policies vs. Cybered Systems and Deception”; “Lessons from Current Efforts in Economic-Cyber-Security Practices in Democracies”; and “Necessary Transformation, Theory, Practices and Strategic Thinking.” 

A final half day and closed panel dedicated solely to Navy and DOD implications of the previous discussions was hosted by the C3S co-director, Capt. Alfred Turner.

The main dinner keynote address for the conference was given by Stephen Keen of Kingston University, London, who gave a presentation, “Deception is for Cybercrime, not Economics.” The lunchtime keynote was given by Peter Kiernan of Kiernan Ventures LLC, entitled “High Noon for Big Data.” The second dinner’s keynote panel was chaired by Joseph Nye of Harvard University.