Another flash market crash was triggered yesterday because of a Twitter hack on the @AP account and a bogus tweet about a White House explosion. Here's a graphic showing the short term impact of the news across various financial markets. The Dow tanked immediately by 140 points.
Cybersecurity issues, social technology fueled disruption and financial calamity all in one Twitter event! Social technology continues to be a real time experiment that is exploiting the elimination of time and space distortions around information flow. These events also continue to prove the seventh rule of social technology that I talk about in my book SOCIAL INC. — social technology is controls resistant.
The New And Volatile Normal
While markets quickly rebounded after the event, there was no doubt an enormous amount of financial gain or loss to be had in this spike. Was it a hack with an agenda, or just an act of mischief? Now that those with malicious intent know that markets can be roiled with such a simple attack, has a new threat emerged? Traders and markets are obviously paying attention to and dependent upon these real time communication channels—there's money to be had in volatility.
In an unrelated development from the prior week, the SEC recently acknowledged that these social channels can be used for corporate disclosure which I blogged about in this post A Big Week For Corporate Governance In America.
In this post, I also raised the issue of whether social technology will actually create more information asymmetry, not less. Those who have the ability to monitor and act on the real time information that flows into and through these channels, before others, will have a distinct advantage. The AP hack illustrates my point precisely.
Goodbye Status Quo
We continue to learn daily that this latest version of social technology creates a brand new ball game, and increasingly has real world implications. Real time information flow, the ability for millions (and soon to be billions) to collectively act and engage, transparency, the truth, the elimination of engagement costs, enhanced innovation…all brought to you by today's social technology. Corporate boards and authority structures everywhere are totally unprepared.
The history of social technology teaches us that the good far outweighs the bad with these tools, but only over time. In the short term, disruption of the status quo and experimentation with these tools creates chaos and calamity—or in other words risk. But risk and opportunity are two sides of the same coin.
The @AP account is back up, and markets have digested this event. But there will be another, and another, and another…is your company prepared?