Economists have long understood the corollary concept of Coase's ceiling, a point above which organizations collapse under their own weight -- where hiring someone, however competent, means more work for everyone else than the new hire contributes. Software projects often bump their heads against Coase's ceiling: recall Frederick P. Brooks Jr.'s seminal study, The Mythical Man-Month (Addison-Wesley, 1975), which showed how adding another person onto a project can slow progress and increase errors.

What's new is something consultant and social technologist Clay Shirky calls "Coase's Floor," below which we find projects and activities that aren't worth their organizational costs -- things so esoteric, so frivolous, so nonsensical, or just so thoroughly unimportant that no organization, large or small, would ever bother with them. Things that you shake your head at when you see them and think, "That's ridiculous."

Sounds a lot like the Internet, doesn't it? And that's precisely Shirky's point. His new book, Here Comes Everybody: The Power of Organizing Without Organizations, explores a world where organizational costs are close to zero and where ad hoc, loosely connected groups of unpaid amateurs can create an encyclopedia larger than the Britannica and a computer operating system to challenge Microsoft's.

Shirky teaches at New York University's Interactive Telecommunications Program, but this is no academic book. Sacrificing rigor for readability, Here Comes Everybody is an entertaining as well as informative romp through some of the Internet's signal moments -- the Howard Dean phenomenon, Belarusian protests organized on LiveJournal, the lost cellphone of a woman named Ivanna, Meetup.com, flash mobs, Twitter, and more -- which Shirky uses to illustrate his points.

The book is filled with bits of insight and common sense, explaining why young people take better advantage of social tools, how the Internet affects social change, and how most Internet discourse falls somewhere between dinnertime conversation and publishing.

Shirky notes that "most user-generated content isn't 'content' at all, in the sense of being created for general consumption, any more than a phone call between you and a sibling is 'family-generated content.' Most of what gets created on any given day is just the ordinary stuff of life -- gossip, little updates, thinking out loud -- but now it's done in the same medium as professionally produced material. Unlike professionally produced material, however, Internet content can be organized after the fact."

No one coordinates Flickr's 6 million to 8 million users. Yet Flickr had the first photos from the 2005 London Transport bombings, beating the traditional news media. Why? People with cellphone cameras uploaded their photos to Flickr. They coordinated themselves using tools that Flickr provides. This is the sort of impromptu organization the Internet is ideally suited for. Shirky explains how these moments are harbingers of a future that can self-organize without formal hierarchies.

These nonorganizations allow for contributions from a wider group of people. A newspaper has to pay someone to take photos; it can't be bothered to hire someone to stand around London underground stations waiting for a major event. Similarly, Microsoft has to pay a programmer full time, and Encyclopedia Britannica has to pay someone to write articles. But Flickr can make use of a person with just one photo to contribute, Linux can harness the work of a programmer with little time, and Wikipedia benefits if someone corrects just a single typo. These aggregations of millions of actions that were previously below the Coasean floor have enormous potential.

But a flash mob is still a mob. In a world where the Coasean floor is at ground level, all sorts of organizations appear, including ones you might not like: violent political organizations, hate groups, Holocaust deniers, and so on. (Shirky's discussion of teen anorexia support groups makes for very disturbing reading.) This has considerable implications for security, both online and off.

We never realized how much our security could be attributed to distance and inconvenience -- how difficult it is to recruit, organize, coordinate, and communicate without formal organizations. That inadvertent measure of security is now gone. Bad guys, from hacker groups to terrorist groups, will use the same ad hoc organizational technologies that the rest of us do. And while there has been some success in closing down individual Web pages, discussion groups, and blogs, these are just stopgap measures.

In the end, a virtual community is still a community, and it needs to be treated as such. And just as the best way to keep a neighborhood safe is for a policeman to walk around it, the best way to keep a virtual community safe is to have a virtual police presence.

