Security Professionalisation in Australasia

Security Professionalisation in Australasia

Security Professionalisation is an issue that all who are involved or care about societal resilience should be concerned about. I’ve just written an article for Security Solutions Magazine talking about the efforts that a new organisation, Security Professionals Australasia (SPA) is undertaking to work with the security industry and governments to improve the state of affairs.

The article has been published in the latest edition of Security Solutions Magazine (Nov/Dc 2015) which is available at  http://www.securitysolutionsmagazine.biz/ 

(Disclosure of interest, Alex Webling is a member of SPA)

The state of ICT Security

State of ICT Security – Attackers take over SCADA controlled steelworks furnace and caused massive damage

The threat to online assets from attackers remains critical according to a report just released on the State of ICT security by the German Government.

Cloud Computing, mobile systems and big data are providing enormous economic prosperity, but have on the other hand opened up large attack surface for organisations.

The German Federal Department for Safety in Information Technology  has just released its annual “State of ICT Security” report for 2014. The German Government’s version of the bit of NSA that helps government and businesses protect themselves online is called the BSI. They are highly skilled and well respected.

As is usual for a government report it is turgid. However there is some really interesting stuff hidden in the morass.  I’ve picked out some of the gems and translated them here.

Complexity is killing information security

The report emphasises that complexity is exposing organisations to attack. Of particular concern is that Internet of Things (Systeme und Dinge) is now moving from the stage where it is mostly about observation of the environment to changing the environment.

Importantly, particularly in light of the Snowden expose, this report is not coming from either the US or UK and so gives a secondary source to some of what those governments are saying.

There are over 250 million individual varieties of Windows malware around now

Other observations which confirm what you may have seen in other places

  1. Spam continues to grow exponentially
  2. Malware is still growing and at least a million devices are being infected annually in Germany. The BSI estimates that the number of different types of Windows malware is at a staggering 250 million. This is up from around 180 million in 2013!
  3. The number of infected sites delivering ‘driveby exploits’ is growing substantially.
  4. Botnets are being used to steal identity information. There are more than one million devices under the control of botnets in Germany.
  5. Phishing continues to yield results for cyber criminals

Advanced Persistent Threats – an increasing threat for government and industry

Germany is constantly being cyber-attacked by foreign intelligence services. The BSI has installed improved sensor technology in the government’s networks following the revelations that came from Edward Snowden in 2013/14. There are a number of methodologies which the BSI has identified. This tallies quite well with some of the things Bruce Schneier has written recently about these issues

  • Strategic enlightenment – whereby the intelligence service identifies connections between various users to gain an intelligence picture
  • Attacks on key individuals – attacking system administrators for key systems to gain access.
  • Influencing Standards – By weakening standards, , the allegation has been that NSA individuals have influenced the NIST standards development process.
  • Manipulation of IT hardware and software – Well they would do that wouldn’t they.

The BSI notes that trusted insiders are being used to enable some attacks by intelligence services, criminals and activists.

This table is reasonably easy to read, even if you don’t understand German. It shows the prognosis (prognose) for threats over the coming year.

Schwachstellen = vulnerabilities
Schadprogramme = malware
Identitaetsdiebstahl = ID theft

Cyber threat prognosis

Casestudies

The report goes through a number of cases where the BSI was called to assist businesses. Here are two that are of particular concern.

Steelworks compromise causes massive damage to furnace.

One of the most concerning was a targeted APT attack on a German steelworks which ended in the attackers gaining access to the business systems and through them to the production network (including SCADA). The effect was that the attackers gained control of a steel furnace and this caused massive damages to the plant.

Dragonfly attacks a dozen companies

The Dragonfly hacker group attacked a number of companies’ SCADA systems and installed the malware ‘Havex’. This was used to gather information about the systems. No damage was done, because the compromise was detected and removed before the hackers had completed the observation and intelligence gathering phase.

