While commentators were busy once again pointing the finger of blame at China for what could be the largest ever theft of government data, the ramifications are likely to be felt across the global digital economy.

The hack was uncovered as the US Department of Homeland Security tried to harden federal government defences against cyberattack in the aftermath of high profile breaches such the Sony hack and revelations increasingly public revelations on the scale of cyberwarfare.

The breach of US government personel databases is more than an embarrasment to the US government. Image: iStock Zmeel Photography

The US Department of Homeland Security has dubbed the intrusion detection system, which uncovered the latest attack, Einstein, but you don't need knowledge of quantum physics to understand the threat that a combination of basic security concerns and fears over state surveillance of private data could have on the digital economy.

While high profile security failures at giant retailers have not, so far, slowed down the growth of e-commerce among consumers, continued such failures could take a toll over time. At the very least such incidents will increase compliance and IT security costs among enterprises and are likely to lead to see retailers and financial services providers tussling with each other about who bears the costs of securing e-commerce.

For the US and UK governments in particular, news of this latest attack could hardly come at a more embarrassing time. Both the Obama and Cameron administrations are fighting to extend their powers of surveillance over the population, citing the threat of terrorism as justification.

Critics can now not only rail against what they dub as "Big Brother" tendencies of the state, but also cite the obvious inability of governments to keep both their own secrets and basic staff and citizen data safe. The target of the latest attack, the Office of Personnel Management, the government agency tasked with hiring and retaining government workers had plenty of warning that it was vulnerable - it was breached last year - but not enough has been done to secure it.

Related

This latest failure also complicates the increasingly fractious relationship between the US government, which is demanding backdoors into IT products and data from digital organisations, and the companies themselves. Google, Apple, Microsoft, Facebook and many others see this as a threat to their business model and their customers.

A healthy digital economy depends on trust between individuals, organisations, enterprises and governments. It depends on individuals and organisations controlling the data they share with others. It depends on those holding the data to do so securely and to be seen to do so securely.

That requires innovative thinking about security and about identity management and it opens the way for innovative young companies to bring to market new approaches and new solutions to a problem than if not tackled, could drag the digital economy down to the lumbering, sluggish pace of the analogue economy it is seeking to transform and replace.

Find your next job with techworld jobs