It's not just terrorism; it's any rare risk in the news. The big fear in Canada right now, following a particularly gruesome incident, is random decapitations on intercity buses. In the US, fears of school shootings are much greater than the actual risks. In the UK, it's child predators. And people all over the world mistakenly fear flying more than driving. But the very definition of news is something that hardly ever happens. If an incident is in the news, we shouldn't worry about it. It's when something is so common that its no longer news - car crashes, domestic violence - that we should worry. But that's not the way people think.

Psychologically, this makes sense. We are a species of storytellers. We have good imaginations and we respond more emotionally to stories than to data. We also judge the probability of something by how easy it is to imagine, so stories that are in the news feel more probable - and ominous - than stories that are not. As a result, we overreact to the rare risks we hear stories about, and fear specific plots more than general threats.

The problem with building security around specific targets and tactics is that its only effective if we happen to guess the plot correctly. If we spend billions defending the Underground and terrorists bomb a school instead, we've wasted our money. If we focus on the World Cup and terrorists attack Wimbledon, we've wasted our money.

It's this fetish-like focus on tactics that results in the security follies at airports. We ban guns and knives, and terrorists use box-cutters. We take away box-cutters and corkscrews, so they put explosives in their shoes. We screen shoes, so they use liquids. We take away liquids, and they're going to do something else. Or they'll ignore airplanes entirely and attack a school, church, theatre, stadium, shopping mall, airport terminal outside the security area, or any of the other places where people pack together tightly.

These are stupid games, so let's stop playing. Some high-profile targets deserve special attention and some tactics are worse than others. Airplanes are particularly important targets because they are national symbols and because a small bomb can kill everyone aboard. Seats of government are also symbolic, and therefore attractive, targets. But targets and tactics are interchangeable.

The following three things are true about terrorism. One, the number of potential terrorist targets is infinite. Two, the odds of the terrorists going after any one target is zero. And three, the cost to the terrorist of switching targets is zero.

We need to defend against the broad threat of terrorism, not against specific movie plots. Security is most effective when it doesn't require us to guess. We need to focus resources on intelligence and investigation: identifying terrorists, cutting off their funding and stopping them regardless of what their plans are. We need to focus resources on emergency response: lessening the impact of a terrorist attack, regardless of what it is. And we need to face the geopolitical consequences of our foreign policy.

In 2006, UK police arrested the liquid bombers not through diligent airport security, but through intelligence and investigation. It didn't matter what the bombers' target was. It didn't matter what their tactic was. They would have been arrested regardless. That's smart security. Now we confiscate liquids at airports, just in case another group happens to attack the exact same target in exactly the same way. That's just illogical.

This essay originally appeared in The Guardian. Nothing I haven't already said elsewhere.

Imagine you're in charge of infiltrating sleeper agents into the United States. The year is 1983, and the proliferation of identity databases is making it increasingly difficult to create fake credentials. Ten years ago, someone could have just shown up in the country and gotten a driver's license, Social Security card and bank account -- possibly using the identity of someone roughly the same age who died as a young child -- but it's getting harder. And you know that trend will only continue. So you decide to grow your own identities.

Call it "identity farming." You invent a handful of infants. You apply for Social Security numbers for them. Eventually, you open bank accounts for them, file tax returns for them, register them to vote, and apply for credit cards in their name. And now, 25 years later, you have a handful of identities ready and waiting for some real people to step into them.

There are some complications, of course. Maybe you need people to sign their name as parents -- or, at least, mothers. Maybe you need to doctors to fill out birth certificates. Maybe you need to fill out paperwork certifying that you're home-schooling these children. You'll certainly want to exercise their financial identity: depositing money into their bank accounts and withdrawing it from ATMs, using their credit cards and paying the bills, and so on. And you'll need to establish some sort of addresses for them, even if it is just a mail drop.

You won't be able to get driver's licenses or photo IDs on their name. That isn't critical, though; in the U.S., more than 20 million adult citizens don't have photo IDs. But other than that, I can't think of any reason why identity farming wouldn't work.

Here's the real question: Do you actually have to show up for any part of your life?

Again, I made this all up. I have no evidence that anyone is actually doing this. It's not something a criminal organization is likely to do; twenty-five years is too distant a payoff horizon. The same logic holds true for terrorist organizations; it's not worth it. It might have been worth it to the KGB -- although perhaps harder to justify after the Soviet Union broke up in 1991 -- and might be an attractive option to existing intelligence adversaries like China.

Immortals could also use this trick to self-perpetuate themselves, inventing their own children and gradually assuming their identity, then killing their parents off. They could even show up for their own driver's license photos, wearing a beard as the father and blue spiked hair as the son. I’m told this is a common idea in Highlander fan fiction.