Conclusion

It’s worth remembering that there are many other countries dealing with the cyber threat around the world. Germany has always been one of the leading non-UK CAN, US, AUS, NZ countries and it is interesting to see how they view the landscape.

You can download the original Document from the BSI – Bundesamt fuer Sicherheit in der Informationstechnik – in German “Die Lage der IT-Sicherheit in Deutschland 2014”  https://www.bsi.bund.de/SharedDocs/Downloads/DE/BSI/Publikationen/Lageberichte/Lagebericht2014.pdf?__blob=publicationFile

Sydney Siege

The siege in a chocolate shop in Sydney’s CBD ended early this morning AEST. Three people died, including one purported to be the gunman Haron Monis.

There will necessarily be intense scrutiny on the forces used to resolve a violent event. However, it is important to remember that they do not happen in isolation.

The factors that lead us to these events are always complex and often have geo-political, sociological and psychological underpinnings.  In this case, the gunman, was a convicted criminal and seems to have latched on to the idea of violent jihad to justify his own failings. 

This is the time for cool heads. It is far more effective and efficient to invest in efforts which counter radicalism before it descends into violence. To that end, we should remember the quiet work of those who enfranchise the disenfranchised and seek to strengthen social cohesion.

It is these people, who make our way of life so great.  

Governments at all levels must lead in these efforts. Politicians must remember, whatever their political colour, that radicalism  is a complex societal issue, not a sound bite. Else we descend into barbarism.

As a society, we must remember that the work of all members of the civil society needs to be focussed on countering radicalism.

This event received so much coverage precisely because it is uncommon in Australia

Just remember that the reason this event received so much coverage in the media is precisely because it is so rare. And of course, it was across the road from the HQ of one of the big Australian TV channels.

Yet, at the same time across the world, six people died, one was wounded, and the gunman escaped in a shooting in Philadelphia. In that case, it seems that the gunman is a mentally disturbed ex soldier.

Yet, although it was reported, multiple shootings are depressingly common in the US. They are even more common in parts of Africa, and often the reports don’t even make it beyond the local news.

It all comes back to risk and societal resilience, because when citizens are allowed to panic, governments start using extreme measures in our names. Professionalism in risk and security is about understanding the difference between perception and reality and taking an evidence based approach to dealing with the issues.

More information

http://www.abc.net.au/news/2014-12-15/sydney-siege-hostages-cafe-martin-place-police-operation/5967232

http://www.nbcphiladelphia.com/news/local/Lansdale-Shooting-285800521.html

http://www.nytimes.com/2014/12/15/us/politics/cheney-senate-report-on-torture.html?_r=0

http://link.springer.com/search?facet-author=%22Roy+Gardner%22

Privacy and social login

Is it possible to enhance privacy with social login?

The likelihood that any Australian Government is going to create an online identity credential now seems distant with the National Trusted Identities Framework (NTIF) almost forgotten. How quickly the Internet forgets, but maybe that’s a good thing if you’re Mario Costeja González.

But the need that the NTIF sought to fill has not gone away. Governments are trying to work out how to service their citizen/customer/users at lower cost. The Internet offers one possibility, but in taking their services online, government agencies expose themselves and us to different threats and potentially higher risk. However, it seems inevitable that government agencies will follow financial institutions in offering higher value transactions online. In the end, the economic argument is likely to drive government agency migration online with more high trust services. Recent federal and state/territory budget announcements are only likely to spur this movement.

There are a number of threats that need to be mitigated before a government agency could potentially provide its services online. Probably the key issue is for the agency to be sure that a user requesting access to a site is who they say they are. Currently issuing the customer with a username and password mostly does this, but the model is beginning to fail. The problem is that most people don’t interact with government agencies on a regular basis and yet information sensitivity and computer capabilities require users to adopt increasingly complex and non-sensical passwords.

It's all getting a bit hard
It’s all getting a bit hard

This in turn makes the passwords more difficult to remember even as they are harder to crack. It also means that password resets are much demanded. Yet at the same time, customers are expected to change their passwords regularly, not to write them down or repeat them for other online services.

