Data Privacy and Security - Importance to Companies using AI and Robotics
The reasons why data privacy and security become an even bigger issue for companies using AI and robotics include the fact that hackers can turn AI security system against the company, the high cost of data breaches, the risk of losing customer trust, and the potential of impacting stock prices.
Hackers Can Turn AI Security System Against The Company
- Although AI and robotic systems can bring notable benefits to the company, cybercriminals can hack them to "weaponize malware and attacks to counter the advancements made in cybersecurity solutions".
- Hackers understand how AI automated systems can receive knowledge and adapt accordingly. Therefore, hackers can launch a few attacks and learn the systems' vulnerabilities before creating an effective malware attack to finally access the companies' data. They can also use AI to accelerate polymorphic malware that makes the code to change frequently and make them almost undetectable.
- For instance, TaskRabbit was attacked by cybercriminals which affected 3.75 million users, yet professionals and experts were unable to locate the attack.
- Along with the growth of AI and robotic systems, hackers can also learn the same technique to compromise the companies' data. Isaac Ben-Israel, the Director of the ICRC and Chairman of Cyberweek, believed that it only takes some time for hackers to succeed breaching the companies' data.
- Richard Stanes, the Chief Security Strategist NEU for Capgemini, agreed that many cybercriminals are using machine learning and AI, especially phishing, due to their abilities to produce well-scripted attacks and automate them.
The High Cost of Data Breaches
- Along with the rise of advanced technologies such as AI, the need for consumer data becomes bigger. However, the data collected by the AI-integrated companies may also be stolen or commercialized for marketing opportunities, purchasing recommendations, or other services without the consumers' consent by cybercriminals.
- Based on a study conducted by Ponemon's Institute, the average US data breach cost $7.91 million in 2018. In 2019, the number rises to $8.19 million. In some cases, large-scale breaches may reach $350 million.
- The US is also named the most expensive country to experience a data breach.
- According to experts from Ponemon's Institute, companies need to start improving their abilities to identify and solve an incident in their AI system to reduce data breach costs.
- Jon Oltsik, the senior principal analyst at IT research firm Enterprise Strategy Group, agreed that the cybersecurity professionals working in the company must know the most updated research and threat intelligence.
The Risk of Losing Customer Trust
- AI-integrated companies are likely to need customers' data for personalization services and improving customer experience. However, due to the complex definition of privacy and the lengthy user agreements, customers tend to click "accept" without realizing what privacy rights that they give to the companies.
- Cybercriminals may also breach customers' information due to the weak companies' data security. For instance, as of 2019, there are 3,800 publicly disclosed breaches cases that affect millions of people in the US. There's also a 54% increase in reported breaches this year compared to the first six months of 2018.
- The privacy breaches may cause consumers to lose their trust in the companies that they use. According to a study conducted by Ponemon's Institute, the average U.S. data breach reaches $4.2 million in lost customer revenue.
- The healthcare, financial, and pharmaceutical industries have the most difficulty in maintaining their customers after they experience data breaches. The healthcare industries' abnormal customer turnover is about 7.0%, whereas other industries typically only reach 3.9%.
- Although consumer trust in AI has been declining due to the irresponsible data breaches, Jim Hare, the research vice president at Gartner, is still positive about the usage of AI in companies to cut corporate brand and reputation risk. He also advises companies that use AI to "build a culture of responsible use, trust and transparency" to improve users' trust.
The Potential of Impacting Stock Prices
- Many companies use AI systems to increase customer experience by collecting users' data. However, privacy breaches in companies that use IT and robotics can lower stock prices. The consequences of data breach that involve highly sensitive information, such as credit card and social security numbers, are more likely to inflict greater damage to the companies' stock prices.
- Cybercriminals can easily use phishing campaigns, malware, or exploiting technical vulnerabilities in IT-integrated companies to collect sensitive information.
- Based on a study conducted by Comparitech, 28 companies that experienced data breaches tended to suffer from low stock prices for almost three weeks. On average, their stock value dropped by 7.27%.
- Rich Campagna, the chief marketing officer of Bitglass, believed that the breaches happening in the past three years have inflicted "massive and irreparable damage to large companies and their stakeholders."
To determine the reasons why data privacy and security is becoming an even bigger issue now than ever before for companies using AI and robotics, we first conducted our research by reviewing expert blogs and reports released by IT professionals from trusted sources (examples here and here). Utilizing the insights from the previous strategy, we then browsed through the news articles and press publications to collect additional information about the selected reasons from reputable sources, such as Forbes and CNBC. We carefully selected these insights based on the latest and most updated topics that experts and professionals widely discussed to make sure that our findings are the current concerns of companies that use AI and robotics around data privacy and security.