Entrepreneurs must learn how to handle business risks in Metaverse

Entrepreneurs must learn how to handle business risks in Metaverse

As it stands, the Metaverse is still largely undefined. It is a challenge to answer the question “What is the Metaverse?” Partly because its definition depends on who you ask. As it stands today, the “Metaverse” includes virtual reality and what we might previously call “cyberspace” – including digital assets such as non-perishable tokens (NFTs), cryptocurrencies, and more.

In the rush to become the first to innovate in metaverse technology, companies are lowering risk management priorities. But risk management is just as critical in the Metaverse as it is in our physical world – all risks are linked and must be managed in a connected way. If new participants in the Metaverse aim to protect against the enormous scope and cost of cyber risks, they must learn how to identify these risks, constantly monitor threats, and make informed decisions for a solid future based on information gained from past threats and attacks.

Here are three types of metaverse risks for expanding corporate attack surfaces.

Physical hardware hazards

From headphones to chips with highly efficient computing power, virtual worlds need hardware to function. The physical devices used to operate the Metaverse can create their own cyber risks.

As people create, expand, and join the metaverse, the massive and powerful potential of this virtual space creates new attack surfaces for bad actors to test and hack. The assembling of devices from the multiple sources required to enable successful entry into this digital reality calls for increased threats such as the man-in-the-middle attacks we’ve seen (in real life) on ATMs and on mobile apps.

Related: The dark side of the metaverse and how to fight it

To ensure safety, companies entering or conducting trials in the Metaverse will have more places to monitor as part of their risk management strategy. Companies will need to create more advanced and comprehensive security controls for physical devices as well as digital portals while constantly managing their compliance.

Risks in Cryptocurrency Assets

In the Metaverse, crypto trades have been a huge source of risk. While cryptocurrencies started out as a niche, censored industry led by experts who were very concerned with security and privacy, the growth in the crypto space brought with it more opportunities for risk taking.

The increasing numbers of consumer traders, new businesses, and hackers are increasing the risk factors for crypto transactions. Crypto has also become the de facto currency of ransomware; As a result, cyber attacks against cryptocurrency accounts are on the increase. The growing number of metaverse technologies will continue to put cryptographic security at risk until companies catch up and start dedicating resources to addressing this type of risk.

Tracking fraudulent activity and implementing secure authentication can make a huge difference in countering cybersecurity threats, particularly in the cryptographic realm. Threats are occurring faster than ever, so constant monitoring of risks is essential.

Institutions can only do so much, because individual users – holders of cryptocurrency wallets – constitute a large part of the risk. Fraud, hacking, and password threats target vulnerabilities at the individual level. Individuals share an important responsibility in conducting due diligence against cryptographic threats in the Metaverse.

identity risk

By design, Metaverse relies on anonymity and fluidity. Digital reality, unlike the offline world, allows users to hide their identities and reinvent their personalities. Digital avatars assume characteristics chosen by their owner, and these identities are not carefully regulated – as on the Internet, nicknames are subject to change.

This opens individuals, as well as companies operating in the metaverse, to greater potential risks. With the rapid expansion of innovation and security taking lower priority, it is difficult for users and metaverse technologists to distinguish between the “good guys” and “bad guys”. The growing calls for controls about identity risks in the Metaverse stem from incidents related to not only the unintended sharing of data between human players and “mock” avatars (bots), but also alleged episodes of player-to-player verbal abuse and even sexual harassment.

Related: 34% of gamers want to use cryptocurrency in the Metaverse, despite the backlash

Implementing safeguards against these breaches of privacy will only increase the difficulty if the future ideal — a single large, interconnected network of metaverses where identities and assets are fully portable — bears fruit.

At the moment, this technology is not yet available – and probably never will be. But there is no doubt that Metaverse is emerging as a true business and technology for consumers – and a real risk factor. And like everywhere, it requires real and proactive risk management.

Gaurav Kapoor He is the co-CEO and co-founder of MetricStream Solutions & Services, where he is responsible for strategy, marketing, solutions and customer engagement. He also held the position of Chief Financial Officer of MetricStream until 2010. Previously, he held executive positions at OpenGrowth and ArcadiaOne, and spent several years in business, marketing and operations positions at Citibank in Asia and the United States.

This article is for general information purposes and is not intended and should not be considered legal or investment advice. The opinions, ideas and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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