The Risks, Opportunities and Impacts of 5G Technology

Jody Yee


April 27, 2023

5G Risks

In China, doctors perform ultrasounds on COVID patients in Wuhan using an ultrasonic robot they control from 435 miles (700 km) away. In South Korea, manufacturers adjust their maintenance schedule according to data gathered from sensors enabled by a subscription-based smart factory service. At an American football stadium, fans stream game action to their smartphones, discussing team stats transmitted almost instantly in augmented reality. 

These are just a few use cases illustrating the potential of 5G-enabled technologies, which is rolling out at different speeds across numerous regions including China, South Korea, the United Kingdom, Germany and the United States. By the end of 2022, the number of 5G global connections reached one billion, according to the mobile network operators organization GSMA. By 2025, two in five people around the world could be living within reach of a 5G network. 

In our increasingly connected world, the proliferation of smart devices and data-hungry apps is putting pressure on existing 4G networks. The 5G—or fifth generation—network promises to be up to 100 times faster than 4G, with lower latency, greatly increased capacity and hyper-connectivity that could power the world through the Fourth Industrial Revolution. It could transform the way we travel, remodel our health care, optimize food production, and maximize energy sources and usage. Technologies such as artificial intelligence (AI), virtual and augmented reality, advanced analytics, and robotics will also be boosted by 5G’s enhanced reach, speed and reliability.  

5G developments represent significant opportunities in all industries, particularly for the tech, media and telecoms sectors. With 5G’s greater capacity and faster speeds, we will be able to better utilize advancements like cloud computing and storage, process more data and use AI to enable advances such as smart mobility and autonomous vehicles. By 2035, it is believed the global 5G value chain—network operators, application developers, technology providers and equipment manufacturers—could create $3.6 trillion in economic output and support 22.3 million jobs. 

High Dependencies Create High Risks 

While 5G unlocks vast potential, the rollout will introduce significant new risks, and the risk profile of companies using or providing 5G goods and services will change. Businesses will have to adapt to an ongoing technological revolution that presents many unknowns. Unforeseen consequences, real or perceived, are a hazard—as was seen in January 2022, when concerns over the effects of 5G technology on aviation systems disrupted airlines in the United States, or in April 2020, when conspiracy theorists in the United Kingdom vandalized phone masts in the mistaken belief they were linked to the COVID-19 outbreak. 

Unlike previous generations, the 5G network will be a software-defined network and “virtualized,” meaning many functions that once relied on hardware will now be virtual software capabilities, with attendant software-related security issues. As the number of interconnected devices, networks, services and mobile data increases, so will the potential attack surface.  

The high dependencies in the overall concept of 5G, from the companies that provide the 5G-enabled solutions to those that buy and use them, is a critical issue. One of the most important features of 5G, with its speed and low latency, is that it offers solutions in real time, 24/7. If there is any interruption in the chain, it could directly impact the processes that follow, not only for a specific client, but potentially on a regional or even global level. 

5G could also be deployed in mission-critical systems within first response services, transport, health care and energy provision where low latency or interference could have near-instant knock-on effects, with catastrophic consequences. 

What Businesses Need to Consider 

Businesses will need to ask whether the speed of the 5G rollout correlates to their security measures. If you are a provider, what procedures are in place to ensure the stability of your systems and services? Issues such as connectivity, identity and access management, and device locations all come into play. Risk management will need to center around the availability, security and integrity of all systems because an interruption could not only result in financial losses for your business but also reputational damage. 

Equally, businesses need to identify all the relevant stakeholders in the ecosystem—their network infrastructure providers, customers, end users, data centers—to determine the opportunities for attack or outage. Even trusted suppliers can be hacked, as was seen in 2020, when an attack on the U.S. technology firm SolarWinds affected Microsoft, Intel and government agencies, costing each company affected an average of $12 million or 11% of annual revenue. 

A Closer Look at the Cyber Threat 

5G will enable the proliferation of highly complex, multi-domain environments. A crucial difference between 5G and its predecessors is the distinct feature of network “slicing.” Slicing utilizes software defined networking (SDN) and the complementary technology network function virtualization (NFV). This allows many different virtual networks to be created on a shared infrastructure, each of which can be customized to different requirements. This flexibility delivers intrinsic security through segmentation.  

Since slices depend on APIs, which are designed to communicate with each other, the reliability of the overall software supply chain becomes hugely significant. Slicing enables segregation, which allows slices to be isolated in case of a security issue, but if those slices are misconfigured or there is no isolation mechanism, the network can be exploited. 

In addition to increasing the software attack surface, slicing means many different stakeholders will be using multiple virtual networks which run on common hardware resources, whether it is for storage or processors. A hardware failure could have a significant service impact. 

A lack of standardization and a regulatory framework that is still evolving present further security risks. Although larger telecoms businesses and their equipment suppliers embed best practices into new procedures and products, there is a risk that others, with fewer resources or in jurisdictions with less robust regulation, might be tempted to cut corners. This could have widescale consequences in a world where the number of everyday devices that are connected could surge. 

To mitigate against this new world of risk and reduce vulnerability to an attack, businesses will have to take specific measures including assuring standardization with all interfaces, proper configuration, authorization and authentication, encryption, API protection (especially if they are from open sources), and system “hardening”—configuring IT assets to reduce their vulnerability to attack. These should go hand in hand with a robust business continuity plan. 

As more and more businesses adopt 5G, it is important they understand that 5G is more than just an upgrade in the everyday technologies they depend on. Since 5G is meant to drive emerging technologies with speed to improve automated operations and capacity to allow greater connections and large amounts of data flow, it is crucial for businesses to adopt a security mindset for 5G and become educated about the types of risks associated with the complex technology to keep businesses and customers safe and secure.   

Jody Yee is global industry solutions director for technology, media and telecoms at Allianz Global Corporate & Specialty.