Now I’ve been “accused” of being a quant in the past (hi rybolov!) but in reality the only dogs I have in this fight are the model and the application of scientific method - and really, ethically speaking, I have to be tied to the latter while applying the former.

And I see a false dichotomy in this whole Quant vs. Qual thing.  We, as a profession, tend to create a political divide between the two which, if it even exists, I’d say is based more on our ignorance rather than our expertise.  After all, we are the profession that regularly multiplies across ordinal scales and uses wonderful models like R=VxTxI.   As someone  learning to deal in probabilities and rationalism, I have to recognize that this discussion is really just about the act of observation using different metrics of measurement.

But how we’re going about observing does not change the fact that there is measurement based on observation.  So if I’m working with you I can easily turn your qualitative scale into a quantitative one, and vice-versa.  Yes, Shrdlu, if we had the time, even your most seemingly Qual things could be Quant! (This flexible world view, btw, is an outcome of that new-fangled Bayesian thing).

COGNITIVE BIAS A-PLENTY

But back to what Rich is saying there about information security and risk - and he isn’t/won’t be the only one saying these sorts of things - we should try to understand what’s really going on rather than get caught up in the emotional hurricane.  Our profession suffers several forms of cognitive bias.  The nature of our jobs and what we do can cause us to be focused on the outcome and not the quality of the decision at the time it was made.  We want to bring in things from other professions that are useful, but at times we do view things outside our profession with false correlation to our own (unfortunately for those who write these sorts of articles, financial risk is completely different than operational risk).  We also have the tendency to focus on negative outcomes without acknowledging the positive outcomes (For example, I hear that Alan Greenspan’s new firm is up a couple of $billion in all this mess since he joined them, short sellers are doing quite well - must be because they have qualitative models or something -grin-).  The effect of these biases are compounded by the facts that proper correlation takes more work than we usually give it, and rational thought is not that easy when there’s a witch-hunt mentality.

What also floats in water? (link to Youtube)

WHAT SHOULD WE BE THINKING ABOUT?

So as you and I read opinions that seem to be the polar opposite of irrational exuberance (and there will be plenty between now and the election) we’ll have to ask ourselves, “what really failed here?”  At the risk (pun) of over-simplification:

• Was There an Error on the part of Probability Theory?

After all, Probability Science like all other fields of knowledge is always “advancing” as they say.  So perhaps probability theory is wrong somehow?

I’m personally disinclined to put the blame here, primarily because I would think that there would be evidence from other fields (like Quantum Mechanics) that something is amiss waaaaay before it hit a field like economics.

• Was There Error In The Model Used to Determine Risk?

Some people who understand real estate valuation and complex derivatives and financial risk want to put the blame here.  It’s a little too early to tell, but one thing is for sure - Financial risk is so different from operational risk I couldn’t begin to hazard an opinion on the subject.   But it would seem that this is really somewhere we might look.

• Was There Error In The  Scale Used (Quantitative vs. Qualitative)?

Honestly?  I find it extremely difficult to understand how this could be the source of financial ruin.

• Was There Error on the part of the Decision Maker?

What if all of the above were just fine, and the decision maker chose short term gain over long term stability?  What if this was (to simplify the matter greatly) a choice of “heads” over “tails” and the coin landed on tails?  What if the model represented the right risk (probability of negative outcome vs. positive outcome), but the complex derivative was sold to someone else who had poor “risk management” (ability to make a good decisions)?

Now I have no clue about complex derivatives, and I’m oversimplifying to be sure - chances are like most things, there are several problems that helped create the primary cause. But it seems to me that as we go into incident response mode for the economy, it’s more helpful to do so in a rational, logical manner.

OTHER THINGS WE MIGHT WANT TO CONSIDER

Consider the Source
Some authors (who I think tend to exploit outcome and hindsight bias,and then combine those with indirect ad hominem attacks in order to sell their books), are actually putting forth arguments against the use of analytics.  The source of this is a current epistemic debate between those who believe that only falsification is certain, and those who maintain that neither proof nor falsification are certain, there are only probabilities.    So before you go believing any “quadrants” of usefulness on faith - I encourage you to understand what is at the heart of the discussion.