Crime isn't the only danger; there is also isolation. If people can segregate themselves in ever-increasingly specialized groups, then they're less likely to be exposed to alternative ideas. We see a mild form of this in the current political trend of rival political parties having their own news sources, their own narratives, and their own facts. Increased radicalization is another danger lurking below the Coasean floor.

There's no going back, though. We've all figured out that the Internet makes freedom of speech a much harder right to take away. As Shirky demonstrates, Web 2.0 is having the same effect on freedom of assembly. The consequences of this won't be fully seen for years.

Here Comes Everybody covers some of the same ground as Yochai Benkler's Wealth of Networks. But when I had to explain to one of my corporate attorneys how the Internet has changed the nature of public discourse, Shirky's book is the one I recommended.

This essay previously appeared in IEEE Spectrum.

So, my dear readers, imagine how amazed I was to find myself being truly inspired by my CEO,  for the first time in my working life! Philippe’s “no-B.S.” approach definitely works for me. I listened to his speech at a company meeting last week and – I am serious! – that was the most interesting, visionary AND inspiring speech that I’ve heard in a long time. It was clear what we’ve been doing, what worked, what didn’t and what we need to be doing and why it will work.

I already learned more than a few things from him just by listening to him  speak or conduct a meeting (or by watching him beat up a job candidate…). For example,  one CAN be “positive, but not marketing-ish,” even if situation is difficult. If one has an issue, one has to face it with no sugarcoating rather than ’play’ positive and pretend the issue is not there. One can have BOTH a driving vision AND be attentive to customers. One CAN release something when it is ready, not a year before :-) Etc, etc.

Finally, while some choose to lay people off, we at Qualys  ARE HIRING!  Come join us and help build the SaaS security platform that actually works! Specifically, we are looking for TAMs (kind like an SE, but better :-)), PMs and a lot of engineers.

…the FBI and the Secret Service came to the campaign with an ominous warning: “You have a problem way bigger than what you understand,” an agent told Obama’s team. “You have been compromised, and a serious amount of files have been loaded off your system.” The following day, Obama campaign chief David Plouffe heard from White House chief of staff Josh Bolten, to the same effect: “You have a real problem … and you have to deal with it.” The Feds told Obama’s aides in late August that the McCain campaign’s computer system had been similarly compromised.

This information demonstrates that the US government has a sophisticated intrusion detection capability. This is likely part of the NSA internet surveillance system that was made public by an AT&T technician in 2006.

It is likely that the system has a set of watch IP ranges that are sensitive from a national security perspective. The campaigns’ computers were probably on this list. The traffic between foreign IP addresses and these watch IPs is then scrutinized for espionage. The pattern of activity flagged would be Microsoft Office documents and PDFs being retrieved or other intruder signs such as an encrypted tunnel with a foreign endpoint.

This shows that the US Government has the capability to detect some types foreign attacks although they probably have to be selective of the IP ranges they monitor. It’s nice to know that if the White House computers were leaking documents to China or Russia that there is some detection capability, but the fact that this is done at the Internet backbone level means any IP could be targeted and it might not just be to look for foreign intrusions.

Lots being written about the Cloud, most of it quite dark and gloomy.  In fact I’m surprised, that Hoff hasn’t got a preso spooled up called “The Toxic Cloud” or something similarly ominous for his next speaking tour.
That said, the Economist does a great job distilling the issue into a simple statement -

Cloud computing is a trade-off between sovereignty and efficiency.

Let me ask you -  if you had to put your money on one of those horses, considering your average profit-preoccupied business, which would it be?  I’d put my bottom dollar on the thoroughbred named “Cost Center Reduction”, to place.

WHO ARE WE TO STAND IN THE WAY OF “PROGRESS”?

I’m always fond of Jack’s rule that the role of information risk management boils down to three deceptively simple premises:

• Reduce Risk.
• Reduce Loss.
• Create Operational Efficiencies.