It seems clear that these password requirements largely force customers to break their user agreements and either, write their passwords down, or worse re-use them for other services/websites.

It also puts government agencies in a bind. They want to provide online access to their services because it could be cheaper to operate than bricks and mortar outlets (if they didn’t have to reset too many passwords), but they also do not want to be embarrassed by privacy and security breaches.

Social Login providers

One option is the use of a social login to help secure online authentication. This could enhance user information security and minimise privacy breaches. Social login, also known as social sign-in, is a form of simple sign-on (to web resources) using existing membership of a social networking service such as Facebook, Yahoo, Twitter or Google+ to sign into a third party website in lieu of creating a new login account specifically for that website or service. Social login is designed to simplify logins for end users as well as provide more and more reliable demographic information to website owners. Social login can be used as a mechanism for both identity authentication and user authorisation.

Google website authentication

Social login is being adopted by private sector organisations for a number of reasons including: Rapid registration; Verified email contacts; and Customer stickiness. However social login also offers three major benefits for government agencies.

–       Currency of contact data. Contact data such as email tend to be kept up to date by the user.

–       Passwords are less easily forgotten because they are regularly used. At the same time, the social login passwords are not transmitted from the user to the agency website.

–       Security. Agencies can leverage security technologies implemented by the social networks that they might never be able to replicate themselves. Because of their resources, social networks such as Google and Facebook are able to detect and patch zero day exploits quickly.

So what are the privacy risks?

A user, when accepting the convenience of a social login, can share a significant amount of their information between a third party website (such as a government agency) and the social network. The social site is informed of every social login performed by the user. Often, it is worth considering whether users understand exactly what they are sharing and whether they are giving informed consent to share. However this risk can be mitigated with the creation of clear and detailed login screens, which explain what the users are sharing.

As an example, the following information is returned when a Facebook user agrees to share their ‘Basic Profile’. Other than the email, the information is not verified and may not be present. However, several organisations claim that the quality of the data returned is in general very good because social network users feel social pressure from their friends to be accurate.

Address Birthday Verified Email
Display Name Family Name Formatted Name
Gender Given Name Homepage
Preferred Username Profile Photo Time Zone

At the same time, it is not necessary for the third party website to collect all the information if it is not required.

Another issue surrounds current sensitivities with the USA NSA’s indiscriminate hoovering of online data. It is important to note that because all the large social networking sites are based in the USA, they are subject to USA’s laws and customs related to security and privacy. Under that regime, Australians are given significantly fewer protections than USA citizens or residents. Effectively, the social networking site itself provides the main protection for reputational reasons. However, readers may be aware that there have been recent moves in the USA to change this approach for what the US charmingly calls ‘aliens’ like Australians and give the same protections for all users irrespective of citizenship.

Can we get the benefits of social login and have citizen privacy as well?

With careful design it seems possible that social login could enhance privacy for users at the same time as providing benefits to government agencies. Considering the social login as an adjunct to agency authentication rather than the whole process could be an answer. If customers nominate their social login at the same time as they were enrolled into a government service, they could later use their social login as the first stage of an authentication process. This would provide an outer layer of defence against hacking. The user could then login to the agency itself using a separate authentication process.

The advantages of this model, beyond defence in depth, are that the user logs into the agency with their authenticated social login username, but does not gain access to sensitive information without providing an agency specific authentication. The social network also does not receive any sensitive information beyond the fact that a user logged in at a website. The use of government portals can be used to obfuscate which agency a user is accessing. At the same time, with consent, contact information from the social login site could be compared with that held by the agency and presented to users so that they can choose to update the information held on them by the agency.

At both the state and federal level, government agencies are starting to actively consider social login. Provided that governments are also prepared to carefully design the user interaction so that the social networks don’t get any more personal information than the user/citizen is prepared to share – by turning off analytics and sharing social network authentication gateways across groups of government agencies, it can provide benefit to users and government alike.