The point isn't to create another movie plot threat, but to point out the central role that data has taken on in our lives. Previously, I've said that we all have a data shadow that follows us around, and that more and more institutions interact with our data shadows instead of with us. We only intersect with our data shadows once in a while -- when we apply for a driver's license or passport, for example -- and those interactions are authenticated by older, less-secure interactions. The rest of the world assumes that our photo IDs glue us to our data shadows, ignoring the rather flimsy connection between us and our plastic cards. (And, no, REAL-ID won't help.)

It seems to me that our data shadows are becoming increasingly distinct from us, almost with a life of their own. What's important now is our shadows; we're secondary. And as our society relies more and more on these shadows, we might even become unnecessary.

Our data shadows can live a perfectly normal life without us.

---

Bruce Schneier is Chief Security Technology Officer of BT, and author of Beyond Fear: Thinking Sensibly About Security in an Uncertain World.

It's become a big deal in IT security, too. Many corporate customers are demanding ROI models to demonstrate that a particular security investment pays off. And in response, vendors are providing ROI models that demonstrate how their particular security solution provides the best return on investment.

It's a good idea in theory, but it's mostly bunk in practice.

Before I get into the details, there's one point I have to make. "ROI" as used in a security context is inaccurate. Security is not an investment that provides a return, like a new factory or a financial instrument. It's an expense that, hopefully, pays for itself in cost savings. Security is about loss prevention, not about earnings. The term just doesn't make sense in this context.

But as anyone who has lived through a company's vicious end-of-year budget-slashing exercises knows, when you're trying to make your numbers, cutting costs is the same as increasing revenues. So while security can't produce ROI, loss prevention most certainly affects a company's bottom line.

And a company should implement only security countermeasures that affect its bottom line positively. It shouldn't spend more on a security problem than the problem is worth. Conversely, it shouldn't ignore problems that are costing it money when there are cheaper mitigation alternatives. A smart company needs to approach security as it would any other business decision: costs versus benefits.

The classic methodology is called annualized loss expectancy (ALE), and it's straightforward. Calculate the cost of a security incident in both tangibles like time and money, and intangibles like reputation and competitive advantage. Multiply that by the chance the incident will occur in a year. That tells you how much you should spend to mitigate the risk. So, for example, if your store has a 10 percent chance of getting robbed and the cost of being robbed is $10,000, then you should spend $1,000 a year on security. Spend more than that, and you're wasting money. Spend less than that, and you're also wasting money.

Of course, that $1,000 has to reduce the chance of being robbed to zero in order to be cost-effective. If a security measure cuts the chance of robbery by 40 percent -- to 6 percent a year -- then you should spend no more than $400 on it. If another security measure reduces it by 80 percent, it's worth $800. And if two security measures both reduce the chance of being robbed by 50 percent and one costs $300 and the other $700, the first one is worth it and the second isn't.

The Data Imperative

The key to making this work is good data; the term of art is "actuarial tail." If you're doing an ALE analysis of a security camera at a convenience store, you need to know the crime rate in the store's neighborhood and maybe have some idea of how much cameras improve the odds of convincing criminals to rob another store instead. You need to know how much a robbery costs: in merchandise, in time and annoyance, in lost sales due to spooked patrons, in employee morale. You need to know how much not having the cameras costs in terms of employee morale; maybe you're having trouble hiring salespeople to work the night shift. With all that data, you can figure out if the cost of the camera is cheaper than the loss of revenue if you close the store at night -- assuming that the closed store won't get robbed as well. And then you can decide whether to install one.

Cybersecurity is considerably harder, because there just isn't enough good data. There aren't good crime rates for cyberspace, and we have a lot less data about how individual security countermeasures -- or specific configurations of countermeasures -- mitigate those risks. We don't even have data on incident costs.

One problem is that the threat moves too quickly. The characteristics of the things we're trying to prevent change so quickly that we can't accumulate data fast enough. By the time we get some data, there's a new threat model for which we don't have enough data. So we can't create ALE models.

But there's another problem, and it's that the math quickly falls apart when it comes to rare and expensive events. Imagine you calculate the cost -- reputational costs, loss of customers, etc. -- of having your company's name in the newspaper after an embarrassing cybersecurity event to be $20 million. Also assume that the odds are 1 in 10,000 of that happening in any one year. ALE says you should spend no more than $2,000 mitigating that risk.

So far, so good. But maybe your CFO thinks an incident would cost only $10 million. You can't argue, since we're just estimating. But he just cut your security budget in half. A vendor trying to sell you a product finds a Web analysis claiming that the odds of this happening are actually 1 in 1,000. Accept this new number, and suddenly a product costing 10 times as much is still a good investment.

