Steps are now being taken, rather faster since Dan Kaminsky came up with a really effective DNS poisoning attack, to secure DNS by using DNSSEC.

The basic idea of DNSSEC is that when you get an answer from the DNS it will be signed by someone you trust. At some point the “trust anchor” for the system will be “.” the DNS root, but for the moment there’s just a handful of “trust anchors” one level down from that. One such anchor is the “.se” country code domain for Sweden. Additionally, Brazil (.br), Puerto Rico (.pr), and Bulgaria (.bg) have signed their zones, but that’s about it for today.

So, wishing to get some experience with the brave new world of DNSSEC, I decided that Sweden was the “in” place to be, and to purchase “cloudba.se” and roll out my first DNSSEC signed domain.

The purchase wasn’t as easy as it might have been — when you buy a domain, Sweden insists that people provide their identity numbers (albeit they have absolutely no way of checking if you’re telling the truth) — or if a company they want a VAT or registration number (which are checkable, albeit I suspect they didn’t bother). I also found that they don’t like spaces in the VAT number — which held things up for a while!

However, eventually they sent me a PGP signed email to tell me I was now the proud owner of “cloudba.se”. Unfortunately, this email wasn’t in RFC3156 PGP/MIME format (or any other format that my usually pretty capable email client understood).

The email was signed with key 0xF440EE9B which was reassuring because the .se registry gives the fingerprint for this key on their website here. Rather less reassuringly footnote (*) next to the fingerprint says “.SE signature for outgoing e-mail. (**) June 1 through August 31.” (the (**) is for a second level of footnote, which is absent — and of course it is now September).

They also enable you to fetch the key through a link on this page to their “PGP nyckel-ID” at http://subkeys.pgp.net.

Unfortunately, fetching the key shows that the signature on the email is invalid.

Since the email seems to have originated in the Windows world, but was signed on a Linux box (giving it a mixture of 0D 0A and 0A line endings), then pushed through a three year old copy of MIME-tools I suppose the failure isn’t too surprising. But strictly the invalid signature means that I shouldn’t trust the email’s contents at all — because the contents have definitely been tampered with since the signature was applied.

Since the point of the email was to get me to login for the first time to the registry website and set my password to control the domain, this is a little unfortunate.

Even if the signature had been correct, then should I trust the PGP key?

Well it is pointed to from the registry website which is a Good Thing. However, they do themselves no favours by referencing a version on the public key servers. I checked who had signed the key (which is an alternative way of trusting its provenance — since the email had arrived to a non-DNSSEC secured domain). Turned out there was no-one I knew, and of 4 individual signatures, 2 were from expired keys. The other signature was the IIS root key — which sounds promising. That has 8 signatures, once again not people I know — but only 1 from a non-expired key, so perhaps I can get to know some of the other 7?

Of course, anyone can sign a key on a public key server, so perhaps it makes sense for .se to suggest that people fetch a key with as many signatures as possible — there’s more chance of it being signed by someone they know. Anyway, I have now added my own signature, using an email address at my nice shiny new domain. However, it is possible that I may not have increased the level of trust

Blogger: Dan Blum

With the crisis in financial markets still unfolding, it is important to draw what lessons we can from the experience. Since the roots of the crisis lie in a monumental failure of risk management, it’s important to understand more about what happened, and then draw some parallels to our business risk management and  IT risk management situations.

The risk management failure in the housing market and on Wall Street had multiple interdependent dimensions:

• Mortgage lenders abandoned long standing prudent loan practices. They made too many loans that buyers might not be able to repay. Exotic instruments like ARMs, option ARMs, and interest only loans proliferated. In many cases, all pretense of lending standards were abandoned, so-called “liar loans” approved.
• Capital was grossly over-leveraged. Mortgage lenders and other financial services packaged loans into securities, which they sold to raise capital to support more lending. Real capital reserve requirements to back loans were reduced. Of course, if borrowers could not repay loans, all or parts of the derivative securities would become worthless.
• Risk was aggregated at Fannie Mae, Freddie Mac, and mortgage loan insurance companies. These companies bought or insured some mortgage loans, providing something of a backstop should loans fail. Government sponsored enterprises (GSEs) Fannie and Freddie in turn became over-leveraged and securities that they sold were in turn repackaged in the murky brew of mortgage-backed securities called collateralized debt obligations (CDOs) and other exotic instruments returning generous yields.
• Non-Caveat Emptor. Institutional wealth funds and financial services firms who should have known better bought securities that had been deliberately structured to obfuscate risk. They bought securities they didn’t understand with buried tranches of toxic subprime loans..