We All Have to Live In The Real World
The sun will rise tomorrow, and someone will try to find the source of the problem and do a better job.  Now chances are, they’ll be doing it in a quantitative manner.  Chances are also that at some point their models will fail and we’ll need to build new ones.  And this will happen whether the field is cosmology, economics, meteorology, information security, or professional baseball.

WHAT ABOUT YOU, ALEX?

I’m far from certain and subject to change, but these days I lean towards Robin Hanson & MIchael Lewis w/regards to placing blame.

A United Nations agency is quietly drafting technical standards, proposed by the Chinese government, to define methods of tracing the original source of Internet communications and potentially curbing the ability of users to remain anonymous.

The U.S. National Security Agency is also participating in the "IP Traceback" drafting group, named Q6/17, which is meeting next week in Geneva to work on the traceback proposal. Members of Q6/17 have declined to release key documents, and meetings are closed to the public.

[...]

A second, apparently leaked ITU document offers surveillance and monitoring justifications that seem well-suited to repressive regimes:

A political opponent to a government publishes articles putting the government in an unfavorable light. The government, having a law against any opposition, tries to identify the source of the negative articles but the articles having been published via a proxy server, is unable to do so protecting the anonymity of the author.

This is being sold as a way to go after the bad guys, but it won't help. Here's Steve Bellovin on that issue:

First, very few attacks these days use spoofed source addresses; the real IP address already tells you where the attack is coming from. Second, in case of a DDoS attack, there are too many sources; you can't do anything with the information. Third, the machine attacking you is almost certainly someone else's hacked machine and tracking them down (and getting them to clean it up) is itself time-consuming.

TraceBack is most useful in monitoring the activities of large masses of people. But of course, that's why the Chinese and the NSA are so interested in this proposal in the first place.

It's hard to figure out what the endgame is; the U.N. doesn't have the authority to impose Internet standards on anyone. In any case, this idea is counter to the U.N. Universal Declaration of Human Rights, Article 19: "Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers." In the U.S., it's counter to the First Amendment, which has long permitted anonymous speech. On the other hand, basic human and constitutional rights have been jettisoned left and right in the years after 9/11; why should this be any different?

But when the Chinese government and the NSA get together to enhance their ability to spy on the world, you have to wonder what's gone wrong with the world.

1. The Sun-Sentinel newspaper in Fort Lauderdale accidentally republishes a six-year-old news story about the bankruptcy of UAL. It wasn't on the home page, but instead buried somewhere inside the web site.
2. Google's news crawler (an automated thing, remember) finds the story and incorporates it as part of its news feed.
3. Investors see the story, and immediately react. When UAL's stock plunged 76% to a low of $3, Nasdaq shut down trading. Eventually trading resumed, and the stock closed at just under $11, losing about 11%.
4. United blamed Tribune Company (the owner of the Sun-Sentinel) for "irresponsibly" changing the date on the story and demanded a retraction.
5. Tribune Company blamed Google, claiming they've had issues with Google's crawler "for months."

Who will blame be shifted to next?

Look -- if people haven't realized by now that the Internet pretty much lacks a delete function, then (IMNSHO) it becomes the requirement of each and every one of us to pay close attention to what we're reading, to use our own big brains and fine-tuned bullshit detectors to suss out whether something makes sense.

Since this is my blog, I'm going to parcel out blame the way I see it:

• United: 0%. If the concept of "negative blame" made any sense, then I'd actually write −∞ (that's a negative infinity, in case your character set is different than mine).
• Google: 5%. How can an automated crawler know that a newly-dated story isn't really new? Well, those folks over there at Google are smart. Certainly it shouldn't be that difficult to compare a "new" article against existing ones. Content hashes won't work as a comparison tool, because the date would be included in the hash computation, thus making the hashes different anyway. Full-text comparisons? Sure, it would take a lot of horsepower. Perhaps not every "new" story needs comparison, but at least the crawler could submit to the comparator any stories that ought to be verified (say those with the word "bankruptcy" in them).
• Tribune Company: 30%. Hey guys, you changed the date on the article. Don't go blaming someone else for your screw-up.
• Investors: 65%. If you're using an automated news aggregator (remember, an aggregator is not a source of news) to make major financial decisions -- decisions that affect the livelihoods of thousands (maybe millions) of people -- well, you're a moron. You should know that incorrect information can be just as instantly available as correct information. Verify potentially damaging claims before engaging in reckless behavior.

