How the City can help fight back against emerging threats
Britain is embroiled in a shadow war, and as threats evolve so must the business models we use to fight back, says Mark Wheatley
We may not be in the middle of a full-blown conflagration. But we are embroiled in something like a shadow war. The threats we in Britain face today – from cyberattack to space – are invisible, but discernible.
Cast your mind back a few months, to the takedown of the Marks & Spencer website. That ransomware attack, thought to be carried out by the group Scattered Spider, not only broke the site but froze online orders and crashed key systems, such as Click & Collect, stock control and payments. The disruption lasted months and inconvenienced many. It reportedly cost the retailer £300m in lost profit and wiped more than £1bn from its market value. Other businesses, from banks to bakers, have been targeted, blackmailed and bruised.
Public and private actors, including those in the City, have built resilience and reserves. But they too face threats, sometimes from shadowy military units such as Russia’s GRU 26165/APT 28 – the virtual Vikings of our age.
Above us, satellites are targeted. One of Russia’s first moves when it invaded Ukraine was to disable Viasat’s satellite communications. Since then, Chinese and Russian satellites have engaged in manoeuvres that look less like routine operations and more like sinister balletics in orbit: shadowing, approaching, probing Western assets. Space, once hailed as a shared domain of exploration, is now a contested frontier, fraught with risk.
Tests of resolve
These dangers are tests of our wider resolve and capability. Our government, like others, has been moved to act. The recent Strategic Defence Review and National Security Strategy, both excellent, paint a picture of our present circumstances and articulate a direction of travel. They provide context but also show ambition.
There have been spending pledges, too – but pitched to the medium and not the short term. Public finances are stretched; there is little public appetite for higher taxes and even less enthusiasm for directing them to defence. Borrowing is not an attractive option for the government. The threat is pressing, but funding lags behind.
Needless to say this isn’t ideal. But it does represent an opportunity – perhaps a duty – for the City and for UK Financial and Professional Services (UKFPS). Britain boasts a reservoir of talent and capital that is both broad and deep. Already they sustain prime contractors such as BAE and Rheinmetall, as they should.
We could engage more fully with the emerging community of innovators in defence and security commerce. But is there the appetite to do so in the City – and should there be? Historically, concerns around ESG have bred caution, particularly towards start-up and scale-up businesses. Some defence firms have even found themselves debanked at the very moment they were starting to grow.
We have been baffled by the business models of innovators in the sector. A Ukrainian drone company will hardly fit the classic projection model for investment, after all; nor will a small UK gaming firm redeploying its super-computing power. It is difficult to weigh risk against reward. But that is where great opportunity lies.
Such firms can be engines of rapid economic growth. They are developing the kind of technology on which the shadow war turns. Last year, global military expenditure reached $2.72 trillion – a rise of 9.4 percent in just 12 months. There is already brass for the brass of ammunition. There ought also to be capital for the advanced forms of technology that will decide tomorrow’s battles.
That is why a group of us came together in the City recently to share ideas. We have drafted a paper, ‘Resilience’, to be circulated this autumn at DSEI, at the party conferences, and here in the Square Mile in October. Our aim is not to put down policy but provoke debate.
This is a case of both duty and opportunity. As Hadean Supercomputing has observed, the threats we face are ‘whole of society’. If we can move ‘the City’ from reticence to resilience, everyone will benefit. The next time you read of a satellite disabled or cyber-system compromised, remember: there will always be those who wish to attack us. What matters is that we have the resilience to absorb those attacks – and endure.
Mark Wheatley is director at Delano Wheatley Consulting Limited