Enterprise Organizations Stand to Lose Credibility as the Result of Successful Security Breaches of Public Cloud Applications

Over the weekend of October 14th and 15th, 2012 several news articles appeared on the topic of apparent cyber warfare. These articles noted a growing likelihood that Iran has at least supported, if not directly participated in cyber attacks on prominent businesses headquartered in the United States. On Thursday, October 11, 2012, Mr. Leon Panetta, who serves as the Secretary of Defense for the United States, in a warning on the looming threat of cyber warfare noted that “[t]he attacks, which have targeted U.S. and foreign banks, demonstrate the need for a more aggressive military role to defend U.S. networks and to retaliate against organized groups or hostile governments . . . That is especially the case if electric grids, water systems, transportation networks and other critical functions are targeted” (quoted from the Wall Street Journal article for which a link has been provided, above) We think that merely the possibility that these attacks can be successful will likely cause enterprise organizations to carefully consider the cons of migrating important systems to public cloud solutions.

These enterprises stand to lose much more than just money should cyber attacks prove successful. They stand to lose their position as credible, dependable, trusted institutions that present a very low likelihood of material loss for individuals and businesses that conduct operations with them. Banks and financial services organizations have already lost a substantial amount of this credibility as a result of the economically challenging times that most of the world’s economies have experienced since 2007. Losing a lot more as the result of a successful attack on a public, transaction-enabled web site will likely be unacceptable.

Mr. Panetta also mentioned electric grids, water systems and other industrial automation systems in his warning. The risks to these organizations, in our estimation, are, actually, far greater. In fact, should cyber criminals successfully compromise a supervisory control and data acquisition (SCADA) network for a public utility servicing one of our largest metropolitan areas, the results will likely be devastating and on par with 9/11, Pearl Harbor, etc.

Nevertheless, as we noted in the first post to this series, it is increasingly likely that large numbers of enterprise organizations will opt to migrate to cloud computing offers. ISVs are determined to lower their development/implementation/customer suport costs; therefore, they are prodding their enterprise customers to migrate on premise systems to cloud alternatives. We cannot help but assume that they are providing enterprise organizations with something like a complete indemnification from a wide set of types of losses in order to move them along; in fact, nothing less would make sense to us.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved

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