Sunday, June 28, 2009

Effective Digital Security Preserves Long-Term Competitiveness

Yesterday I mentioned a speech by my CEO, Jeff Immelt. Charlie Rose also interviewed Mr Immelt last week. In both scenarios Mr Immelt talked about preserving long-term competitiveness. Two of his themes were funding research and development and ensuring the native capability to perform technical tasks.

It occurred to me that digital security is reflected in both themes. In Crisis 0: Game Over I asked I'm sure some savvy reader knows of some corporate espionage case that ended badly for the victim, i.e., bankruptcy or the like? I got a few interesting cases, but I believe the net result is that it is difficult to find examples where an intrusion or breach was so devastating that it ended up destroying the victim organization.

This makes sense once you reflect on it. Why would a mature, thoughtful intruder seek to destroy his victim, if the purpose of his mission is to conduct espionage on behalf of a competitor or intelligence service? Destroying the victim renders it useless as a source for stealing intellectual property gained by the victim's research and development. In the foreign intelligence case, almost all operators prefer to keep a source active, even in wartime when you might think that destruction is the ultimate goal.

Taking this line of reasoning to its natural conclusion, we can see that digital security can be considered a means to preserve long-term competitiveness, particularly for organizations that seek to drive internal growth via investing in research and development. Such an organization is a natural target for competitors who find it immensely cheaper to steal intellectual property, rather than fund their own.

The problem is showing those who make budgetary and management decisions that digital security has a real role in loss prevention. I've written a lot about intellectual property and digital security, but it is exceptionally difficult to tie individual intrusions to real impact. How does pervasive theft of intellectual property (IP) manifest itself? In commercial cases, perhaps it would appear as a loss of sales to rivals who make similar or duplicate products based on stolen IP. Would the victim organization even know these lost or declining sales were the result of IP theft?

Even if the victim identified the stolen IP, could it be traced back to one or more intrusions, or would it be considered the consequences of product reverse engineering by competitors? The bottom line could be that the victim is still in business, but the double-digit growth and expanding market share it craves are reduced to single-digit growth and eroding market share.

It's a waste of time to use terms like "ROI" or "ROSI" when talking to managers or business people. It is usually impossible to fully explain, from loss to impact, the IP theft cases like the one I described in Intellectual Property: Develop or Steal, i.e., spend $10 million over 10 years on a product, then watch the Chinese duplicate it for $1.4 million in 6 months after stealing the IP. More often than not, the victim of IP theft simple whithers, wondering why its competitive advantage is not what it expected it to be. It's time to get managers and business people to think in terms of long-term competitiveness.

Clearly Mr Immelt has determined that it is not in his company's best interest, nor in the interests of the country, for the US to be underfunding R&D or outsourcing everything overseas. We security professionals need to adopt this line of reasoning to emphasize how effective digital security preserves long-term competitiveness.

By the way, you might be wondering if I can prove there is an impact to IP theft. I look at the question this way. If there were no impact to IP theft, why would economic and national competitors fund teams to steal IP? You might argue that IP thieves can duplicate and sell products at prices lower than the IP owner could afford, thereby serving a new market. If that were true, why would IP owners file patents? Clearly there is value in IP, so stealing it lessens the value available to the IP owner.

I use a variant of this argument when I encounter asset owners who claim there is no impact associated with an intrusion. My reply is usually this: If there is no impact, then why operate the asset? Retire it.


Richard Bejtlich is teaching new classes in Las Vegas in 2009. Regular Las Vegas registration ends 1 July.

1 comment:

David said...

"If there is no impact, then why operate the asset? Retire it."

I often face the question, "Why is my data valuable?". The answer is, of course, "We pay you to generate it, if it is not valuable, should we stop paying you?".

Other employees state that their data is so unique that nobody else could understand it or use it. The same question is quite valid - "If nobody can understand or use the data, why are you generating it, and why are we paying you to do so?".

Employees who perceive their data as valuable, and who understand that the PC or other systems that they work can be a gateway to the rest of the organization are far more likely to engage in useful security practices.