In the longer term, government will be able to verify citizens online when they wish to enrol themselves for services. The possibility arises to use the Document Verification Service (DVS) combined with social history to connect an entity to an identity, but that may be a discussion for another time.

I’d love to hear what you think.

Alex

This article originally appeared under the title “Can social login be privacy enhancing” in the May 2014 edition of Privacy Unbound, the journal of the International association of privacy professionals (IAPP) Australia New Zealand chapter and can be found here at this link iappANZ_MayJournal

Direct link to the IAPP:  https://www.privacyassociation.org/

IAPP ANZ http://www.iappanz.org/

 

Climate sustainability and resilience

Resilience for organisations is bound to their adaptability to climate change both in the short and long term.

A review of US public companies shows a number of climate related risks and costs. Their ability to adapt and become resilient to climate change is starting to affect their finances.

The document reveals that USA S&P 500 companies are seeing climate change related risks increase in urgency, likelihood and frequency, with many describing significant impacts already affecting their business operations, according to a new report from CDP, which collects environmental performance information on behalf of investors.

company

Threats include damage to facilities, reduced product demand, lost productivity and necessitated write-offs. The impact of these threats being realised comes with costs that can reach millions of dollars.

Importantly, the proximity of the threat is quite near. 45% of the risks S&P 500 companies face from extreme weather and climate changes are current, or expected to fall within the next one-to-five years, up from 26% just three years ago. 50% of these risks range from “more likely than not” to “virtually certain”. This is up from 34% three years ago.

Around 60 companies describe the current and potential future risks and their associated costs in the research, which highlights excerpts from the companies’ disclosures to their investors between 2011 and 2013. Ironically, even NewCorp made the following contribution to the report.

“Climate projection models make it difficult to know exactly how business might be impacted by episodic weather events. However, it is clear from past severe weather events that some of News Corporation’s businesses are susceptible to such extreme weather.”(p6)

The media release accompanying the report asserts that

Dealing with climate change is now a cost of doing business

Making investments in climate change related resilience planning both in their own operations and in the supply chain has become crucial for all corporations to manage this increasing risk.

Resilience Outcomes has the skills and expertise to help your organisation develop its organisational resilience strategy to take into account how it will adapt to the changing environment. contact us via the form below or at [email protected] to discuss your needs.

Download the full report here

CDP is an international, not-for-profit organisation providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. We work with market forces to motivate companies to disclose their impacts on the environment and natural resources and take action to reduce them

 

Cyber resilience update

Cyber resilience

One of the most important aspects of resilience in the information age is understanding the environment in which we exist. Resilience is adaptability in a changing environment, the more we understand that change, the less painful it is. Here are a few  current issues that might help your cyber resilience.

Alert, but not alarmed
Alert, but not alarmed! – Photo AWebling

Cyber Security Summit – Stanford November 2013

In the shadow of the Snowden revelations about the US and UK, security experts and leaders from more than 40 countries have been at Stanford University in California, USA for a gathering on cyber security.

If you have a sense of irony, you may have listened to the debate on Syria and comparing that to the NSA / Snowden / Internet debate.
– US Secretary of State John Kerry has recently made broad and I think reasonable statements saying that

President Assad had lost the moral authority to rule Syria.

– However that same test can be made against the USA.

 The USA has lost its moral authority to control the Internet

through the activities of the NSA and other government agencies. The full text of Secretary Kerry’s Syria speech can be found here via usembassy.gov. Of course although the USA is the biggest culprit here, the UK, Canada, Australia and NZ have all been shown up.

China was prominently represented at the conference. The Minister of State Council Information spoke about China’s problems. In his speech Cal Mingzhao said that in the first six months of 2013, 20,000  websites were hacked and 8 million servers compromised. According to Minister Mingzhao this indicated a rise of 14% year on year.