What's this got to do with security? I don't know, maybe nothing directly related. But it certainly raises the question -- what if someone intentionally wanted to cause nearly permanent damage to a person or a corporation? Malicious content, disguised as "news," certainly seems to have become a potentially successful attack vector this week.

Worried about a social engineering attack on a massive scale? I suspect that what happened Monday (8 September) was the largest social engineering attack in history -- although I wouldn't classify it as intentionally malicious. Just you wait until the idea spreads.

He’s a bit indignant that so much energy goes to sporting events like the Olympics rather than more important news that isn’t getting reported around the world.

This is in a year when tons of journalists are getting laid off.

This is in a year when there are tons of stories around the world that aren’t getting reported on.

Could we take half of those photographers and send them to Russia, for instance

Reminds me of a feeling I had back in college as an undergrad student studying social sciences and humanities, about the way my friends who were physicists interacted with the world. They were so awed by the stars, Mars, astrophysics, and it seemed to me interesting but altogether unimportant. They argued they may find something outside our planet that could help solve Earth-bound problems like disease, or find the origins of earth and humanity — but really they were doing it because they loved it. One of my friends had a good argument, though — there are enough people right now that we can specialize in what we care about, and there will still be others covering other topics. He could be a physicist and look into the universe’s origin, while I studied social interaction and writing, and our other friends looked into solving cancer or eradicating invasive plants in the native wetlands. We have to specialize, and there are enough of us to do it too.

I think it’s the same way in journalism — whether it’s sports, celebrity journalism, or coverage of politics and war, there are a lot of opportunities right now for journalists. Of course the business model is changing, and some old-schoolers won’t know how to roll with that, but generations change slowly; we’re learning.

Also, the Olympics is seen as more than a sporting event, it’s also a symbol of world competition and cooperation too — a way for countries to come together and share entertainment globally. I think that’s worth covering.

In the second post, Robert Scoble says there are plenty of great journalists but the public doesn’t care. In some ways I have to agree with that, but I don’t think it’s negative, necessarily. I had a conversation with someone the other day about world news reportage. He says, “I was just reading this story, but what does it matter to me if there’s a flood in some city in another country I’ll never visit and some farmer lost his sheep?” World news is only important when it’s relevant, so it’s no wonder that many people don’t care — if they don’t know much about the area, and it doesn’t affect them, they have no incentive to give it full attention. You can call that apathy, but I think it’s an important selectivity skill that humans have. We have to choose what to give priority to, so if nothing stands out as being particularly important, we just ignore it or gloss over it. Human nature…

Also I think the common person today just gets desensitized and doesn’t know where to turn their energy, when surrounded by so many crises. Either you focus on one specialty and do your best to work toward one cause in your life — and maybe that’s just in the course of your daily work — or you become a complete Attention-Deficit-Disorder case and bounce from one problem to the next, without knowing how to solve anything. That just causes a sense of bewilderment, despair, and either that bogs you down or eventually you get desensitized.

There’s a commenter on Scoble’s blog, Spencer, who talks about this generation’s apathy. There are so many people who want to blame today’s generation or the young generation for this “apathy” that they sense. But I see it as a survival mechanism that arises from the way information flows these days. We’re surrounded by crises, everyone wants us to know about them — the water shortage, global warming, death in Iraq, the national deficit. Okay, crisis, I get it. But no one gives a real clear idea on what any individual is really supposed to do to solve the problem. You can’t get involved with one global cause, without ignoring all the others, and if you do get involved it’s likely to become your life’s purpose. Most people are concerned with other things — their families, their work, personal development, their homes and futures, and really that’s enough to take up all their time.

I’m always amazed when I read about the early unionists. Emma Goldman for example, the activist who pushed for the 8-hr workday, and campaigned for free love in the early 1900s when women were still wearing corsets, used to work 16 hour factory days as a seamstress, then lead meetings late into the night. Today we lead cushy lives comparatively–8 hour days, plus commute and lunch, family time, dinner time, gym maybe, sleep… but it still doesn’t seem like we ever have enough energy and time.

