Costly lesson in risk mitigation


Long lines at KLIA's Terminal 2 recently due to a global IT system outage. A suitable back-up method must be put in place to handle such problems. The world needs proper oversight and monitoring as it relies more and more on AI.  — ART CHEN/The Star

THE world got a big shock when IT services ground to a halt the past week with updates to Microsoft’s operating systems bugged out by a faulty kernel.

The incident brought many industries to their knees. The biggest hit were the airlines, where the “blue screen of death” stopped check-in counters from processing boarding passes. The outages were also seen in banking and other industries that are connected to Microsoft 365 services.

Up to 97% of the outages have been addressed but the incident has taught us a big lesson in risk mitigation.

Then there are the hackers who are always lurking on the periphery, eager to disrupt services or scam individuals. With automation and robotics increasingly supplementing services that were once run by people and basic computing services, the potential losses will only increase.

Increasingly people and technology are intertwined, with our lives seemingly controlled by that little gadget — the cell phone — which has become a conduit to how we conduct our daily lives, from scheduling to booking a trip to reading the news.

In addition to the connected world, cloud services enable us to store information and technological solutions in cyberspace.

As we have become more reliant on technology, and even artificial intelligence (AI), the outage episode shows us how we need to mitigate risks. Billions of dollars were lost and the reality is that it was not a one-off Black Swan Event.

It is crucial to have a plausible back-up. What worked was the good old manual check-in process where pen and paper were whipped into action to get people moving for the services they were using.

Also, the crash has shown that the cost of IT comes down as a result of the proliferation of such services, but a suitable back-up method must be in place.

When it comes to public and critical services, a fail-safe option should be required through regulation.

Moreover, the outage illustrates the need for proper oversight and monitoring as the world relies more and more on AI to run jobs and functions.

AI is expected to replace more critical job functions in the future, and governments need to ensure that fail-safes and human interventions can be manually switched over in such areas where failures could be devastating, such as digital currency.

It is important to weigh central banks’ enthusiasm for digital currencies against the availability of a payments system that is as reliable as paper money.

In the absence of counterfeiting, paper money is the most secure form of money, but digital currencies should never take over traditional money as a means of transacting. Even though paper money has a handling cost, it should be considered a cost of ensuring system stability.

Another justification for a back-up option is that the world is getting older. Greying societies do not embrace the modernity of society as swiftly as the younger generation. Often, new technology involves a learning curve, which the elderly have trouble adapting to.

Furthermore, there will be a lot of modern tech-driven services, such as robo-taxis and self-driving cars. As it stands, it is not completely safe and can occasionally make technological mistakes.

Despite the fact that humans too make mistakes that can cause harm and death, self-driving cars should make fewer errors than humans.

CrowdStrike’s update error also serves as a reminder that the world is becoming more complex.

Even humanoid robotics are being developed to mimic human movements and ergonomics as technology that will replace human action approaches adoption.

As a result of population decline, it is more likely that robots will take over assembly-line work. A mechanistic or robotic element will one day be incorporated into every job we see today. It seems inevitable, and people will have to live side-by-side with machines in a new way.

We have read about machines replacing our jobs, and governments are responsible for ensuring that such jobs are protected from human harm.

The Y2K scare showed the extent mankind would go to prevent widespread catastrophe. Huge amounts were spent to ensure services were not disrupted by a programming or hardware issue.

Increasing digitalisation would require even more money to ensure not just faulty codes do not disrupt services, but also our daily lives are not disrupted by machine-man coexistence.

This article first appeared in Star Biz7 weekly edition.

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