In industry after industry, digital technology has changed the game in countless ways. From music (iTunes) to retail (Amazon) to the emerging internet-of-things, the changes have been pervasive and downright breathtaking.
What about real estate? The ramifications of the online revolution are certainly affecting real estate development as well, such as in the rising risk of cyber attacks.
What should developers be doing to manage these risks? In this post, we will address that question, using a Q & A format.
Why would real estate development be affected by cyber attacks?
New developments offer increasing levels of technological functionality, with ever-smarter computers to automate operations and connect buildings to sophisticated electronic grids.
With these enhancements come a corresponding increase in the risk of cyber attacks. As we noted in our August 1 post, cyber risk management is therefore becoming more and more important.
What are some of the cyber risks that must be managed?
Unauthorized parties could take control of computer networks and hold them for ransom or obtain private information that could be used to commit fraud and other crimes.
With more information available in the cloud, on mobile devices and on social media, there could also be risks of theft of electronic payments and sensitive personal information. There could also be theft of intellectual property.
Malicious hackers could even try to harm tenants through control of computer-controlled facilities systems. They could also try to destroy the buildings themselves.
The consequences to real estate companies if such attacks were successful would be significant. Tenants who have had their information compromised or even be assaulted might sue. Or, at the very least, they might leave for another building.
But the consequences of a successful cyber attack would go beyond immediate revenue loss. There would also be long-term implications for the developer's brand, posing major reputation-management challenges and legitimate shareholder concern.
Have ransomware attacks been successful in other industries?
Yes. Ransomware attacks are a growing problem in the health care industry. Several hospitals have had their computers hacked. Earlier this year a hospital in Los Angeles paid thousands of dollars to hackers in order to get its computer system released.
The hospital industry is engaged in a furious game of data-security catch-up, trying to better protect itself from cyber attacks.
What are some of the steps that developers should consider to reduce the risk of cyber attacks?
For starters, this means making a clear assessment of the strategic risks and enlisting appropriate expertise to address them. Getting buy-in among the key leaders of the company, such as the chief information officer and the chief financial officer, is critical, because implementing an appropriate risk-management solution will require coordinated efforts throughout the company.
Creating a robust response to the challenge of cyber attacks also requires a full awareness of legal issues. It is therefore important to get knowledgeable legal counsel about risk-management issues. This will help you avoid undue digital dilemmas as you seek to grow your business amid the opportunities and threats of this online age.