Industrial and Economic Espionage: How to Uncover Hidden Threats to Business

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For many start-ups, the excitement and anticipation of creating a product and building a business can be exhilarating. This is especially true for small technology companies and very new financial service firms that just entered the market. Everything feels so positive, and it seems that, as they say, “The world is their oyster.”

Unseen Threats to Your Business

There is, however, a dark side. Imagine having spent countless hours on an app that had features that would rival and even outperform Zoom or Instagram. Think about the potential revenues and the media attention it would get on the launch date. Then feel all that energy dissipate as you watch the news about a surprisingly similar application that was launched yesterday. Feelings of surprise and rage rise as you begin to realize that the new application is a clone of your app! Somebody hacked your system and copied the entire code.

This is what is known as industrial espionage, a situation when a company steals information from another company in the same industry or line of business. It intends to outperform another company by taking its business ideas, product designs, project plans, and even information related to supply chains and financial forecasts. The primary intent is to sabotage the competitor company and utilize that company’s resources for another company’s benefit.

Many firms, especially in the technology and financial service sector, become targets of spying because of the value of their product and service. They are also victimized because of their systems’ vulnerability to internal and external threats such as hacking. Once their databases are illegally entered into and stolen from, these companies often resort to hiring a professional security implementation partner that can review, strengthen, and secure the company’s vital online and offline resources.

Old School Spies

This form of spying is nothing new and has been around for many decades. For example, in the 1920s, a team of specially trained spies from the Soviet Union traveled to the United States with a single mission: steal the blueprints of newly designed Ford tractors. The spies were successful and, presumably, the plans were copied as a means to produce a Soviet version of the said agricultural machine.

Spying for industrial or commercial gain goes even further back into history. It is said that the Roman Emperor Justinian once sent Christian monks to China as a way to help spread the Christian religion while having the opportunity to learn from other religions and cultures outside Rome. The truth was, the monks were also spies who went to China to steal eggs of silkworms.

After successfully stealing the worms, the monks hid them in special compartments inside their walking staff. Upon their return to Rome, the eggs are already hatched and ready to be expanded into a wide silk-producing farm. In the 1800s, the British used a botanist to spy and steal tea plant cuttings in China. These tea plant cuttings were brought to India as were grown as a new industry and source of revenue. These acts of subterfuge ended China’s monopoly on fine silk and tea.

21st Century Industrial and Economic Espionage

spy agentLast July 2020, the United Kingdom chose to ban Chinese telecom giant Huawei from participating in the 5G wireless network or infrastructure. The ban had been imposed by the US much earlier due to suspicions that the said Chinese company can be used by the Chinese government to conduct cyber-spying. In cases like this, when a foreign country is suspected to be involved or sponsors spying in business and industry circles, it is already referred to as economic espionage.

It is not only the large firms that should be concerned since the more modest-sized companies have much fewer resources and assets for protecting themselves against espionage. With their limited capital and investor base, these smaller firms have more to lose when hackers victimize them, and their original concepts and products are reproduced by other companies, which effectively steals the profit and the idea itself about the stolen merchandise.

These threats to business are so severe that it could undermine economies of entire countries. For example, according to the German Association for Information Technology, more than 50% of German-owned firms lost a total of at least $50 Billion due to data theft, spying, and other cybercrimes that were perpetrated between 2016 and 2018.

Three Must-Do Actions to Counter Industrial Spies

As the sophistication of espionage methods and techniques continue to rise, so must counter-measures develop exponentially. Some fundamental anti-industrial espionage activities all revolve around protecting information and data, which are the 21st century’s most valuable resource in business.

First, a review of data storage security is the top priority. Small and big companies need to review their systems for data storage at the physical compartments and those in cloud storage systems, some of which are third-party service providers.

The second task is to review the data transmission process, meaning how, when, why, to whom, and from whom does information flow? Somewhere in the process, a vulnerability might appear and becomes a target for hacking.

Third, identify gaps in security from within the company. Many view threats as only coming from something external to a company such as a hacker. There are many cases of industrial espionage that is perpetrated by a human agent, usually an employee of the company. Things to detect are unauthorized use of external storage gadgets, unusual overtime work, and attempts to access databases or reports without clearance.

The threat of industrial and economic espionage is so widespread and complex that these three suggestions should be treated as mere starting points. With a good IT security consultant, a company can develop a more robust and hacker-proof security system. The investment a company makes on its security is key to its present and future business integrity and success.

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