Welcome!

Agile Computing Authors: Pat Romanski, Plutora Blog, Liz McMillan, SmartBear Blog, Elizabeth White

Related Topics: Cloud Security, Industrial IoT, Agile Computing, Release Management

Cloud Security: Article

Victim-nomics: Estimating the “Costs” of Compromise

Should you pay now or pay later?

Since launching ThreatConnect.com, Cyber Squared's Intelligence Support Team has become more effective in managing, analyzing and sharing our Threat Intelligence. While understanding the threat remains one of our core requirements, we have also begun to fill a key gap that, we feel, many within the industry are failing to address.

Providing effective Threat Intelligence requires more than just characterizing the threat from a technical perspective.  Instead, you must strike a balance between providing technical context as well as non-technical relevancy to the victim.  Industry report authors will often admire the cyber espionage problem all the while promoting their technical talents.  Unfortunately, these overly technical threat details are not easily interpreted or acted upon by today's non-technical business leaders.  So, ultimately, this shortcoming often overwhelms and distances the customer from the reality of the issue. It also reduces their ability to fully appreciate and understand how an investment toward Threat Intelligence can protect their business operations and enhance their overall corporate risk mitigation strategy.

Caveats
In the following scenario, we have masked the possible victim companies in an effort to protect their identities and have addressed the threat and its infrastructure in very general terms to acknowledge operational equities without contextually identifying the possible victim companies. We have used the data obtained in our recent discovery to walk through several hypothetical scenarios while making assumptions that give the reader a better understanding of the potential financial impact of dealing with a targeted attack.  Finally, we have notified the appropriate authorities and possible victim companies, so that they are aware of the threat and the tailored infrastructure which we believe may be directed against them or their customers.

The Facts
While recently researching a known threat group within ThreatConnect.com, we identified several interesting observables associated with targets of a single Chinese-based Advanced Persistent Threat (APT) group.  Over the course of seven days, we watched the adversary tailor their command and control infrastructure toward the specific target companies and industries.  Ten suspected targets were readily identified; they consisted of U.S. based, publicly and privately held companies across the following industries:

  • Mining & Metals
  • Aerospace & Defense
  • Manufacturing & Fabrication
  • Construction & Engineering

We researched the collective group of target organizations and found that the sum of the companies' annual revenues was approximately $54 Billion dollars.  The relative size of each company and specific industries give us insights into what the intelligence collections requirements of the attackers may have been at the time of compromise.

Company

Rounded Revenue

U.S. Company 1

$26,000,000,000

U.S. Company 2

$11,000,000,000

U.S. Company 3

$6,000,000,000

U.S. Company 4

$5,000,000,000

U.S. Company 5

$4,000,000,000

U.S. Company 6

$1,500,000,000

U.S. Company 7

$600,000,000

U.S. Company 8

$20,000,000

U.S. Company 9

$20,000,000

U.S. Company 10

$2,500,000

Total:

$54,142,500,000

In this use case, we made some assumptions based on the information available to us.  Our first assumption was that the victim companies were likely committed to making a short to mid-term investment in mitigating the immediate risk and eradicating the threat from their network.  Unfortunately, we did not have any data available to us that revealed the severity of the compromise nor did we have access to the actual budgets or investments toward a response and future threat mitigation efforts in which these respective companies may choose to make.

The cost of getting "RSA'ed":
When making assumptions, it is important that we compare apples to apples.  We can assess with a high level of confidence that the threat we are monitoring in this case is an APT of Chinese origin.  We can confidently assess that the threat is most likely persisting within the respective enterprises with the intent of conducting long term data exfiltration of proprietary information from the respective organizations.

One example that helped us put the scenario in perspective is from the 2011 RSA breach.  Between April and June 2011, RSA spent $66 million dollars in the aftermath of a March 2011 APT breach, which also resulted in the compromise of information associated with RSA's SecurID two-factor authentication technology.   It is important to note that the $66 million cleanup figure did not include the post breach expenses from the first quarter of 2011 when EMC began investigating the breach, nor does it account for any of the long-term associated costs.  EMC's 2011 earnings statement cited a consolidated revenue of $20 billion dollars.  The $66 million cleanup figure would account for 0.33% of EMC's overall $20 billion dollar revenue.  However, if we apply the same $66 million cleanup costs for RSA's total revenue of $828.2 million for 2011, we find that the intrusion had a direct impact of 7.96% of RSA's 2011 revenue.

What if?
All of the target organizations are not the same.  Their roles, sizes and revenues within their respective industries all differ.  Furthermore, many of these companies do not have a parent company the size of EMC which could absorb the cost of a $66 million dollar incident. However, each organization could respond and invest in a similar manner as RSA.  If we theorize that each company identified were to invest 7.96%, of their annual revenues to mitigate the effects of this persistent APT, the effect would be:

Company

Rounded Revenues

Cost of getting "RSA'ed"

U.S. Company 1

$26,000,000,000

$2,069,600,000

U.S. Company 2

$11,000,000,000

$875,600,000

U.S. Company 3

$6,000,000,000

$477,600,000

U.S. Company 4

$5,000,000,000

$398,000,000

U.S. Company 5

$4,000,000,000

$318,400,000

U.S. Company 6

$1,500,000,000

$119,400,000

U.S. Company 7

$600,000,000

$47,760,000

U.S. Company 8

$20,000,000

$1,592,000

U.S. Company 9

$20,000,000

$1,592,000

U.S. Company 10

$2,500,000

$199,000

Total:

$54,142,500,000

$4,309,743,000

Irrespective of size, could these companies really all afford a 7.96% hit in response to a major enterprise breach? Considering that many of the victims are either publicly traded or provide direct support to U.S. Government funded programs, most would be compelled to notify various stakeholders, such as investors, the U.S. Security Exchange Commission, and their primary customers or government contract managers.

