There have been a number of high-profile cyberattacks on multinationals in the last few years, including Lockheed Martin (LMT), Northrop-Grumman (NOC), Sony (SNE), Google (GOOG) to Visa (V) and Mastercard (MA), among others. (See: Cyberattacks: A National Security Threat Largely Being Ignored)
A new, first of its kind report by the Federal Emergency Management Agency (FEMA), estimates cyberattacks jumped 650% from 2006 to 2010.
Sixty percent of U.S. companies reported security breaches, according to the annual report which was commissioned by President Barack Obama last year to assess the country's ability to respond to natural disasters and other natural security threats. Fifty percent of "high-priority facilities" like those that manage the country's electrical grids reported having been attacked.
Cybersecurity was the biggest area of concern for state and local governments with only 42% of officials believing their capabilities adequate enough to respond to such a threat and 45% of officials said they had no formal program to prevent or fend off an attack, according to the report, which was released on Thursday.
Cyberattacks: "Biggest Threat We Currently Face"
Ahead of the release of this report, The Daily Ticker's Aaron Task sat down with former Department of Homeland Security secretary Michael Chertoff to discuss the threat of cyberattacks on the U.S. and corporations.
"This is the biggest threat we currently face," says Chertoff, now the chairman of The Chertoff Group, a private sector company that advises businesses on cybersecurity-related issues. "Not only is there a concern about our critical infrastructure… but we are losing billions of dollars of intellectual property every year that is being stolen and it is resulting in job losses and damages to our economy."
Such illegal activity put nearly $400 billion in research spending at risk between 2009 and 2011, according to a National Counterintelligence Executive report issued last fall.
The biggest threat from cybersecurity, he believes, is coming from China. "The Chinese government has a national policy of economic espionage in cyberspace. In fact, the Chinese are the world's most active and persistent practitioners of cyber espionage today," Chertoff wrote in a WSJ op-ed earlier this year.
Due to the growing prevalence of cyberattacks, it seems cyber-warfare and espionage could become the new frontier for global combat as well as economic competition, as Aaron points out in the accompanying video.
"For many nation, they view the economic well-being of the country as part of their national security strategies. They will use their intelligence agencies as a way to enable their companies, their national champions, to compete in the market place," Chertoff says. "We don't do that in the United States. We keep the free-market separate from government, but as a result sometimes we have our rivals overseas stealing our assets."
Politics of Cybersecurity
There is an ongoing debate in Washington about how fight the impending threat from cyberattacks.
"This [threat] is not going away unless we do something about it," says Chertoff. But that may be easier said than done because, as usual, Democrats and Republicans cannot seem to agree on the best way to address the issue.
The House of Representatives recently passed the Cyber Intelligence Sharing and Protection Act (CISPA), which would make it easier for companies to share information about cyberattacks. The Senate has yet to vote on this legislation, but when it does, the bill is not likely to pass. And if it should get through the Senate, President Obama has threatened to veto the bill because he does not believe it goes far enough to protect critical infrastructure. The White House is also concerned CISPA encroaches upon civil liberties.
There are also two different bills floating around the Senate, but only one both Obama and Chertoff support, and that is the legislation proposed by Senators Joe Liberman (I-Conn.) and Susan Collins (R-Maine). This bill would give the Department of Homeland Security the authority to monitor the nation's critical infrastructure and set mandatory security standards.
Many Republicans oppose the Lieberman-Collins bill because it would give the government authority to increase regulations, which conservatives argue hinders economic growth and job creation. The U.S. Chamber of Commerce, the largest special interest group in America, is also lobbying against the bill.
"I like Lieberman-Collins because it has not only the information sharing but it also requires that our critical infrastructure raise its standard," says Chertoff. 'That being said, I think it is important to at least get the information sharing done. I'd rather see some of this pass than none of it."