It was a great Ponzi scheme – one that kept working as long as housing prices were going up; the recipients of subprime loans could always flip that house to the next buyer. Everyone made money. As Chuck Prince of Citigroup famously put it during a July, 2007 interview: “So long as the music is playing, you’ve got to keep dancing. We’re still dancing.” But one month later, the music stopped. Since then, Citigroup and other financial institutions have taken massive writeoffs with more to come. Wall Street titans like Bear Sterns, Lehman Brothers, Merrill Lynch, and AIG have fallen or been bought out.

What can we learn from this risk management debacle?

As business risk managers and investors, we should ask questions like these:

• Does the executive incentive structure of the company encourage managers to dance around risk? Many Wall Street firms paid senior managers 5 times their salary in bonuses tied to annual growth alone.
• Is the company over-leveraged? Is it borrowing too much money and betting it on ventures with uncertain outcomes?
• Are financial models used for risk management realistic? Earlier, I described the mortgage market of the past few years as a Ponzi scheme, where risk management models must have assumed prices would keep rising. Unlike the dotcom boom whose demise many predicted, very few in the industry foresaw the sharp declines to come in housing prices and sales volumes. Historically, the U.S. housing market has been a steadily rising one, but on the other hand the 2000s saw unprecedented rates of price increases. In reality, what goes up must come down.
• Has your company’s risk council ever performed worst case scenario analysis and built adequate reserves? In the days before economics emerged as a would-be “hard” deterministic science, business leaders may have been more cautious, more aware of and more accepting of uncertainty. Events like the Great Tulip Bubble came once in decades or centuries – not every few years. Note that legendary investor George Soros has proposed a Theory of Reflexivity that, if true, helps explain the recent extremes of boom and bust cycles. This theory holds that market participants model market behaviors based on self-interest, and for a time, their manipulations change the reality of the market – until gravitational forces bring it back to earth. Has the music of ephemeral success played to the backbeat of deterministic-sounding economic models gone to your heads and infected your risk management models?
• Are cost cutting efforts pursued blindly? Outsourcing and other forays into treacherous global waters may be giving away the crown jewels. Smart companies cut costs, but they do it in smart ways. Smart companies think like intelligence agencies as they parcel out work to different partners with varying levels of dependability, and they check on those partners.

Risk management failures can also occur at the more technical level of IT security. As IT risk managers, we might ask questions like these:

• Are the accounting and financial systems your IT department supports under adequate control? As Fred Cohen wrote in one of our documents: “Many companies use computers to manage financial systems, and despite the Sarbanes-Oxley Act (SOX) claims about accounts being properly kept, there are many attacks on financial systems that remain. For example, most of the largest financial systems in the world running on common financial databases do not use double-entry bookkeeping and are thus susceptible to all manner of frauds by insiders.” We find it troubling that a prudent control dating back to the 12th century is going out of style in the name of convenience and cost cutting. Kind of like credit checking became anachronistic during the housing bubble, eh?
• Is the “separation” in your “separation of duty” (SoD) for real? Sure the SOX auditors are looking for SoD, and maybe you have different administrators with different accounts maintaining different systems or functions. But when they say Western civilization may be but one weak password from collapse they’re not lying. Look what happened to Sarah Palin’s email account! Weak and straggly SoD is a problem across all critical IT systems where deperimiterization and server consolidation may be bringing down protective barriers, identity management is weak, and strong process controls (e.g., where two people must sign on, one perform a critical operation such as backbone router reconfiguration, and the second observe) abandoned in the name of expediency.
• Are risks being aggregated to unacceptable levels in centralized control systems? There are many ways that risks aggregate within enterprise IT infrastructures as we pursue automation and cost cutting. Network risks aggregate when centralized domain name system control is implemented. Application risks aggregate when common infrastructure is shared among applications. And enterprises aggregate platform risks when they use low-assurance endpoints, authentication, and directory systems with single sign-on to access large numbers of resources and don’t separate high consequence systems.
• Non-caveat emptor: Has IT security really done the worst case consequence analysis, attack graphs, and vulnerability analysis to know when putting more eggs in a supposedly stronger basket aggregates risks to an unacceptable level? Or are you depending only on vendor claims about some black box appliance equivalent of a risk-obfuscated CDO security? Caveat emptor (buyer beware) again! (The good news is we’ll keep talking about promoting vendor and product rating systems so you don’t have to do all the detailed product analysis yourself, but that’s another post.)

There are many parallels between the monumental risk management failure in the financial markets, and the probable weaknesses in our day to day business risk management and IT risk management. Abandonment of prudent practices for profit; excessive leverage and centralization; ill-constructed risk analysis models; risk obfuscation; and a failure of caveat emptor seem to be common problems. Please take this as a wakeup call to sharpen up the risk management thinking, process, and execution.