Based on our long term understanding of this threat group, we are almost certain that a resourced Chinese state sanctioned or sponsored threat group is responsible for establishing and using the observed command and control infrastructure we have detected within ThreatConnect.com.  We also conclude that the threat group is likely conducting economic espionage on behalf of an unknown Chinese benefactor who may be in an advantageous position to operationalize and monetize the information.  What we do not know is who, when or how the information may be employed.

The targeted and persistent nature of the threat suggests that the threat actor knows what type of information they want to acquire and are concentrating their collection by targeting multiple victims within overlapping industries.  Left unchecked, enterprise compromises could facilitate access to corporate intellectual property such as research and development, confidential corporate insights, and operational plans.  Access to confidential information regarding the mining and metals industry, as well as U.S. defense aerospace, engineering and fabrication could allow the attacker to enable the manipulation of markets, conduct restricted defense related technology transfers and or obtain unfair advantages within international business or trade negotiations.

Conclusion
Until more companies come forward with details of Chinese corporate espionage, little data will be available to us regarding the associated short and long term costs. In 2011 the U.S. International Trade Commission issued a report titled "China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy".  The report details estimates of Chinese Intellectual Property Rights (IPR) infringement had cost the U.S. economy approximately $48 billion in 2009 alone, caveating the $48 billion figure that many companies were unable to quantify their losses.  The ITC report also highlighted that if China improved their current international obligations to protect and enforce IPR, 2.1 million jobs could have been created in the U.S.

Although there are numerous variables that cannot be accounted for with the data available to us, we can apply a simple model based on the RSA data that supports our hypothetical scenario and begin to see what the financial and economic effects would be across ten companies of various industries and revenues.  It is important to understand the scenario outlined above is associated with a real threat that has tailored their infrastructure and is likely exploiting the U.S. companies. Any associated enterprise exploitation would have an obvious direct and indirect effect to each company's respective annual revenues.   All of the threat data obtained is based on real-world data collected and analyzed within ThreatConnect.com.

More Stories By Rich Barger

Rich is the Chief Intelligence Officer for Cyber Squared and the ThreatConnect Intelligence Research Team (TCIRT) Director.

@ThingsExpo Stories
Fortunately, meaningful and tangible business cases for IoT are plentiful in a broad array of industries and vertical markets. These range from simple warranty cost reduction for capital intensive assets, to minimizing downtime for vital business tools, to creating feedback loops improving product design, to improving and enhancing enterprise customer experiences. All of these business cases, which will be briefly explored in this session, hinge on cost effectively extracting relevant data from ...
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
As enterprises work to take advantage of Big Data technologies, they frequently become distracted by product-level decisions. In most new Big Data builds this approach is completely counter-productive: it presupposes tools that may not be a fit for development teams, forces IT to take on the burden of evaluating and maintaining unfamiliar technology, and represents a major up-front expense. In his session at @BigDataExpo at @ThingsExpo, Andrew Warfield, CTO and Co-Founder of Coho Data, will dis...
The Quantified Economy represents the total global addressable market (TAM) for IoT that, according to a recent IDC report, will grow to an unprecedented $1.3 trillion by 2019. With this the third wave of the Internet-global proliferation of connected devices, appliances and sensors is poised to take off in 2016. In his session at @ThingsExpo, David McLauchlan, CEO and co-founder of Buddy Platform, will discuss how the ability to access and analyze the massive volume of streaming data from mil...
WebSocket is effectively a persistent and fat pipe that is compatible with a standard web infrastructure; a "TCP for the Web." If you think of WebSocket in this light, there are other more hugely interesting applications of WebSocket than just simply sending data to a browser. In his session at 18th Cloud Expo, Frank Greco, Director of Technology for Kaazing Corporation, will compare other modern web connectivity methods such as HTTP/2, HTTP Streaming, Server-Sent Events and new W3C event APIs ...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
SYS-CON Events announced today that FalconStor Software® Inc., a 15-year innovator of software-defined storage solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. FalconStor Software®, Inc. (NASDAQ: FALC) is a leading software-defined storage company offering a converged, hardware-agnostic, software-defined storage and data services platform. Its flagship solution FreeStor®, utilizes a horizonta...
Silver Spring Networks, Inc. (NYSE: SSNI) extended its Internet of Things technology platform with performance enhancements to Gen5 – its fifth generation critical infrastructure networking platform. Already delivering nearly 23 million devices on five continents as one of the leading networking providers in the market, Silver Spring announced it is doubling the maximum speed of its Gen5 network to up to 2.4 Mbps, increasing computational performance by 10x, supporting simultaneous mesh communic...
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Eighty percent of a data scientist’s time is spent gathering and cleaning up data, and 80% of all data is unstructured and almost never analyzed. Cognitive computing, in combination with Big Data, is changing the equation by creating data reservoirs and using natural language processing to enable analysis of unstructured data sources. This is impacting every aspect of the analytics profession from how data is mined (and by whom) to how it is delivered. This is not some futuristic vision: it's ha...
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
With an estimated 50 billion devices connected to the Internet by 2020, several industries will begin to expand their capabilities for retaining end point data at the edge to better utilize the range of data types and sheer volume of M2M data generated by the Internet of Things. In his session at @ThingsExpo, Don DeLoach, CEO and President of Infobright, will discuss the infrastructures businesses will need to implement to handle this explosion of data by providing specific use cases for filte...
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Avere delivers a more modern architectural approach to storage that doesn’t require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbuilding of data centers ...
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies adopt disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevO...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 ad...
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...