The FISMA Focus IPD

Hackers temporarily shut down computer networks at South Korean broadcasters and banks in the biggest cyber attack on the nation in two years, prompting the government to investigate possible links with North Korea.

President Park Geun Hye’s administration set up a cyber crisis group to investigate whether North Korea is responsible, according to a statement from her office. Computer shutdowns today hit companies including Shinhan Bank (1558), Nonghyup Bank, Munhwa Broadcasting Corp., YTN and Korea Broadcasting System, the Korea Communications Commission said in a statement.

The attack occurred less than a month after Parkbecame president of Asia’s fourth-largest economy, and amid an increase in friction over North Korea’s nuclear weapons program. Kim Jong Un’s regime, which detonated an atomic device in February, recently threatened to attack the U.S. with nuclear weapons and today warned it would retaliate if the U.S. again flies B-52 bombers over the Korean peninsula.

“It’s hard to find who did it immediately but North Korea is the usual suspect,” said Park Choon Sik, a professor of cyber security at Seoul Women’s University, who used to work for a government agency specializing in the field. “Cyber attacks are much easier weapons for North Korea as they cost far less than missiles or nuclear tests, but they can send more people into a real panic. Furthermore, they can do it at any time without worrying about international sanctions.”

Stocks Decline

South Korean stocks tumbled, with the Kospi Index (KOSPI) losing 1 percent, compared with a 0.1 percent drop in the MSCI Asia Pacific Excluding Japan Index. The won slid 0.5 percent to 1,116.30 per dollar in Seoul, according to data compiled by Bloomberg. The yield on South Korea’s 2.75 percent bonds due December 2015 rose one basis point to 2.60 percent, according to prices from Korea Exchange Inc.

North Korea’s Kim led two precision-attack drills using drones and rockets, the official Korean Central News Agency said today. The exercise rehearsed an attack against South Korea, according to the statement.

Disruption to networks at Shinhan Bank, Nonghyup Bank and Cheju Bank began around 2:20 p.m., Park Mikyung, spokeswoman at South Korea’s Financial Supervisory Service, said in an e-mailed response to Bloomberg.

Malware code was distributed through targeted organizations’ servers, destroying their computers’ ability to boot, the Korea Communications Commission said.

“This is the biggest and most serious cyber attack in two years,” said Shin Hong Sun, an official at the KCC in Seoul. “There haven’t been simultaneous attacks on more than one target since 2011.”

Transactions Stall

All transactions at Shinhan Bank (1558), a unit of Shinhan Financial Group Co., stalled this afternoon, the Seoul-based bank said in an e-mail. Nonghyup Bank said some computers at its main office in Seoul and some branches froze at around 2:15 p.m., according to an e-mailed statement. Transactions through Internet and mobile banking were unaffected, according to the statement.

Operations at the two banks were back to normal later in the afternoon, they said. The network at Cheju Bank, a unit of Shinhan, is also back to normal, according to Shinhan’s statement.

South Korea blamed North Korea for an attack on about 40 websites in 2011. The South also blamed the North for an attack on Nonghyup a month later that kept almost 20 million clients from using automated teller machines and online banking services. South Korean police believe the most recent cyber attack by the North was last June, against the JoongAng Ilbo newspaper.

Worst Attack

The worst cyber attack in South Korea occurred in 2003, when a computer virus shut down servers at the country’s largest Internet service provider, KT Corp. (030200), disconnecting 5 million customers from the web, according to Chon Kwan Ho, another KCC official. The police did not find North Korean links in that attack, Chon said.

Min Byung Ho, the spokesman for broadcaster YTN (040300), said the outage affected half of the computers in its newsroom and broadcasting facilities from about 2 p.m. The broadcaster is still investigating the cause. Only one of Seoul’s four biggest media companies, Seoul Broadcasting System, reported being unaffected by the outages.

Igloo Security Inc (067920). and other Internet security-related companies rose in Seoul trading. Igloo Security, which provides Internet security solutions, advanced 13 percent, while SoftForum Co., which markets data security-related products, climbed by the daily limit of 15 percent. Ahnlab Inc (053800)., South Korea’s biggest anti-virus software maker, rose 6.5 percent.

Possible Hacking

South Korea has been monitoring for possible hacking since North Korea’s Feb. 12 nuclear test, the KCC said March 12.

“South Korea is extremely vulnerable to cyber terrorism as everything from banking to shopping is done through the Internet,” said Park at Seoul Women’s University. “Broadcasters and banks were hit today, which itself is really a big concern, and the next target can be infrastructure, such as power, communication and transportation facilities.”

The U.S. is increasing its defense capability in the region after Kim’s regime this month threatened to use atomic weapons in response to tougher United Nations sanctions. Tensions on the peninsula are the highest since at least 2010, with China also indirectly criticizing U.S. plans to bolster a regional anti- missile shield.

The U.S. Pacific Air Forces Command successfully carried out the latest B-52 training flight, according to a statement on its website. A B-52 can carry nuclear warheads and air-to-ground missiles with a range of 3,000 kilometers (1,864 miles).

Closely Watching

The North is closely watching the situation and “the hostile forces will never escape its strong military counter- action” if the B-52s fly sorties over the the peninsula again, according to a statement on KCNA.

U.S. Defense Secretary Chuck Hagel said March 15 he will shift $1 billion from a European missile shield to install 14 additional missile interceptors in Alaska against threats by Iran and North Korea.

In a phone call today with Chinese President Xi Jinping, Park reiterated her resolve to “firmly respond” to any attacks, while promising to give aid to North Korea if it gives up nuclear weapons and chooses the right path,’’ according to a statement on her website.