What Emma had that most people today don’t, is a community living in the same conditions as herself, with clear goals about what they were campaigning for, and a cause that affected their own daily lives. Today, unionism and local activism is in much shorter supply, in part due to the many people who work fairly comfy desk jobs, and the problem that everyone has his own specialization, works in a cubicle, does his or her own thing. The problems we’re facing today in terms of global warming, global water shortage, aren’t the same kinds of problems that activists have fought for in the past, and there’s no clear road map for how to solve them. Our leaders sure aren’t leading the way.

What we do have, at least, is the Olympics, which is an age old symbol of international cooperation, play and competition…so, uh, go sports! As for full disclosure, I don’t actually have a TV and haven’t watched the Olympics in many years, but I do try taking short showers–does that help?

I’d like to give everyone the benefit of the doubt here; perhaps Dell was using it in a much narrower sense. Perhaps the term has really only been used more commonly since the time Dell first applied for the trademark back in March 2007 and now. BUT…

- Dell’s definition is quite broad and certainly not Dell-specific. “The design of computer hardware for use in datacenters and mega-scale computing environments for others; customization of computer hardware for use in data centers and mega-scale computing environments for others; design and development of networks for use in data centers and mega-scale computing environments for others.” Strike One.

- And according to the Wall Street Journal’s research, “cloud computing” has been in regular use since 2001. Strike Two.

So now the “case” has been returned to examination and hopefully the PTO will follow up on everyone else’s research on this and decide that yes, cloud computing is one of those broad, ubiquitous terms that should NOT be trademarked by a single company.

In their eyes, we were not earning money for the bank. Worse, we had the power to say no and therefore prevent business from being done. Traders saw us as obstructive and a hindrance to their ability to earn higher bonuses. They did not take kindly to this. Sometimes the relationship between the risk department and the business lines ended in arguments. . . .

Tactfully explaining why we said no was not our forte. Traders were often exasperated as much by how they were told as by what they were told.

At the root of it all, however, was—and still is—a deeply ingrained flaw in the decision-making process. In contrast to the law, where two sides make an equal-and-opposite argument that is fairly judged, in banks there is always a bias towards one side of the argument. The business line was more focused on getting a transaction approved than on identifying the risks in what it was proposing. The risk factors were a small part of the presentation and always “mitigated”. This made it hard to discourage transactions. If a risk manager said no, he was immediately on a collision course with the business line. The risk thinking therefore leaned towards giving the benefit of the doubt to the risk-takers.

Collective common sense suffered as a result. Often in meetings, our gut reactions as risk managers were negative. But it was difficult to come up with hard-and-fast arguments for why you should decline a transaction, especially when you were sitting opposite a team that had worked for weeks on a proposal, which you had received an hour before the meeting started. In the end, with pressure for earnings and a calm market environment, we reluctantly agreed to marginal transactions.

• Would You Know a Good decision if You Saw One?
• Decision Making Under Uncertainty

I’ll take your 6 centers of excellence and uh, raise you 2 data centers. Following up on the HP announcement that they’ve partnered with Yahoo and Intel to create cloud computing Centers of Excellence this week, IBM said they were building out 2 data centers to accommodate the coming cloud computing resources need. I should say that IBM had already announced their “partnership” with Google to provide services for the cloud back in May. Who’s left to partner with on cloud computing? Microsoft and Amazon?

Packet Trap Networks recently conducted a survey of network engineers and IT professionals who perform network management duties inside companies with more than 100 employees. Out of the 800 engineers surveyed, 49 percent stated that they did not have a comprehensive network management system in place – showing a need for solutions focused on the mid-market – i.e., the right features at reasonable prices. If you remember, Sevcik and Wetzel (not a vendor!) conducted their own survey on application performance management and had similar findings but a rather different answer… (hint – starts with “E” and ends in “7”)

Is open-source software more secure? After all thousands of eyes are better than a handful, right? Well, according to a report sponsored by Fortify Software, that’s just not the case. Roger Thornton, founder and CTO of Fortify Software, adds that the underlying problem is “a lack of understanding and collaboration between developers and security experts – today each are talking past each other when it comes to security.”

For all you aspiring CIOs out there, WSJ has provided a must-read list. Uh oh– the first on the list is “How to Read a Book”. Please, any negative comments directly on the Journal site…and any “good” ones here!

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