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‘We got a problem’ as the fallout continues from Colonial Pipeline: Exiger Executive Chairman

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Michael Cherkasky Exiger Executive Chairman, joined Yahoo Finance to discuss the latest on the Colonial Pipeline hack.

Video Transcript

SEANA SMITH: Investors are keeping a close eye on the cyber attack on Colonial Pipeline. And we've seen gas demand spike in some states across the East Coast. Here to talk a little bit more about that, we want to bring in Michael Cherkasky. He is Executive Chairman of the risk compliance firm Exiger.

And, Michael, it's great to have you here on Yahoo Finance. First, let's just take a step back, because the FBI has said Dark Side, the Russian-linked group, is responsible for this hack. So I guess just talk to us about the information that they're seeking, why they targeted Colonial Pipeline, and how big of a threat this could potentially be.

MICHAEL CHERKASKY: First, thanks for having me. First thing, let's put it in perspective. In the last year, these kind of attacks have grown 500%. So we've got a real problem. What are they seeking?

I think there are two things. One, short-term, it's money. These are financial crimes. I think this organization is a gang that is seeking to extort a ransom from Colonial Pipelines. The North Korean government, I think some estimates said a quarter of its budget is made up by extortions like this. So they're extorting money.

I think a couple of weeks-- a few weeks ago, there was a SolarWinds penetration of the government. That was more of a intelligence gathering, understanding your enemy kind of activity. So they're really two very different activities-- one's economic, one is strategic.

ADAM SHAPIRO: So let me ask you this-- first, I think a lot of us are surprised that there's only one major pipeline and not a second for redundancy. But two, what should the government do-- we heard Senator Portman at the hearings this morning talk about critical infrastructure. Is it time to have the government provide that kind of security to a private business? Because we learned at the hearing that Colonial probably wouldn't have notified the government had the FBI not stepped in.

MICHAEL CHERKASKY: 85% of our critical infrastructure is controlled by the private sector. So it's going to have to be a partnership. What the government can do and must do is set standards. And it has to set uniform standards, and they have to be standards that are deep.

One of the problems we have in these cyber-attacks is the attack is not just-- doesn't have to be just on the core industrial section of the pipeline. It can be third parties who, in fact, have dealings with the people in the pipeline. It can be on its employees. There are a whole series of different ways to get into these systems.

And these hackers know those ways. So what the government has to, first and foremost, do is set the standards all the way down-- third parties, individuals, as well as the core business. But then we need to, in fact, have-- the private sector has to be better about this.

Again, don't know exactly what what's going on with this particular hack, but they realize that they're in the crosshairs. And they're going to have to, in fact, protect their precious goods and their reputations. And the American infrastructure private companies are not-- just not doing a good enough job of that.

Having said all of that, understand that this is-- it's going to be frequently state-sponsored. And it's not 10 years ago. These cyber-attacks-- 10 years ago, the United States was breakaway leader. Now, they're good. The Iranians are good. The North Koreans are good. The Russians are good. The Chinese are good. And it's going to be a warfare. And the government and private sector have to cooperate together.

SEANA SMITH: Michael, real quick, because we heard from the Energy Secretary last hour how the government, of course, is working with Colonial Pipeline trying to get it back online as soon as possible. Going through the various checks that have to happen before we see the pipeline come fully back online, take us through what that looks like.

MICHAEL CHERKASKY: Well, first thing you have to understand the systems they penetrated. And you have to get rid of it. You have to exit those areas to make sure that they are not compromised anymore. And then segmentally, they have to go back online. So they've got to assure themselves that a certain segment is clean, and then they can go to the next segment.

I am confident that's what they're doing. Segment by segment, they'll get back online. As your last guest said, this will be transitory for this incident. It will not be transitory for our economy for long-term, because there are going to be repeated attempts that are successful. And we're going to have to learn from that.