So it would seem antithetical to the charter of the Chief Security Officer to stand in the way of progress as embodied by “cloud computing” (not to mention dangerous to long-term job security).  And I think that this presents opportunities to discuss strategies for managing risk, strategies that aren’t too theoretical and have practical application (though actual “cloud” use by enterprises may be rare at this point).

ON RISK REDUCTION IN THE CLOUD (or, How To Learn From the Shortcomings of PCI DSS)

The good news is, there’s already a well-established model for managing the risk around outsourcing the processing of “confidential” information.  The bad news is, that model kinda sucks it.

The Payment Card Industry, known as the “PCI” or “meal ticket” to many in the industry, faced a similar problem with the introduction of GLBA.  As I see it (and I’m not at all close to the PCI, at all, so this is all just abstract soliloquy) the PCI had one of two choices when faced with the prospect of other people managing their sensitive information:

1. Accept the *massive* amount of GLBA risk their business creates and spend a TON of money to build out the infrastructure (both process and IT) to manage the consumer data themselves (in conjunction with the banks, of course) and never have it grace the computing systems of the retailer.  Or,
2. Transfer the GLBA risk down to the retailer and have them bear the majority of the risk (and cost of reducing risk to a level that might be tolerable to the US Government).

(Martin, you may recall our Twittering about PCI a while back.  This is the crux of my view on the subj.)

Now fortunately, the CSO’s of the world are going to be a little more “invested” in protecting the information they are stewards over, and unlike the PCI, will remain primarily responsible for the C, I, & A of the data in the Cloud.  The cool thing is, this actually presents a great opportunity to start building a meaningful model for co-management of risk!  In fact, we can take the PCI model of contractual risk transference but modify where it goes all wrong, and start working to create something better.  And we can start by euthanizing some faulty assumptions.

JUST HOW INFORMATIVE IS PCI DSS?

What might be the.greatest.mistake of the standards compliance mentality is the assumption of value for the past-state measurement.  That is, I believe that the CSO needs more than some “past-state” assurance in order to understand their risk.    If you look at the concept of “PCI compliance” it really is an examination of a past state of nature that is assumed to be relevant to current and future states.   Many people (myself included) are not at all convinced that this past-state is nearly as informative as those who mandate it’s measurement believe it to be.

That’s not to condemn past-state measurements as completely non-informative,  they most certainly are useful.  It’s just that no self-respecting CSO sleeps well because they were deemed “PCI compliant” 10 months ago.  They sleep well because they have good visibility into current-state information and confidence in their strategy concerning future-state (based on that visibility and the outcomes of sound IRM models).

MOVING PAST THE VULNERABILITY SCANNER INTO INTELLIGENCE AND WISDOM

So realizing this new importance (to me, at least) concerning visibility and IRM models, I’m lead to the conclusion that if we are to manage risk in the Cloud, we’ll have to move beyond “PCI Compliance” or the concept that some regular “audit” of controls in place at the host is all we need to understand our ability to manage risk.  No, the CSO must have good information concerning current and probable future states.   This is that “visibility” I spoke of above.  In fact, we’ll need significant amounts of piercing, transparent visibility.  And in order to gain that visibility, our insight into Cloud Risk Management must include significant provisions for understanding a joint ability to Prevent/Detect/Respond as well as provisions for managing the risk that one of the participants won’t provide that visibility or ability via SLA’s and penalties . These SLA’s must be expressed in measurable terms (more visibility), and those metrics must have their roots in the things that help understand how we manage risk (those aforementioned IRM models).

THE CLOUD COMPUTING SECURITY SILVER LINING (sorry couldn’t resist)

As I mentioned earlier, I do see an opportunity to create insight.  The need for visibility and IRM models would allow us to create a “guidance” if you’ll allow me to use the term.  Not a standard or a “best practice” to audit by, but simply a reference document that says “if you’re going to put information on somebody else’s systems and still hold some significant responsibility for that information, here’s the considerations, why they are considerations, and how you might go about collaborating on the management of risk”.