It gets worse when you deal with even more rare and expensive events. Imagine you're in charge of terrorism mitigation at a chlorine plant. What's the cost to your company, in money and reputation, of a large and very deadly explosion? $100 million? $1 billion? $10 billion? And the odds: 1 in a hundred thousand, 1 in a million, 1 in 10 million? Depending on how you answer those two questions -- and any answer is really just a guess -- you can justify spending anywhere from $10 to $100,000 annually to mitigate that risk.

Or take another example: airport security. Assume that all the new airport security measures increase the waiting time at airports by -- and I'm making this up -- 30 minutes per passenger. There were 760 million passenger boardings in the United States in 2007. This means that the extra waiting time at airports has cost us a collective 43,000 years of extra waiting time. Assume a 70-year life expectancy, and the increased waiting time has "killed" 620 people per year -- 930 if you calculate the numbers based on 16 hours of awake time per day. So the question is: If we did away with increased airport security, would the result be more people dead from terrorism or fewer?

Caveat Emptor

This kind of thing is why most ROI models you get from security vendors are nonsense. Of course their model demonstrates that their product or service makes financial sense: They've jiggered the numbers so that they do.

This doesn't mean that ALE is useless, but it does mean you should 1) mistrust any analyses that come from people with an agenda and 2) use any results as a general guideline only. So when you get an ROI model from your vendor, take its framework and plug in your own numbers. Don't even show the vendor your improvements; it won't consider any changes that make its product or service less cost-effective to be an "improvement." And use those results as a general guide, along with risk management and compliance analyses, when you're deciding what security products and services to buy.

This essay previously appeared in CSO Magazine.

Jeff uses the example, “Smart Order Routing” as an example of taking an event and routing the resulting market order match based on some simple rules.    Routing a order kicked off by a simple order match against a deep liquidity pool (or other market factor) does not define complex event processing nor detecting a complex event - the core idea behind CEP.   Order routing based on simple rules is BPM, plain and simple.

Let’s take another example, fraud.  In this example, there is some complex neural network monitoring for credit card fraud and a potential fraud is detected - this is CEP, detecting a complex event based on some sophisticated analytics.   

After a possible fraud has been detected, a process looks into a database and the routes the incident to someone in the company who is a (1) specialist in credit card fraud, (2) working at the same time of the discovered threat, and (3) immediately available to act on this type of task.   Routing the incident is not CEP, it is BPM.

Jeff makes the argument that it is OK to call an event-driven BPM task CEP because “it fits the EPTS definition” in the CEP glossary.   He also avoids the discussion of detection accuracy, and instead insists that latency is a ”very important” factor in a CEP application.

If you read the various post by vendors in the blog-o-sphere, it is obvious that they are continually defining CEP as BAM, BPM, BRE, BRMS, SOA and just about every other related processing activity that is complimentary to the event correlation and analysis required to detect an opportunity or threat to your business.

I’m not picking on Aleri.  TIBCO has been doing the same thing recently in their CEP blog, continually attempting to redefine CEP as BRMS.    Detecting business opportunities and threats with high confidence requires sophisticated analytics, and their tools have not yet evolved to “real CEP” capabilities.  Instead, vendors are attempting to redefine BPM, BRMS, BRE, and even SOA to some degree, as CEP. 

CEP is Not BPM, BAM, BRE, BRMS or SOA.

1. Sad, but VERY insightful story of Alan Shimmel getting 0wned (1,2,3,4, others on his blog)
2. A very good essay on security industry/market/community "Evolution is Punctuated Equilibria" ("Right now, Internet security is due for another period of rapid change.")
3. As I like to say, most everybody in out industry is confused about risk (myself included, in fact) - here is some nice reading about the subject: "Quant love", "What is Risk?" ("The probability of a threat overcoming security controls resistance to exploit a vulnerability that results in a loss.") While you are at it, check this blurb about risk and CVSS (BTW, CVSS is about "V" - vulnerability, not "R" for risk!)
4. Solid gold on "running IT as business" (and where it hits the wall) - Richard, the original CIO.com piece ("If you've tried managing an internal IT department as a bona fide business you already know that you can't take that very far, for the obvious reason that your IT department isn't a business.")
5. More fun stuff from Richard on insiders and why NOT look for them (sadly, same logic applies to not looking for owned boxes in your environment...).
6. Analyst firms shocking discovery: wireless MAY have security issues (I guess count it as humor...)
7. Fun read: "Challenges of Enterprise Cloud Computing" ("By moving the data into the cloud, enterprise, for now, will lose some capabilities to govern their own data set.")
8. Raffy on visualization. ("One of the dangerous things is if you don't understand the log file itself, don't assume you'll understand the visualization of it or even generate a visualization that makes sense") Amen to that! BTW, Raffy's book is finally out.
9. Compliance and checkbox mentality: fun pickup from my original "DLP and Compliance" post - Rich and TechTarget. Good stuff! ("Don’t Sell ‘Compliance’ If It Isn’t A Checkbox ")
10. RedHat is nicely 0wned (more info)
11. BGP hole to dwarf the DNS hole?
12. Chris continues the virtualization and PCI DSS theme here. The jury is still out on this one, even though the common sense approach (that virtualization is OK in regards to PCI) will probably win.
13. NEWS FLASH! Privacy dies. The date of death? 1967. While reading it, think just how visionary some folks are...
14. Finally, just for laughs: How to Spin Bad News