China has used the conference to repeat its call for global efforts in building a robust legal system, and strengthening international cooperation. Although I am somewhat cautious about their motives. I believe that the Chinese are on the right track with this view. I have previously made my views clear here in this post about why the world needs the cyber equivalent of an international law of the sea.

It is good to read  that Scott Charney ex US Department of Justice and current Microsoft VP on privacy and security is publicly calling for the US to show more information about what it collects and what happens to that data. Few sensible people disagree that the US and its allies should use maximum efforts against terrorists.

The US has lost support because it has strayed away from its stated goal of combatting terrorists and towards industrial espionage and employed tactics which compromise the majority in the pursuit of this goal such as the backdooring of encryption algorithms.

 

In other news

The Canadian Office of the Superintendent of Financial Institutions has released a ‘Cyber-Security Self Assessment Guidance for Canadian financial institutions, but which provides some good advice to any organisation looking for a template to help them.

Unlike the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) Preliminary Cybersecurity Framework, which was released for public comment on October 22, 2013, the Guidance does not prescribe a common language or mechanism for financial institutions to control and manage cyber security risk nor does it expressly build on existing standards, guidance and best practices for managing cyber security risk. In fact, in the Guidance, OSFI indicates that it “does not currently plan to establish specific guidance for the control and management of cyber risk.”

Rather, the Guidance sets forth an 11-page self-assessment template that sets out “desirable properties and characteristics of cyber security practices that could be considered by a FRFI when assessing the adequacy of its cyber security framework and when planning enhancements to its framework.” Of course if you’re a Canadian bank trying to do business in the US..

www.offi-bsif.gc.ca

Lastly, in the ‘this might be a little insane’ category

A US (Missouri) based cyber crime prevention network is advising parents to teach their children about cyber-security from the time they are toddlers.

www.kshb.com

I can just imagine it – “Our little Johnny fixes our firewall whilst we sit him on the potty…..” But seriously, of course keeping kids safe online is important in the same way as keeping them safe in the real world, but maybe they should learn to read first.

 

 

 

Privacy in an information age – Does it exist?

The Four Corners program that aired tonight “In Google We Trust”  was interesting if a little alarmist as these things sometimes are. But it did make some good points about privacy in the information age.

  • There was an interesting piece of information about the NSW Police licence plate tracking technology which has been installed on about 200 police vehicles and has contributed to a database of several million pictures of cars, numberplates and associated metadata.
    • Whilst the  NSW Police were willing to explain what the technology did, they were unwilling to explain how it was being used or what protections were placed on the data.
  • Comments by Danny O’Brien from the Electronic Frontier Foundation emphasising  that data held for non-US citizens by US corporations has none of the protections that one might otherwise expect, despite the protestations of Google, Microsoft, Apple and others.
    • The assertion that Australian authorities might be using this to circumvent Australian laws by getting the US authorities to ‘retrieve’ Australians’ data and hand it over to Australian authorities.
  •  Revelations that a broad number of agencies including Australia Post and the RSPCA (yes the dog and cat people)  were able to access Australians’ metadata with no legal oversight and little administrative control.
  • The poignant comment by one of the commentators that when information becomes available, people find a way of using it before actually thinking whether they should. This was followed by the question of whether in a democracy the government should know as much about you as it can, or whether there should be limits?

As an aside, it would seem that the US has been telling fibs when it said that the NSA PRISM system was just used to catch terrorists and that there was no economic espionage undertaken. The Brazilians are  rightfully annoyed after the latest Snowden leaks reported in the Wall Street Journal show that the NSA targeted the Brazilian national oil company Petrobas.  The article states

 In the past, the U.S. has harshly criticized Chinese hackers, for example, for allegedly engaging in industrial espionage. But the new allegations at the very least showed the NSA using corporate targets for training purposes. One of the slides presented on the show listed three reasons for spying—one was “economic.”

A case of pot calling the kettle black I wonder?

 

privacy in the information age

 

Privacy, public surveillance, terrorism

Is Privacy overrated, or should we just think about it in a more balanced way?

