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Sunday, January 1, 1989
Warning to all

One of the more daunting aspects of computer hacking is the magnitude of the damage that can be inflicted on a system. The implications of computer fraud to a company are enormous. It could result in a loss of shareholders’ funds, the company’s reputation, the jobs and future of the employees. Hacking has even brought victim companies to bankruptcy.
As Grahame Wright, assistant director of First Bowring warns. “Computer fraud is rather like blood pressure: you cannot see the results until it is too late: it can be the silent killer for you and your company.”
Computer crime today is more than just hacking. It includes fraud, extortion, blackmail and the deliberate planting of so-called ‘computer viruses’. Motives behind such activities range from deliberate acts of sabotage, harmless meddling, to the unintentional. But with, or without malicious intent, computer hacking is still a crime. It is the unauthorised use of technology which constitutes an infringement of someone else’s property.
There is the story of the two brothers, Amjad Alvi and Basil Alvi, in Pakistan. Their objective was to teach computer pirates an unforgettable lesson. Every discounted disk sold to tourists from their computer store had a deadly virus inserted into it. The virus, which had a formula for replicating itself, was the type that scrambled any data it came into contact with into an unintelligible mess. Scores of sales were made. In 1987 the brothers stopped selling contaminated software. Damage done was not quantified exactly.
Drew Davidson from Tucson, USA, received his share of the limelight as the brains behind the Peace virus. It was a simple message of universal peace accompanied by a drawing of planet earth which flashed across the screen. It then immediately erased itself and disappeared from the computers of the few thousand Macintosh owners that had been sent the message.
Not to be taken flippantly is the recent ‘unintentional’ hash-up made by the young Robert Morris of the USA.
He created a virus which was intended to enter computers via Arpanet, a massive communications network. The programme was simply meant to inhabit the computer. Unfortunately a single digit error by Morris accelerated the multiplication process. What arose was a crippling of thousands of computer systems.
This story highlights three features associated with computer crime.
Firstly, is the ease with which people gain access to information systems. In a recent computer security review, First Bowring revealed that the results were indeed poor. Out of 400 test cases 64% were found to have either weak or poor security systems.
Secondly, is the speed at which a criminal action can he completed successfully.
Thirdly is the fact that there are no parameters to contain the crime. It transcends geographical, moral and economic borders.
Fortunately, in South Africa the virus problem has not struck seriously. Less fortunately, computer fraud has found a comfortable nest in many sectors of the economy. It has been estimated that it is costing companies in total more than R250m per annum. These days, even the innocent have been drawn into the vortex of crime.
Just recently a person operating his Ned- bank account on an automatic teller machine (ATM) made an interesting discovery.
Unthinkingly, he punched in the secret pin number of his UBS card instead. To his alarm the machine accepted the transaction and gave the money.
To confirm his suspicions he once again keyed in the wrong pin number. Once again he successfully drew money. The bug in Nedbank’s ATM system was corrected when he reported it. This loophole in the ATM system is just one of many that could exist. These systems are not fool proof and the gaps are not always discovered by such honest citizens.
It is obviously of major concern to the insurance industry. Many companies are looking for ways to protect themselves against a loss through computer fraud. Currently, only local fidelity guarantee insurance are available. However, First Bowring is now able to offer computer crime insurance to complete a company’s portfolio. It is hoped that local insurers will participate more meaningfully in this cover.
Richard Fearon MD of Networx Communications, argues, “Fidelity cover looks toward the inside of the organisation and is designed to protect a company from acts or omissions on the part of executive directors and/or employees. It doesn’t compensate against outside hacking.
“In any case, it is irrelevant how much you get paid out if the hacking costs you your business. If you can’t service your customers they go elsewhere”.

Copyright © Insurance Times and Investments® Vol:2.1 1st January, 1989
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