Artificial intelligence (AI) has such a great future promising advancements in multiple areas that will help manufacturers continue to prosper.

However, AI-driven cyberattacks pose unprecedented risks to global economies, supply chains, and trade, which calls for a greater level of cyber resilience to mitigate the far-reaching consequences of these new age threats on the interconnected global trade ecosystem.

“Incorporating cyber resilience significantly dampens the reported negative consequences, highlighting the critical role of preparedness in combating digital warfare,” said Dr. Sherif Elgendy, a researcher in a study that will be forthcoming in the journal Risk Analysis, the official publication for the Society of Risk Analysis. “Collective efforts to bolster cybersecurity infrastructures, foster international cooperation in threat intelligence, and establish open and resilient trade frameworks are crucial in navigating the treacherous labyrinth of AI-driven cyberattacks.”

Unlike traditional cyberattacks, which are typically manual or scripted, AI-driven cyberattacks utilize AI and machine learning algorithms to enhance their effectiveness, stealthiness and adaptability. Additionally, AI-driven cyberattacks can autonomously learn and evolve their tactics, techniques and procedures based on real-time feedback and environmental changes.

Critical Infrastructure Targeted
Moreover, these advanced threats, transcending mere data breaches, now target critical infrastructure, wielding the potential to sever vital trade routes and inflict profound economic wounds.

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Furthermore, recent history paints a grim picture of this unfolding reality, according to the research. The 2020 SolarWinds hack, employing sophisticated AI algorithms, compromised the networks of 18,000 organizations, including tech giants (such as Microsoft and FireEye) and government agencies, highlighting the reach and sophistication of AI-driven cyber threats.

Just three years earlier, the NotPetya ransomware attack, fueled by AI-enhanced propagation techniques, crippled the global shipping industry, inflicting over $10 billion in losses. Its tentacles ensnared major transportation companies, paralyzing their systems and disrupting supply chains with chilling precision. The ensuing ripple effects, extending far beyond delayed deliveries, triggered economic shocks across nations. The United States, the United Kingdom, Germany, France, China, and India are among the countries most severely affected by the supply chain disruption.

Through simulation scenarios, researchers discovered the potential economic ramifications of cyberattacks, focusing on regions heavily reliant on digital technologies and interconnected supply chains. The analysis revealed significant declines in real GDP, trade prices and volumes, and trade route disruptions across regions. The most vulnerable economies were China, the U.S., the U.K., and the E.U. – due to their deep integration into global networks.

The impact of AI-driven cyberattacks on global trade and economies is multifaceted and pervasive. The average cost of a data breach globally reached $4.24 million in 2021, according to the IBM Cost of a Data Breach Report. The World Economic Forum’s Global Risks Report 2022 identified cyber threats among the top risks concerning businesses and economies worldwide.

Threat Scenarios
The study’s results depicted varying degrees of negative impacts on the real GDP of major regions under different cyber threat scenarios. For a low-level cyber threat, with limited breaches, the decrease in real GDP was relatively minor, ranging from 0.02 to 0.25 percent. China, Japan and South Korea experienced slightly higher declines in real GDP. These three economies account for around 20 percent of world trade, and are major mutual trading partners with strong intra-industry trade in manufacturing products.

For a high-level cyber threat, the U.S., the U.K., the E.U., China, Japan and India encountered more pronounced reductions in GDP. This demonstrates the heightened detrimental impact of a high-level cyber threat, resulting in more significant economic disruptions.

Within the study all regions experienced deterioration in terms of trade, meaning their export prices rose less than their import prices from an AI cyberattack. Sharp declines in terms of trade occurred in countries with high dependency on digital technologies and strong interconnected supply chains (e.g. the U.S.). Economies that are more reliant on exports experience higher terms of trade deteriorations (e.g. China, Japan and South Korea) compared to other economies such as the U.K., India and Russia.

In a high cyberattack scenario, major trade partners like China and the U.S. experience disruptions in their direct exchanges, prompting alternative routes and benefiting intermediary countries such as India, Japan, and nations in North & Latin America. China exports to the USA dropped sharply by -24 percent and its exports to the U.K. and the E.U. decreased by -4.5 percent and -3.2 percent respectively.

Cyber Resilience Needed
The findings underscore the urgent need for a global paradigm shift toward cyber resilience to mitigate the far-reaching consequences of AI-driven cyber threats on the interconnected global trade ecosystem.

The study showcases the effectiveness of proactive measures like adaptable production systems, diversified trade partners, and robust cybersecurity infrastructure in mitigating the adverse impacts of cyberattacks.

Click here to view the entire paper.

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