Welcome!

Security Authors: Paul Speciale, Kevin Jackson, Pat Romanski, Carmen Gonzalez, Rick Delgado

Related Topics: Security, XML, Web 2.0, Open Web

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. Rich has over 17 years of experience supporting the commercial sector, defense industry, and intelligence community with threat intelligence and computer network operations. Rich is a passionate and creative thought leader that has led talented teams of researchers in producing quality analysis and actionable intelligence. After his commitment to the United States Army, Rich has supported the U.S. Army Command and Control Support Agency, the U.S. Army 1st Information Operations Command, the Joint Task Force Global Network Operations, and the NSA/CSS Threat Operations Center. Rich possesses a variety of industry certifications and a BS in Information Systems Security with Honors from American Military University.

@ThingsExpo Stories
Samsung VP Jacopo Lenzi, who headed the company's recent SmartThings acquisition under the auspices of Samsung's Open Innovaction Center (OIC), answered a few questions we had about the deal. This interview was in conjunction with our interview with SmartThings CEO Alex Hawkinson. IoT Journal: SmartThings was developed in an open, standards-agnostic platform, and will now be part of Samsung's Open Innovation Center. Can you elaborate on your commitment to keep the platform open? Jacopo Lenzi: Samsung recognizes that true, accelerated innovation cannot be driven from one source, but requires a...
SYS-CON Events announced today that Red Hat, the world's leading provider of open source solutions, will exhibit at Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, a...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at Internet of @ThingsExpo, Robin Raymond, Chief Architect at Hookflash Inc., will walk through the shifting landscape of traditional telephone a...
SYS-CON Events announced today that Matrix.org has been named “Silver Sponsor” of Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Matrix is an ambitious new open standard for open, distributed, real-time communication over IP. It defines a new approach for interoperable Instant Messaging and VoIP based on pragmatic HTTP APIs and WebRTC, and provides open source reference implementations to showcase and bootstrap the new standard. Our focus is on simplicity, security, and supporting the fullest feature set.
BSQUARE is a global leader of embedded software solutions. We enable smart connected systems at the device level and beyond that millions use every day and provide actionable data solutions for the growing Internet of Things (IoT) market. We empower our world-class customers with our products, services and solutions to achieve innovation and success. For more information, visit www.bsquare.com.
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic • Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happens, where data lives and where the interface lies. For instance, it’s a mix of architectural style...
SYS-CON Events announced today that SOA Software, an API management leader, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. SOA Software is a leading provider of API Management and SOA Governance products that equip business to deliver APIs and SOA together to drive their company to meet its business strategy quickly and effectively. SOA Software’s technology helps businesses to accelerate their digital channels with APIs, drive partner adoption, monetize their assets, and achieve a...
From a software development perspective IoT is about programming "things," about connecting them with each other or integrating them with existing applications. In his session at @ThingsExpo, Yakov Fain, co-founder of Farata Systems and SuranceBay, will show you how small IoT-enabled devices from multiple manufacturers can be integrated into the workflow of an enterprise application. This is a practical demo of building a framework and components in HTML/Java/Mobile technologies to serve as a platform that can integrate new devices as they become available on the market.
SYS-CON Events announced today that Utimaco will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Utimaco is a leading manufacturer of hardware based security solutions that provide the root of trust to keep cryptographic keys safe, secure critical digital infrastructures and protect high value data assets. Only Utimaco delivers a general-purpose hardware security module (HSM) as a customizable platform to easily integrate into existing software solutions, embed business logic and build s...
Connected devices are changing the way we go about our everyday life, from wearables to driverless cars, to smart grids and entire industries revolutionizing business opportunities through smart objects, capable of two-way communication. But what happens when objects are given an IP-address, and we rely on that connection, sometimes with our lives? How do we secure those vast data infrastructures and safe-keep the privacy of sensitive information? This session will outline how each and every connected device can uphold a core root of trust via a unique cryptographic signature – a “bir...
Internet of @ThingsExpo Silicon Valley announced on Thursday its first 12 all-star speakers and sessions for its upcoming event, which will take place November 4-6, 2014, at the Santa Clara Convention Center in California. @ThingsExpo, the first and largest IoT event in the world, debuted at the Javits Center in New York City in June 10-12, 2014 with over 6,000 delegates attending the conference. Among the first 12 announced world class speakers, IBM will present two highly popular IoT sessions, which will take place November 4-6, 2014 at the Santa Clara Convention Center in Santa Clara, Calif...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at Internet of @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, will discuss how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.

SUNNYVALE, Calif., Oct. 20, 2014 /PRNewswire/ -- Spansion Inc. (NYSE: CODE), a global leader in embedded systems, today added 96 new products to the Spansion® FM4 Family of flexible microcontrollers (MCUs). Based on the ARM® Cortex®-M4F core, the new MCUs boast a 200 MHz operating frequency and support a diverse set of on-chip peripherals for enhanced human machine interfaces (HMIs) and machine-to-machine (M2M) communications. The rich set of periphera...

SYS-CON Events announced today that Aria Systems, the recurring revenue expert, has been named "Bronze Sponsor" of SYS-CON's 15th International Cloud Expo®, which will take place on November 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Aria Systems helps leading businesses connect their customers with the products and services they love. Industry leaders like Pitney Bowes, Experian, AAA NCNU, VMware, HootSuite and many others choose Aria to power their recurring revenue business and deliver exceptional experiences to their customers.
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce the value of the network in helping organizations to maximize their company’s cloud experience.
The Internet of Things (IoT) is making everything it touches smarter – smart devices, smart cars and smart cities. And lucky us, we’re just beginning to reap the benefits as we work toward a networked society. However, this technology-driven innovation is impacting more than just individuals. The IoT has an environmental impact as well, which brings us to the theme of this month’s #IoTuesday Twitter chat. The ability to remove inefficiencies through connected objects is driving change throughout every sector, including waste management. BigBelly Solar, located just outside of Boston, is trans...
SYS-CON Events announced today that Matrix.org has been named “Silver Sponsor” of Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Matrix is an ambitious new open standard for open, distributed, real-time communication over IP. It defines a new approach for interoperable Instant Messaging and VoIP based on pragmatic HTTP APIs and WebRTC, and provides open source reference implementations to showcase and bootstrap the new standard. Our focus is on simplicity, security, and supporting the fullest feature set.
Predicted by Gartner to add $1.9 trillion to the global economy by 2020, the Internet of Everything (IoE) is based on the idea that devices, systems and services will connect in simple, transparent ways, enabling seamless interactions among devices across brands and sectors. As this vision unfolds, it is clear that no single company can accomplish the level of interoperability required to support the horizontal aspects of the IoE. The AllSeen Alliance, announced in December 2013, was formed with the goal to advance IoE adoption and innovation in the connected home, healthcare, education, aut...
SYS-CON Events announced today that Red Hat, the world's leading provider of open source solutions, will exhibit at Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, a...