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    August 2013
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    The Internet of Things – Opportunity and Risk

    Gerald Trites, FCA, CPA

    The idea of having home appliances hooked into the internet has been around for almost as long as the internet itself. Having a refrigerator that tells you when you are out of milk was a favourite example. Or a coffee maker that can be started while on the commute home. But while there have been several product offerings, few of them have really caught the public imagination, or caused them to dig into their wallets.

    But lately, the idea of having not only appliances, but a while range of things on the internet has seen a resurgence. Some of the elements have indeed caught on and are gaining in use. A prime example is home security systems, many of which now include webcams that can detect motion and send an email to the owner’s smartphone when someone comes to the door. They can even send a short video clip as an attachment.

    Some systems go beyond that level to the idea of monitoring heat levels in the home and being able to turn up the furnace remotely if needed. Also, if you forgot to lock the doors, there’s an app for that too, enabling you to, again, lock them using your phone. And then there’s the idea of being able to turn on your oven or slow cooker remotely, making for a fast dinner when you get home.

    There is no shortage of ideas for future development. Some of them quite smart. We already have rules in some provinces that if you use the power grid in off hours, the rate is cheaper. How about a washing machine and dryer that turns on and off when the timing is right for lower power rates? Of course, it needs to be loaded and ready to go.

    And then there’s the idea of turning lights on and off remotely without the use of timers, making for random and more convincing activity. Or the TV. Many cars are now connected to the internet for purposes of road assistance and the like.

    These types of applications can be expected to grow quickly over the next few years, to the point of being routine. All of them require that the thing is question be set up with an IP address on the internet. A particular IP address could represent a server for a big business, a personal laptop, a smartphone or a toaster.

    IP addresses are a primary means by which hackers gain unauthorized access to a device, which means that the more things around the home there are on the internet, the greater the risk to the owners or occupants. Hackers can use the information from them to determine when people are home or away, and they can wreak destruction if they are the type to get a kick out of that, such as turning on the heat to full, or the washer, or the water sprinkler. They might also hack into a car and cause an accident. Recently in a test, a university group hacked into a GPS for a yacht (with the owners cooperation) and caused it to go off-course.

    Commercial operators, such as the airlines, have been aware of this for years, and most have taken the appropriate security precautions. However, with an expected plethora of home systems, the security is not so advanced. People need to be aware of this risk, and make sure that the systems they put into place are secure. That may mean researching the applications to be put into place. Or it could mean adding in strong security software to protect the online devices.

    It could be a matter of life and death.

     

    The MONEY® Network