Hyped as it is, the Metaverse remains largely undefined. It’s a challenge to answer the question “What is the Metaverse?” in part because its definition depends on whom you ask. As it stands today, the “Metaverse” includes virtual reality and what we might previously have called “cyberspace” — including digital assets like non-fungible tokens (NFTs), cryptocurrencies and more.
In the rush to become the first to innovate in metaverse technology, companies are deprioritizing risk management. But risk management is as critical in the Metaverse as in our physical world — all risk is linked and must be managed in a connected way. If new entrants to the Metaverse are meant to protect against the overwhelming scale and cost of cyber risks, they must learn to identify these risks, continuously monitor for threats, and make informed decisions for a strong future based on information gained from past threats and attacks.
Here are three types of metaverse risks expanding the attack surfaces for businesses.
Physical hardware risks
From headsets to chips with highly efficient computing power, virtual worlds need hardware to operate. The physical hardware used to run the Metaverse can create a cyber risk of its own.
As people create, expand and join metaverse worlds, the huge and powerful potential of this virtual space creates new attack surfaces for bad actors to test and breach. The assemblage of hardware from multiple sources required to successfully enable entry into this digital reality invites increased threats like the man-in-the-middle (MITM) attacks we’ve seen (in real life) at ATMs and on mobile applications.
Related: The dark side of the metaverse and how to fight it
To ensure safety, companies entering or experimenting 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 hardware as well as digital gateways while continuously managing their compliance.
Risk in cryptocurrency assets
In the Metaverse, crypto trades have been huge sources of risk. While cryptocurrencies started as a controlled niche industry driven by experts who were very concerned with security and privacy, growth in the crypto space has brought with it more opportunity for risk.
Growing numbers of consumer traders, new companies, and hackers all increase the risk factors in crypto transactions. Crypto also has become the de facto currency for ransomware; as a result, cyberattacks against crypto accounts are on the rise. The growing number of metaverse technologies will continue to endanger crypto security until companies catch up and begin dedicating resources toward addressing this type of risk.
Tracking fraudulent activity and implementing secure authentication can make a significant difference against cybersecurity threats, particularly in crypto. Threats happen faster than ever before, so continuous monitoring of risks is a necessity.
Organizations can only do so much, as individual users — the holders of crypto wallets — are a large part of the risk. Scams, hacks and password threats target vulnerabilities at the individual level. Individuals share an important responsibility in conducting due diligence against crypto threats in the Metaverse.
By design, the Metaverse is based on anonymity and fluidity. A digital reality, unlike the offline world, allows users to cloak their identities and reinvent their characters. Digital avatars assume characteristics chosen by their owner, and these identities are not carefully regulated — as on the internet, aliases are changeable.
This opens individuals, as well as the companies that operate metaverse territories, up to even greater potential risk. With innovation rapidly expanding and security a lower priority, it is difficult for users and metaverse technologists to tell the “good guys” and the “bad guys” apart. Increasing calls for controls around identity risk in the Metaverse stem from incidents relating not just to unintentional data-sharing between human players and automated “mimic” avatars (bots), but also alleged episodes of player-to-player verbal abuse and even sexual harassment.
Related: 34% of gamers want to use crypto in the Metaverse, despite the backlash
Implementation of safeguards against these breaches in privacy will only increase in difficulty if the future metaverse ideal — one large, interconnected web of metaverse territories where identities and assets are entirely portable — comes to fruition.
Right now, that technology isn’t yet available — and maybe it won’t ever be. But there’s no question that the Metaverse is emerging as a real business and consumer technology — and a real risk factor. And like every space, it requires real, proactive risk management.
Gaurav Kapoor is the co-CEO and co-founder of MetricStream Solutions & Services, where he is responsible for strategy, marketing, solutions, and customer engagement. He also served as MetricStream’s CFO until 2010. He previously held executive positions at OpenGrowth and ArcadiaOne, and spent several years in business, marketing and operations roles at Citibank in Asia and in the U.S.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.