Richard Posner (US Judge) in an opinion piece in the NY Times has responded to NY Mayor Bloomberg’s view that there should be a more welcoming attitude towards surveillance cameras.  Bloomberg argues that the US Constitution should be changed to allow more surveillance. Posner makes a good point about Surveillance use in public spaces.

It seems likely that if the Boston bombers hadn’t been caught soon, they would have continued their killing, whether in Boston or NY, only they can say definitively.

surveillance cameras by Jonathan Mcintosh
Surveillance cameras in NY – Photo by Jonathan Mcintosh – http://www.flickr.com/photos/jonathanmcintosh/

I think most people can accept that surveillance cameras should be used in public spaces. They may also be contributing to a general decrease in lawlessness in public spaces, especially in the UK where there are apparently up to 4 million. The question in my mind is always about what is done with the footage. I have fewer problems personally with government agency use of surveillance in a society where somebody watches the watchers than the use by ‘marketers’ of surveillance in shops and ‘semi-private’ places.

The argument against surveillance cameras being linked up is always the fallacy of the slippery slope. I suspect we should all just get used to being watched in public.

In any case, it is probably time for politicians in democratic countries to “Suck it up” and have an honest conversation with the public about privacy, both online and offline.

PS – Of course, when Google glass becomes a mass market item, your life and mine will be 720p movies for ourselves and other people. We won’t say, remember when you were “insert embarrassing event”, we’ll just play it from the memory…. Maybe Minority Report wasn’t so wrong after all – even if Tom Cruise starred. 🙂

 

 

Complexity and organisational resilience

On the face of it, complex systems might have more resilience than those that are simple because they can have more safeguards built-in and more redundancy.

However, this is not supported by real world observation. Simply put, more complexity means more things can go wrong. In both nature and in human society, complex controls work well at maintaining systems within tight tolerances and in expected scenarios. However complex systems do not work well when they have to respond to circumstances which fall outside of their design parameters.

In the natural world, one place where complex systems fail is the immune system. Anaphylactic shock, where the body over-reacts because of an allergy to a food such as peanuts is a good example. Peanuts are of course, not pathogens, they are food, The immune system should not react to them. However people’s immune systems are made up of a number of complex systems built over the top of each other over many millions of years of evolution. One of these systems is particularly liable to overreact to peanuts. This causes in the worst case, death through anaphylaxis – effectively the release of chemicals which are meant to protect the body, but which do exactly the opposite. This is an example of where a safety system has become a vulnerability when it is engaged outside normal parameters.

We are beginning to see the resilience of complex systems such as the Great Barrier Reef severely tested by climate change. Researchers have found that the reef is made of complex interactions between sea fauna and flora, built upon other more complex interactions. This makes it nigh on impossible for researchers to find exact causes for particular effects, because they are so many and varied. Whilst the researchers confidently can say that climate change is having a negative effect on the coral and that bleaching effects will become more common as the climate becomes warmer, they cannot say with a great deal of certainty how great the other compounding effects such as excess nutrients from farm runoff or removal of particular fish species might be. This is not a criticism of the science, but more an observation that to predict the future with absolute certainty, when there are multiple complex factors at play is extremely difficult.

These natural systems are what some might call ‘robust yet fragile’. Within their design parameters they are strong and have longevity. Such systems tend to be good at dealing with anticipated events such as cyclones in the case of the Great Barrier Reef. However, when presented with particular challenges outside the standard model, they can fail.

Social systems and machines are not immune from the vulnerabilities that complexity can introduce into systems and can also be strong in some ways and brittle in others.