And I think that if we undertake this journey, there is going to be a lot of growth and risk management innovation along the way.  But keen insights into what it means to manage risk will be necessary, and secure and forthright collaboration will be of absolute importance.

I say that last bit because, if these pundits are right about the utility of a hosted computing model - the Cloud will happen regardless of the CSO’s ability or desire to manage it.

Investigators are treating the explosions as acts of vandalism, not terrorism, Shields said.

"Under the Criminal Code, it would be characterized as mischief, which is an intentional vandalism. We don't want to characterize this as terrorism. They were very isolated locations and there would seem there was no intent to hurt people," he said.

It's not all good, though. Here's a story from Philadelphia, where a subway car is criticized because people can see out the front. Because, um, because terrorist will be able to see out the front, and we all know how dangerous terrorists are:

Marcus Ruef, a national vice president with the Brotherhood of Locomotive Engineers and Trainmen, compared a train cab to an airliner cockpit and said a cab should be similarly secure. He invoked post-9/11 security concerns as a reason to provide a full cab that prevents passengers from seeing the rails and signals ahead.

"We don't think the forward view of the right-of-way should be available to whoever wants to watch ... and the conductor and the engineer should be able to talk privately," Ruef said.

Pat Nowakowski, SEPTA chief of operations, said the smaller cabs pose no security risk. "I have never heard that from a security expert," he said.

At least there was pushback against that kind of idiocy.

And from the UK:

Transport Secretary Geoff Hoon has said the government is prepared to go "quite a long way" with civil liberties to "stop terrorists killing people".

He was responding to criticism of plans for a database of mobile and web records, saying it was needed because terrorists used such communications.

By not monitoring this traffic, it would be "giving a licence to terrorists to kill people", he said.

I hope there will be similar pushback against this "choice."

• Provide a government I.D. number for verification of your identity.
• Set up custom security questions and answers, further safeguarding your domain assets.
• Provide special verification instructions and artifacts to ensure that your unique business or ownership interests are protected.
• When you request that your domains be unlocked, our security team works directly with you to verify all of the above off-line - further eliminating risks of doing business in an online world!

I say today is a good day for two reasons:  1.)  BT’s CSO Jill Knesek wrote an article called “Keys to establishing an end-to-end security strategy” which begs some discussion within context, and 2.)  Sara Peters on Twitter last night wanted to know why I thought “risk management” requires more than what most “best practices” around the subject suggest the effort requires.

WHAT SHOULD WE BE REFLECTING ABOUT?

Jill Knesek’s article gives us a rough outline of how to develop a security strategy.  It’s fairly high-level, Pragmatic CSO-ish type stuff.  It gives us a nice outline of

• Get a seat at the table
• Process
• People
• Technology

Nothing earth-shattering there.  But it is a very nice broad CISO-level taxonomy about what we have to reflect on.  The need to reflect is driven by something Jack told me long ago,

“The amount of risk we have is a function of the decisions we made and our ability to execute on them from some point in the past”.

As an Aside:  So Sarah if you’re reading, this quote does much to explain why I said I disagree with much of what our industry calls “risk management”.  We tend to define the process of risk management as essentially a tactical “issue whack-a-mole” exercise. Find the issue.  Analyze the “risk” around the issue.  Fix the issue.  Repeat. This hamster-wheel-of-pain, while sometimes an effective tool for the CISO, is incongruous with addressing root causes (the ability to match a tactical issue to the strategic shortcoming that created the issue is up to the expertise of the analyst or consultant).  It is only Kaizen without (good) Hansei, if you will.

