Cyber Risks to Geopolitical Risks: The Challenges For IT Professionals in 2023

Alongside the ongoing advance of technology in IT, geopolitical issues and supply chain disruptions are expected to continue to impact the sector in 2023. Navigating this more complex landscape while delivering for clients is on course to be one of IT professionals’ big challenges for the year ahead, and beyond.

One of the IT trends forecast to accelerate this year is end-to-end digital transformation (DX) at companies and organisations. Whereas it had been the norm until recently for DX projects to focus on a single department or division, comprehensive digitisation of entire operations is now becoming more commonplace.

A ‘Digital Transformation in Japan (2022)’ report from the EU-Japan Centre for Industrial Cooperation concluded that Japanese corporations were on average about two years behind their counterparts in comparable countries. And it is in terms of end-to-end transformation that they fare particularly poorly: “…although most of the companies have effectively undertaken initiatives toward DX, the maturity level of the implementation remains poor in most of the cases, characterised by isolated implementations within organisations, with a lack of companywide strategic vision.”

New frontiers

Both in Japan and worldwide, a central element of DX and tech progress overall is increasingly going to be leverage of AI. The launch of ChatGPT from OpenAI at the end of last year has opened even the eyes of numerous non-tech types to its wider potential and made them realise that an AI-driven future is much closer than they had probably imagined.

In addition to producing essays for students, composing emails and enhancing search engine functionality, ChatGPT is also being used to write and debug code. Given that the beta-version has only been available for a few months, the chatbox’s full potential has likely not even come close to being utilised. And it is only a single, albeit seminal, AI innovation.

Similar to the situation for DX and IT overall, Japan is somewhat lagging its peers in the AI department. Applications for AI-related patents in Japan tripled to 5,745 in the five years to 2020 — even as the overall number of patent applications continued to fall — according to an October 2022 report from the Japan Patent Office. Despite the encouraging trend, that still leaves Japan behind China, the US and South Korea in the AI space.

Japan does have significant strength in edge AI — where computations are carried out on the edge of a network, usually on the device itself, rather than at a central facility. The Japanese edge AI market is predicted to grow 20% annually and reach nearly $41 billion by 2030, according to Allied Market Research.

With great connectivity comes great vulnerability

The advance of digitisation in all its forms will necessarily be accompanied by heightened cybersecurity, another area set for robust growth. Increasing use of the cloud, greater connectivity across systems and devices, as well as more employees working remotely, can all enhance convenience and productivity. But these trends also expand potential vulnerabilities to cyberattacks.

According to cybersecurity firm Check Point, the number of cyberattacks detected worldwide in 2022 was up 38% on the previous year. The firm also predicted that AI tools like ChatGPT would make the creation of emails and code used in attacks easier, further boosting risks in 2023. As well as private companies, organisations in fields from education to healthcare to the military were all frequent targets.

Ransomware attacks on Japanese organisations in the first half of 2022 were up 87% over the same period the previous year, according to the National Police Agency. A sizable proportion of those were linked to Russia-backed hacking groups and believed to be in retaliation for Japanese sanctions imposed over the invasion of Ukraine.

Predictions for reduced geopolitical risks in 2023 are few and far between, with most expecting their presence to be felt across the global economy. In addition to increased cybersecurity threats, US-China tensions, the Ukrainian conflict and other friction points could again disrupt supply chains — the vulnerabilities of which have been clearly exposed over the last couple of years.

Interwoven with these issues, trends towards deglobalisation and nationalism are contributing to complexity around IT and related tech by way of diverging regulations.

There appears little doubt that the tech environment will throw up new challenges in 2023, but all is far from doom and gloom. Indeed, the Asia-Pacific market, including Japan, is forecast to be the fastest growing region for System Integrators from 2023 through to 2027, according to a recent report on the global industry by Mordor Intelligence.

By: Gavin Blair

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