The troubles with the global financial system are a good example. Banking has become very complex and banking regulation has kept up with this trend. That might seem logical, but the complex rules may in themselves be causing people to calibrate the financial system to meet the rules, focussing on the administrivia of their fine print, rather than the broad aims that the rules were trying to achieve. As an example, one important set of banking regulations are the Basel regulations. The Basel 1 banking regulations were 30 pages long, the Basel 2 regulations were 347 pages long and the Basel 3 regulations are 616 pages. One estimate by McKinsey says that compliance for a mid-sized bank might cost as much as 200 jobs. If a bank needs to employ 200 people to cope with increased regulation, then the regulator will need some number of employees to keep up with the banks producing more regulatory reports, and so the merry-go-round begins!

A British banking regulator, Andrew Haldane is now one of a number of people who question whether this has gone too far and banks and banking regulation has become too complex to understand. In an interesting talk he gave in 2012 in Jackson Hole, Wyoming, USA titled the ‘Dog and the Frisbee’, Haldane uses the analogy of a dog catching a frisbee to suggest that there are hard ways and easy ways to work out how to catch a frisbee. The hard way involves some complex physics and the easy way involves using some simple rules that dogs use. Haldane points out that dogs are better in general at catching frisbees than physicists! I would also suggest that the chances of predicting outlier events, what Nicolas Taleb calls ‘Black Swans’  is greater using the simple predictive model.

This is in some ways a challenge to the traditional thinking behind risk modelling. When I did my risk course, it was all very formulaic. List threats, list vulnerabilities and consequences, discuss tolerance for risk, develop controls, monitor etc. I naively thought that risk assessment would save the world. But it can’t. Simple risk management just can’t work in a complex system. Firstly, it is impossible to identify all risks. To (misquote) Donald Rumsfeld, there are known risks, unknown risks, risks that we know we have, but can’t quantify and unknown risks that we can neither quantify nor know.

Added to this is the complex interaction between risks and the observation that elements of complex systems under stress can completely change their function (for better or worse). An analogy might be where one city under stress spontaneously finds that its citizens begin looting homes and another intensifies its neighbourhood watch program.

Thus risk assessment of complex systems is in itself risky. In addition, in a complex system, the aim is homeostasis, the risk model responds to each raindrop-sized problem, correcting the system minutely so there are minimal shocks and the system can run as efficiently as possible. A resilience approach might try to develop ways to allow the system/organisation/community to be presented with minor shocks, in the hope that when the black swan event arrives, the system has learnt to cope with at least some ‘off white’ events!

Societies are also becoming more complex. There are more interconnected yet separately functioning parts of a community than there were in the past. This brings efficiency and speed to the ways that things are done within the community when everything is working well. However when there is a crisis, there are more points of failure. If community B is used to coping without electricity for several hours a day, they develop ways to adapt over several months and years. If that community then finds that they have no power for a week, they are more prepared to cope than community A that has been able to depend on reliable power. Community B is less efficient than community A, but it is also less brittle.

This does however illustrate out a foible of humanity. Humans have evolved so that they are generally good at coping with crises (some better than others), however they are not good at dealing with creeping catastrophes such as climate change, systemic problems in the banking and finance sector, etc.

Most people see these things as problems, but think that the problems are so far away that they can be left whilst other more pressing needs are dealt with.

Sometimes you just need a good crisis to get on and fix long-term complex problems. Just hope the crisis isn’t too big.

Video Donald Rumsfeld – Known Knowns
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Online trusted identities – a primer

“Trust is the currency of the new economy”

You may have heard recently about the efforts being promoted by the USA and Australia amongst others to promote trusted online identities. There are also significant efforts in the private sector to develop online trust systems.

Trust will be the currency of the new economy as it was in the mediaeval village. During the late 19th and early 20th Century, formal identity credentials gradually replaced more informal systems of identifying people that we interacted with. Increasing population and technology drove this change. It was simply impossible to know everybody that you might deal with and so societies began to rely on commonly used credentials such as drivers’ licences to prove identity and ‘place’ in society. Of course, drivers’ licences don’t say much if anything about reputation. But if you think about  high value financial transactions you establish your identity and then you give a mechanism to pay for the transaction. Although in most cases it wouldn’t matter who you are, it gives the vendor some comfort that the name on your driver’s licence is the same as on your credit card and makes it just that bit more difficult to commit fraud on the vendor if the credit card isn’t legit. However this isn’t the case with interbank lending. Most of this is done on a trust basis within the ‘club’ of banks and it is only at a later time that the financials are tallied up for the day.