Enjoy!

BTW, I am saving some fun reading for dedicated posts soon :-)

The "Oyster card" used on the London Tube was at issue in the Dutch case, and a similar fare card used on the Boston "T" was the center of the U.S. case. The Dutch court got it right, and the American court, in Boston, got it wrong from the start -- despite facing an open-and-shut case of First Amendment prior restraint.

The U.S. court has since seen the error of its ways -- but the damage is done. The MIT security researchers who were prepared to discuss their Boston findings at the DefCon security conference were prevented from giving their talk.

The ethics of full disclosure are intimately familiar to those of us in the computer-security field. Before full disclosure became the norm, researchers would quietly disclose vulnerabilities to the vendors -- who would routinely ignore them. Sometimes vendors would even threaten researchers with legal action if they disclosed the vulnerabilities.

Later on, researchers started disclosing the existence of a vulnerability but not the details. Vendors responded by denying the security holes' existence, or calling them just theoretical. It wasn't until full disclosure became the norm that vendors began consistently fixing vulnerabilities quickly. Now that vendors routinely patch vulnerabilities, researchers generally give them advance notice to allow them to patch their systems before the vulnerability is published. But even with this "responsible disclosure" protocol, it's the threat of disclosure that motivates them to patch their systems. Full disclosure is the mechanism (.pdf) by which computer security improves.

Outside of computer security, secrecy is much more the norm. Some security communities, like locksmiths, behave much like medieval guilds, divulging the secrets of their profession only to those within it. These communities hate open research, and have responded with surprising vitriol to researchers who have found serious vulnerabilities in bicycle locks, combination safes (.pdf), master-key systems and many other security devices.

Researchers have received a similar reaction from other communities more used to secrecy than openness. Researchers -- sometimes young students -- who discovered and published flaws in copyright-protection schemes, voting-machine security and now wireless access cards have all suffered recriminations and sometimes lawsuits for not keeping the vulnerabilities secret. When Christopher Soghoian created a website allowing people to print fake airline boarding passes, he got several unpleasant visits from the FBI.

This preference for secrecy comes from confusing a vulnerability with information about that vulnerability. Using secrecy as a security measure is fundamentally fragile. It assumes that the bad guys don't do their own security research. It assumes that no one else will find the same vulnerability. It assumes that information won't leak out even if the research results are suppressed. These assumptions are all incorrect.

The problem isn't the researchers; it's the products themselves. Companies will only design security as good as what their customers know to ask for. Full disclosure helps customers evaluate the security of the products they buy, and educates them in how to ask for better security. The Dutch court got it exactly right when it wrote: "Damage to NXP is not the result of the publication of the article but of the production and sale of a chip that appears to have shortcomings."

In a world of forced secrecy, vendors make inflated claims about their products, vulnerabilities don't get fixed, and customers are no wiser. Security research is stifled, and security technology doesn't improve. The only beneficiaries are the bad guys.

If you'll forgive the analogy, the ethics of full disclosure parallel the ethics of not paying kidnapping ransoms. We all know why we don't pay kidnappers: It encourages more kidnappings. Yet in every kidnapping case, there's someone -- a spouse, a parent, an employer -- with a good reason why, in this one case, we should make an exception.

The reason we want researchers to publish vulnerabilities is because that's how security improves. But in every case there's someone -- the Massachusetts Bay Transit Authority, the locksmiths, an election machine manufacturer -- who argues that, in this one case, we should make an exception.

We shouldn't. The benefits of responsibly publishing attacks greatly outweigh the potential harm. Disclosure encourages companies to build security properly rather than relying on shoddy design and secrecy, and discourages them from promising security based on their ability to threaten researchers. It's how we learn about security, and how we improve future security.

This essay previously appeared on Wired.com.

EDITED TO ADD (8/26): Matt Blaze has a good essay on the topic.