Tuesday, January 10, 2012

Cyber Security Part 3 - Future of Warfare - China Privateering

One of the main challenges that the first world faces in cyber security is that  developing nations do not  always have an interest in creating and enforcing laws against cyber crimes. A strong example of this is what is being called, "Ghostnet".

Ghostnet is the codename given to a campaign of targeted cyber attacks launched from China. This past year 760 companies were target by cyber criminals in China. Experts allege that some of these attacks have been launched by criminals that were state sponsored, traced to known government facilities in China. 

Richard Clarke, an expert on cyber security and former cyber security adviser to the White House, said, "I don’t think you can overstate the damage to this country that has already been done.” It is hard to estimate the damages done to U.S. corporations, but Roger's a former FBI agent said that a declassified estimate of the stolen intellectual property's value through these attacks reached nearly $500 billion. This estimate is based off of known attacks, this means that this is sure to be a very conservative estimate. Think about that $500 billion dollars, in intellectually property stolen by these targeted cyber attacks. To give some sort of perspective on a number that is so far removed from our daily lives. The entire Afghanistan War over the last ten years has not yet cost the United States $500 billion dollars. 

Why do these cyber attacks benefit China? An article in the Wall Street Journal discussing these targeted cyber attacks raised the point that stealing intellectual property is far cheaper than developing it. The Chinese have become masters in reverse engineering. However, even reverse engineering takes time and money. Favorite targets by cyber criminals have been companies that develop products that require a vast amount of resources to develop. In this same article there is a citation from a government intelligence official that claims that these GhostNet hackers attack on commission. There are well documented cases of corporations getting targeted by Chinese attackers over the last few years. Google was a victim of a targeted cyber attack in 2010 that was well publicized, they claim that this attack was also carried out by Chinese hackers. 

Now in the interest of full disclosure the Chinese have denied any such activities. And as I previously stated in a previous post it can be rather difficult to track hackers, so it is important to maintain some degree of skepticism. However, cyber attacks uniquely offer developing countries plausible deniability and great reward. These hackers are like cyber privateers, as stated before some hack on commission. Assuming the experts on cyber security are accurate in their analysis we can say that at least historically developing countries (China) can sponsor cyber criminals without any concern of consequence. $500 Billion in intellectual property gained in a year with a fraction of the time and money invested. 

Many Americans are concerned that we have exported too much of our manufacturing base to China. I think the Americans that believe this are perhaps right. However, America's strength has always been in intellectual property and if we loose our edge via serial robbery by targeted cyber attacks it leaves America in a very weak position. It has huge implications on the future of America's global trade and economic future.

Again, not to sound like a broken record but cyber security needs to be taken seriously. The government and corporations in the United States need to work together to fight to secure our property against foreign threats. Corporate America and the Federal Government should develop a stronger security relationship. The government should be protecting America's interests. 

Update:  Chinese Hackers Attack US Chamber of Commerce: This targeted attack had been going on for quite a long time. It was only recently detected. This supports what I have already written in my previous posts.

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