A Security Nightmare or the Next Big Thing? The Internet of Things
From smart fridges to your favourite wearable activity tracker, the Internet of Things ("IoT") is poised for explosive growth. IoT refers to connecting any device or "thing" to the internet. Sensors are embedded into familiar household devices, such as televisions and cell phones, but also roads and industrial machines, which are then linked to the internet, allowing the devices to collect data and communicate with other objects.
IoT technology provides companies with the opportunity to forge deeper connections with their consumers. By embedding sensors in products, companies can collect data on how items are used and monitor consumers' interaction with products. Understanding consumer behavioural patterns can provide businesses with opportunities to enhance product offerings and delivery in order to engage consumers, as well as tweak business models to fully profit from the information.
However, IoT technology presents a substantial mix of opportunity and risk. Recent headlines, like thermostats leaking unencrypted user data, Smart TVs listening and transmitting personal conversations and Barbies vulnerable to hacking, highlight the need for device manufacturers to consider appropriate security and privacy measures in implementing the technology.
In fact, experts note that many IoT devices are inherently vulnerable, making them easy to hack. Take, for instance, recent experiments involving wireless carjackers: hackers have successfully toyed with air conditioning, radios and windshield wipers, as well as cut the transmission of the consumer vehicles. Even babies are not immune from these threats: hackers have infiltrated baby monitors, using them to shout profanities at sleeping children.
At this point, IoT regulation remains sparse, but signs point toward greater government scrutiny. In February of this year, the Privacy Commissioner of Canada released a research paper on IoT, focusing on retail and home environments. Recognizing the need for self-regulation in the area, industry groups have begun to step up, creating IoT security standards.
Businesses and governance professionals should take note: IoT devices present a new set of targets for potential data exposure and crime. While IoT devices appear to exist in a current regulatory void, companies utilizing IoT devices should take security seriously, before serious data breaches or damages occur.
Stay tuned for Part II of our series on the Internet of Things. In the next part, we explore the consumer side of IoT and how companies can ensure they gain and maintain consumer trust as they harness the potential of IoT devices and data.
*This article was written with the assistance of Alyssa Gebert, an articling student at Aird & Berlis LLP. Alyssa will be returning to the firm in September as an associate.