How the SEC Almost Shut Down Wall Street

While taking the core of our financial markets on a cross-country joyride, did these supposed security experts ever happen to leave their computers in their vehicles, as did an employee at the Kennedy Space Center, whose NASA-issued laptop was stolen from his car in March? Was any of the sensitive data ever disseminated by mistake, as when the Veterans Administration emailed the names and Social Security numbers of at least 2,257 veterans to Ancestry.com?

Nobody really knows. The Reuters story is based upon an as-yet-unreleased report by the S.E.C.'s inspector general. However, security issues have surfaced before. According to a report issued by agency's inspector general in 2010 the S.E.C.'s Office of Information Technology had repeatedly failed to encrypt data on mobile devices.

Again, so far there is no evidence that any of the data was accessed by hackers or spies, according to Reuters' inside sources. That's the good news. However, I submit for your consideration that the good news was made possible by dumb luck.

So, how many times must we endure the colossally negligent acts of people who are supposedly protecting our sensitive data, yet do the exact opposite? How long will we sit idly by as bureaucrats expose all manner of sensitive data -- personal, corporate, scientific -- to the designs of the ill-intentioned and the vagaries of chance?

Is it individual execution failure, or systemic breakdown? To my mind, it's the latter. I believe that we are staring down the missile tube of a nuclear sub, the launch sequence has begun and without taking firm measures to stop the snap count, "Cyber-geddon" is imminent. I am hardly alone.

We need a comprehensive national cyber-security policy today that establishes how government entities and private suppliers of critical infrastructure protect our data from breach and attack. Such a policy must not lock organizations into any particular tool or technology, since the rate of technical innovation among both hackers and those who pursue them only continues to accelerate.

Rather, a successful cyber-security policy must set forth our expectations for how organizations safeguard data. That will include encryption, obviously, with staggered layers of sophistication applied to increasingly important types of data; hard and fast rules regarding data creep, preventing companies and government agencies from gathering more information than is required to complete the goal immediately at hand; and guidelines for how long organizations can keep data before being required to destroy it. Since none of these goals can be met overnight, each must include a series of guideposts to assure that companies and government agencies stay on track.

[Related Article: 94 Million Exposed: The Government's Epic Fail on Privacy]

Finally, whatever cyber-security policy we devise must provide for severe punishments for those who break the rules. Yes, I mean prison time. Unlike some other types of white collar crime, willful or accidental leakage of sensitive data to unauthorized parties can endanger lives, as when an identity thief with a rare blood type accesses medical services using someone else's personally identifiable information, or crimes are committed in the name of an innocent victim.

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