You can’t trust who or what is on the other end of the keyboard just because of what they say

What is a trusted ID?

Most simply, trusted online identity systems are the online equivalent of a physical credential such as a drivers’ licence used to give evidence of identity online. They can (but don’t have to) also be the basis for online reputation. They may also say something about the rights of the credential holder, such as that they are a resident in a particular country.

Which countries are developing trusted identity systems

The program in the USA is called NSTIC – National Strategy for Trusted Identities in Cyberspace. In Australia, the Prime Ministers’ department has been investigating the possibility of a trusted identity system as part of its work on a cyber policy paper which was due to be released ‘early in 2012’. At the same time, Australia has undertaken a number of processes of service delivery reform, government 2.0 and e-health. All without necessarily solving the problem of identifying whom they are dealing with online. The USA has gone beyond the planning stage and announced that it will move forward on development. As I mentioned recently. NIST has announced grants for pilot projects in NSTIC.

Some countries have already implemented online identity systems simply by migrating their physical identity cards online and allowing these to be used as trusted online systems. A number of Asian countries including Malaysia, Hong Kong and Singapore have proportions of their online services available through such means. Estonia probably leads the world in online service delivery with around 90% of the population having access to an online ID card and around 98% of banking transactions being via the Internet. More information at the Estonia EU website. While NSTIC was issued by the USA government, it calls for the private sector to lead the development of an Identity Ecosystem that can replace passwords, allow people to prove online that they are who they claim to be, and enhance privacy.  A tall order which runs the risk of creating an oligopoly of identity systems driven by corporate interests and not one which suits users. It may be a signal of things to come that Citibank and Paypal have recently been accepted to lead development of the NSTIC. There are also a number of private sector initiatives which come at the issue from a different perspective. Beyond Paypal, Google Wallet and the recently announced Apple Passbook are interesting initiatives which give some of the attributes of a trusted identity.

Why might we want one?

As more services go online from both government and business and more people want to use them there will be an increased demand for a way of proving who you are online without having to repeat the process separately with each service provider. In some ways this is already happening when we use PayPal to buy products not only on eBay, where it originated but also on Wiggle.co.uk and many others. The problem is that different services need different levels of trust between the vendor and the purchaser. Thinking about a transaction in terms of risk… The majority of private sector transactions online carry equal risk for both the vendor and customer. In that the customer risks that he or she won’t get a product or service from the transaction and the vendor risks that they won’t get the cash. Here online escrow services such as Transpact, or PayPal can help.

Where this doesn’t work well is where there complexity to the transaction.  The banking or government services sector are key areas where this is the case. Here the vendor must know their customer. One area might be analysing whether a customer can pay for a service on credit. Another is in applying for a passport, you need to prove that you are a citizen and pay a fee. However, the intrinsic value of the passport is far greater than the face value, as shown by the black market price. The result to the government if it issues the passport to the wrong person is not the value of the nominal fee, but closer to the black market value of the passport.

As a result, we are at an impasse online, in order for more ‘high trust’ services to go online the community has to have more trust that people are who they say they are.

Who might need a trusted identity?

If you take the Estonian example, 90% of the population. Most of us carry around some form of identity on our persons that we can present if required. In some countries, it’s the law that a citizen must carry their identity card around with them. In Australia and Canada and other countries, it’s a bit more relaxed. In the end the question will be whether a trusted id is used by customers and required by vendors. This will be influenced by whether there are alternative ways of conveying trust between people and institutions which are independent of the concept of identity in the traditional sense of the word

Next time:

What are the security and safety implications of a trusted identity and a discussion of about social footprint and whether this may overtake government efforts