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Fast & Fearful

Australia’s current affairs program 4 Corners ran a story this week on Internet hackers which has backfired.

4 Corners reporter Andrew Fowler contends in the report that cybercrime is one rise, and may explode when Australia’s long-delayed National Broadband Network (NBN) launches sometime before December 21, 2012 or Skynet takes over the world’s computer networks. Fowler’s report is a mix of commentaries from victims of denial-of-service attacks and identity fraud; ethical hackers who are employed by companies to test their information systems security; vendors who provide virus protection software; and a jount investigation by the Australian Federal Police (AFP) and Victorian Police into a warez site for hackers.

Detective Superintendent Brian Hay of Queensland Police’s Fraud and Corporate Crime Squad sums up the report’s mood: “I expect to see at some stage in the future there will be a real debate on the future of the internet, should we turn it off?”

Over four years ago I looked at this area, as part of a research team on internet futures see the report‘s section ‘Chaos Rules’. The experts the tean interviewed had sometimes expressed similar thoughts to Hay. Despite the mention of NBN this was the same kind of report which could have been filmed in 2004 or 1999, as PBS Frontline did in 2003 in its Cyber War! report. The journalistic genre extends to the choice of edits, music and images to portray the vulnerability of the technologies.

Several other things struck me about Fowler’s 4 Corners report. Many of the sources had an interest in raising the threat levels of identity theft and denial-of-service attacks. The program’s case studies raised other potential sources — banks, customer service teams in financial intermediaries, and telecommunications infrastructure providers — which Fowler did not pursue. High-profile experts who might have a more informed and critical viewpoint, such as hacker Kevin Mitnick and security maven Bruce Schneier, were missing. Perhaps Fowler’s researchers did not have the leads or production budget. For me, the result was that whilst Fowler raised important issues about internet security, he also went for the low-hanging fruit and with a cliched editorial format.

Hackers retaliated and broke into AFP computers only 24 hours after Fowler’s report screened. The incident raises some further questions. Under what conditions is the short-term ‘publicity dividend’ of police cooperation in a journalist story worth the risk of a retaliatory tit-for-tat attack? To prevent unauthorised and external access, will police intelligence on the investigation (continue to) be kept on a secure computer with no online or network connections? Should a police team maintain a low-key, covert presence to monitor underground hacking sites, or instead alert site members as a deterrent? And, given this latest development, will Fowler’s team file a follow-up report?

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We Are All Traders Now?

Mark Pesce pointed me to Bernard Lunn’s article which contends netizens now live in a real-time Web. Lunn suggests that journalists and traders are two models for information filtering in this environment, and that potential applications include real-time markets for digital goods, supply chain management and location-based service delivery.

Lunn’s analogy to journalists and traders has interested me for over a decade. In the mid-1990s I read the Australian theorist McKenzie Wark muse about CNN and how coverage of real-time events can reflexively affect the journalists who cover them. As the one-time editor for an Internet news site I wrote an undergraduate essay to reflect on its editorial process for decisions. I then looked at the case studies on analytic misperception during crisis diplomacy, intelligence, and policymaker decisions under uncertainty. For the past year, I’ve read and re-read work in behavioural finance, information markets and the sociology of traders: how the financial media outlets create noise which serious traders do not pay attention to (here and here), what traders actually do (here, here, and perhaps here on the novice-to-journeyman transition), and the information strategies of hedge fund mavens such as George Soros, Victor Niederhoffer, David Einhorn, Paul Tudor Jones II and Barton Biggs. This body of research is not so much about financial trading systems, as it is about the individual routines and strategies which journalists and traders have developed to cope with a real-time world. (Of course, technology can trump judgment, such as Wall Street’s current debate about high-frequency trade systems which leaves many traders’ expertise and strategies redundant.)

Lunn raises an interesting analogy: How are journalists and financial traders the potential models for living in a real-time world? He raises some useful knowledge gaps: “. . . we also need to master the ability to deal with a lot of real-time
information in a mode of relaxed concentration. In other words, we need
to study how great traders work.” The sources cited above indicate how some ‘great traders work’, at least in terms of what they explicitly espouse as their routines. To this body of work, we can add research on human factors and decision environments such as critical infrastructure, disaster and emergency management, and high-stress jobs such as air traffic control.

Making the wrong decisions in a crisis or real-time environment can cost lives.

It would be helpful if Lunn and others who use this analogy are informed about what good journalists and financial traders actually do. As it stands Lunn mixes his analogy with inferences and marketing copy that really do not convey the expertise he is trying to model. For instance, the traders above do not generally rely on Bloomberg or Reuters, which as information sources are more relevant to event-based arbitrage or technical analysts. (They might subscribe to Barron’s or the Wall Street Journal, as although the information in these outlets is public knowledge, there is still an attention-decision premia compared to other outlets.) Some traders don’t ‘turn off’ when they leave the trading room (now actually an electronic communication network), which leaves their spouses and families to question why anyone would want to live in a 24-7 real-time world. Investigative journalists do not generally write their scoops on Twitter. ‘Traditional’ journalists invest significant human capital in sources and confidential relationships which also do not show up on Facebook or Twitter. These are ‘tacit’ knowledge and routines which a Web 2.0 platform or another technology solution will not be the silver bullet for, anytime soon.

You might feel that I’m missing Lunn’s point, and that’s fine. In a way, I’m using his article to raise some more general concerns about sell-side analysts who have a  ‘long’ position on Web 2.0. But if you want to truly understand and model expertise such as that of journalists and financial traders, then a few strategies may prove helpful. Step out of the headspace of advocacy and predetermined solutions — particularly if your analogy relies on a knowledge domain or field of expertise which is not your own. Be more like an anthropologist than a Web 2.0 evangelist or consultant: Understand (verstehen) and have empathy for the people and their expertise on its own terms, not what you may want to portray it as. Otherwise, you may miss the routines and practices which you are trying to model. And, rather than commentary informed by experiential insight, you may end up promoting some myths and hype cycles of your own.