We're living in the age of the hacker

Hack or be hacked.

Never in the history of written communication could 140 characters have the impact that they can have now

Two weeks ago, after gaining access to the Associated Press’s main Twitter account (@AP), the Syrian Electronic Army (SEA) posted a fake tweet reporting two explosions in the White House and the injury of President Barack Obama. Within seconds, US financial markets dropped by about 1%.

Minutes later, Twitter was abuzz with refutations. Reporters at the White House tweeted that they felt no explosion, and AP reporters and the AP Politics Twitter account announced that @AP had been hacked. At his afternoon briefing, White House press secretary Jay Carney confirmed that Obama was indeed unharmed. Financial markets returned to their pre-hoax level.

The @AP Twitter hoax represents systemic risk that cannot be eliminated, for it arises from the interaction of highly integrated financial markets and increasingly democratized news delivery. Given strong incentives for malicious parties to perpetrate such hoaxes, we should expect to see an increase in incidents.

Financial markets are vulnerable to manipulation, because they are not in the business of evaluating the truth. Trading often favours first movers, so being fast but wrong can still be profitable.

Imagine that a sophisticated trading firm has invested significant resources to develop an algorithm that quickly evaluates the potential market impact of news, and then automatically sends orders to trade based on that predicted impact. When that algorithm parses a tweet from the AP containing important keywords (explosion, White House, and Obama), it will send orders to sell with the expectation that the market will drop as others – first, slower algorithms, then even slower humans – start to process the same news.

The first mover is happy to make such trades without verifying that the news is true. If it is true, the market will stay down or continue dropping, and the first mover will profit from the sales that it has made. If the story is a hoax, the market will probably return to its earlier, fairly valued level, and the first mover will break even on its sales, and possibly profit from any position purchased as a hedge when the market was down. The first mover’s algorithm worked, regardless of the story’s veracity.

The likely losers in the @AP Twitter hoax were later movers who did not react quickly to the news, but reacted instead to the market’s movement.

These late movers were also likely to have been sophisticated electronic or institutional traders; some were probably using arbitrage-based strategies that relied on the futures market for a calculation of the fair price.

The market’s vulnerability to hoax stories is thus difficult to eliminate, for it is inherent in its structure. It cannot be regulated away or fixed by technology or surveillance.

Even if markets moved more slowly, there would still be a first mover who responded before such a news story was revealed as a hoax. This dynamic is similar to that of an asset bubble, albeit faster. In a bubble, valuations are based on collectively evaluated evidence, and those who enter the market earliest often benefit. Whether evaluating an assumption about the rise of house prices or whether a news story is true, the market does not provide a definitive answer instantaneously.

If protecting against hoaxes is not the market’s purview, can news agencies or new media entities like Twitter prevent such deception? To be sure, they have suffered reputational damage from this fiasco and will likely try to improve. But their efforts will not be enough.

Twitter’s vulnerabilities were technically understood before this event, and the service was already moving toward a more sophisticated authentication model (a password paired with a one-time key from a text message or other device). Twitter will likely implement this soon. It should also consider adding an optional “two-key” system, in which an independent signoff from a separate account is required before a proposed tweet is broadcast. But, while such measures would increase the difficulty of hacking the system, no technological fix can make it impenetrable.

What about the AP’s vulnerabilities? Attackers launched a “phishing” attempt against the AP’s emails shortly before the hoax tweet was sent. Phishing attacks, in which an employee is duped into sending a password to a third party or clicking an untrusted link that installs malicious software, represent a hybrid of cultural and technological failures.

As attackers become more sophisticated, they send better-crafted emails, sometimes impersonating trusted sources that lure unwary users. Crafting a culture of security is difficult and often at odds with the dynamic and decentralised work environment of a fast-moving newsroom.

This story can be read in full at economia

Chris Clearfield is a principal at System Logic, an independent research and consulting firm that focuses on issues of risk and complexity. András Tilcsik is an assistant professor of strategic management at the Rotman School of Management at the University of Toronto.

Photograph: Getty Images

This is a news story from economia.

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Female genital mutilation is not just a women’s issue, it’s a human issue

A new play explores how two women react when their daughters' friend is subjected to FGM.

Alice Denny was born into a body that didn’t feel like hers. There is no one ‘right’ way to live and no one should have to hide who they really are.  For years, she accepted the guise before eventually making the transition she deserved.

“A life and body to finally match my mind,” she says softly, quoting one of her own poems to me. “I know, it’s silly,” she adds in a fluster, but Alice needn’t be so modest. In fact, she should be very proud.

We’re at The Joker, an offbeat bar in Brighton, and Alice explains how the realisation of her womanhood inspired her to take up a leading role in CUT, a community play highlighting the horrors of female genital mutilation (FGM), which premieres in Brighton next week.

“For anything to stop women from being women, I find so upsetting,” Alice tells me with a communicable heartbreak in her voice.

FGM involves the removal of a woman’s clitoris, inner-and-outer lips of the vagina, and the sewing or stapling together of the two sides of the vulva leaving only a small hole to pass urine and menstruate – depending on the variation. Typically, FGM is carried out with a razor blade on girls between the ages of four and 15, often without any anaesthetic.

This misguided practice, fed by some faux-rationale about raising girls properly, is most common among cultural and religious groups in Africa and the Middle East with the World Health Organisation estimating around 125 million cases across the globe. Many of these communities believe FGM will serve to limit a woman’s libido, discourage sexual promiscuity and strengthen the institute of marriage.

“It’s brutal and makes me almost ashamed to be a human being,” Alice states emphatically.

Of course, to take solace in the fact FGM is not as common in Britain, where it is illegal, is to cataclysmically miss the point. It shouldn’t happen anywhere or to anyone. As it is, an approximate 137,000 women in Britain are affected by FGM, but even that number could be more given the ‘hidden’ nature of the crime.

Daughters of some first-generation immigrants and asylum seekers can be at a particular risk, with these girls taken to their countries of origin against their will during the school holidays for the procedure, allowing them time to ‘heal’ before their return. In reality, the lasting effects both physical and psychological never cease completely.

It is a terrifying thought and one that the incisive CUT, written by Suchitra Chatterjee and Susi Mawell-Stewart, explores. The play chronicles the lives of two women, Brona and Kiva, neighbours forced to face up to the problem of FGM on their doorstep when a shared African friend of their daughters is about to be sent away to be mutilated. Parent of two Alice stars as Brona, while Norma Dixit portrays Kiva. 

So what does CUT hope to achieve?  “It’s about trying to break the conspiracy of silence surrounding this issue,” an impassioned Alice reveals.

The former psychiatric nurse continues: “FGM isn’t something that’s isolated to one place or one group of people. It’s a wider feminist issue, a human issue, which needs to be addressed collectively. The play is about raising awareness, a vehicle to say to women to make the world a better place for each other.

“Women matter, never mind culture, never mind traditions of people being subjugated. We matter and we can make our lives what we want them to be. I’ve made my life what I want it to be and I feel so happy about that.

“People who say ‘it’s nothing to do with us,’ of course it is. It’s brutalizing women. I would love people to say, ‘actually I do know something that’s going on and I will go to the police and they will listen to me.’ I want people to be energized and make it their business.”

Admittedly, CUT, directed by Rikki Tarascas, is not for the faint hearted and will no doubt leave the audience shocked in their seats. Then again, that’s the idea.

CUT will premiere at the BrightHelm Community Centre in Brighton on May 10 and features a pre-show event with speeches from, among others, Khadijah Kamara, an FGM survivor and Heather Knott, a former Soroptomist International UK committee member.