Back to what Jill is writing - the sorts of things we should be reflecting about can be thought of in context of her outline.  Namely:

1. Once you have a seat at the table, what is the nature of that relationship?  Who are you reporting to and what are their concerns? What and how are you reporting and how might that be addressing their concerns?
2. What processes are in place?, How do you know that those are the processes that should be in place? If they are, what kind of job am I doing at those processes?
3. What is the quality of the skills and resources I have from a people perspective, and how do I know if they are adequate?  How do I know that the training they petition me for will effectively reduce organizational risk?
4. Are the Technology solutions I have in place effective, are we managing them effectively, and what sort of States of Knowledge could they provide me with (to make good decisions and execute upon them, from above)?

This, for the CISO, is Hansei.  The continuous management of it is Kaizen.  Not to particularly pick on Jill’s article, but creating a “risk register expressed in ALE” might be fine if you’re trying to explain to the board what your “first 100 days in office” will be like - but these sorts of lists are usually not very strategic in nature, and as such, depending on the outcome of that risk register (and the models used to create it) it might not actually be useful.

WHAT IS NEEDED FOR REFLECTION?

So what is needed for this sort of CISO-level Hansei?

The CISO must understand the

• Current State of Nature

turn that into a

• State of Knowledge

and use that to create a

• State of Wisdom.

CREATING A STATE OF NATURE FOR THE IRM PROGRAM

This Current State of Nature determination be done by applying analytical methods to a program audit.  We must understand questions like,  “What is in that program and how is it structured?”  before we can answer questions about “how (good/bad) are we at managing risk?”

There are many ways to structure an IRM program, but as an example - below is a graphic shared with me by Adrian Seccombe.  For those who know Adrian and the Trust Model - this is classified as “white” so it’s OK for public display and consumption.  But here’s what Adrian is trying to build at a high level:

So regarding Adrian’s program diagram:

1. Is a governance framework.  Think ITIL.
2. Is a risk framework.  Think ISO 27002 using FAIR as an analytical engine.  To be fair (pun) I believe this is really issue management, and it’s a process, but that’s OK.
3. Reg compliance should be self explanatory.  That’s essentially what GRC products do for you.
4. With architecture, I think Adrian is inclined towards TOGAF.
5. Security is the ISMS in place (27001, ISM^3, PCI, whatever…)
6. Are the processes that drive execution
7. Monitor (audit) is creating a State of Nature and Evaluate is creating a State of Knowledge from that State of Nature around items 1-6.

EVALUATE - CREATING A STATE OF KNOWLEDGE ABOUT THE IRM PROGRAM

That evaluate is Hansei/Kaizen.  Evaluation, done effectively, will drive actual organizational risk exposure.  Evaluate will even answer those four questions we raised in the “What Should We Be Reflecting About” section above:

1. Once you have a seat at the table, what is the nature of that relationship?  Who are you reporting to and what are their concerns? What and how are you reporting and how might that be addressing their concerns?
2. What processes are in place?, How do you know that those are the processes that should be in place? If they are, what kind of job am I doing at those processes?
3. What is the quality of the skills and resources I have from a people perspective, and how do I know if they are adequate?
4. Are the Technology solutions I have in place effective, are we managing them effectively, and what sort of States of Wisdom do they provide me with (to make good decisions and execute upon them, from above)?

If we could have a nice metric (or set of metrics) that answers these questions, we might call it something like “My Ability To Manage Risk” or MATMR for short.

GETTING TO A STATE OF WISDOM

What’s then missing is how you create a State of Wisdom around the State of Knowledge developed - your “MATMR” metric.  That is, given the current State of Knowledge - how can I be most effective?  This State of Wisdom requires proper models for what risk is, and what you can do to manage it applied in a probabilistic manner (because we can’t intrinsically *know* the future, we can only say with some degree of certainty what the desired course should be).

So the outcome of Hansei/Kaizen should be to create a State of Wisdom about Risk Management.  This is why reflection must be relentless - because your wisdom must be similarly abundant.

This is no small part of the reason RMI exists, why we build software and help organizations understand the things they do.