SCADA – and now for something new…

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Almost three and a half years after I published The SCADA Scandal, and over a year after The Biggest Hole – Keeps Getting Bigger, it seems that something is finally being done.

Over the last weekend, it emerged that two researchers, using a tool not more complicated then Google Search have found more than 500,000 SCADA devices which use little to no security, and are accessible from the Internet.   This deserves repeating:   over 500,000 from Internet-connected SCADA devices alone.  This does not include the many millions of devices that are not direct-connected to the Internet.

The state is truly grim.


From those, it appears that Mark and friends at DHS, have contacted the ‘owners’ for the 7,200 systems judged the most risky or egregious  in terms of potential impact to the country (US) . and are working with these owners to fix the situation or remove these systems from the Internet.


So the good news is that (finally) something is being done.   I wonder if we can continue to be just  step ahead of hackers and rely on luck, or should we have a more fundamental risk-based approach to SCADA security.




SEC Guidance Regarding Disclosure of Information Security Risk


With the US economy in danger in 1933, almost 100 years ago, two laws were passed to perform important tasks.  On the one hand, to calm and reassure a desperate public that future investments by themselves should be into fully risk-transparent companies; and on the other to demand that companies which collect money from the public, will fully assess, investigate, mitigate and disclose such risks.

These laws, called the “The Securities Act of 1933″  and “The Securities Exchange Act of 1934″ , set minimum thresholds for many practices, including the disclosure of all forms of risk.  Arguably, the most visible effect of these laws was the creation of the Securities and Exchanges Commission, or, for short, the SEC.

While the disclosure of risk was always mandated by these laws, as you can see below, there was never a direct call to disclose ‘cyber’ (or information security) risks. (Regulation S-K 503 (c) ).

Risk factors. Where appropriate, provide under the caption “Risk Factors” a discussion of the most significant factors that make the offering speculative or risky. This discussion must be concise and organized logically. Do not present risks that could apply to any issuer or any offering. Explain how the risk affects the issuer or the securities being offered. Set forth each risk factor under a subcaption that adequately describes the risk. The risk factor discussion must immediately follow the summary section. … The risk factors may include, among other things, the following:

  1. Your lack of an operating history;
  2. Your lack of profitable operations in recent periods;
  3. Your financial position;
  4. Your business or proposed business; or
  5. The lack of a market for your common equity securities or securities convertible into or exercisable for common equity securities.


In fact, due to the SEC’s demands, since 2005, if disclosing information security risk *at all*,  some companies chose to put in the annual 10-K and quarterly 10-Q forms a ‘boilerplate’ template stating something like:

Failure of an information system or a compromise of security of an information system could adversely affect our results of operations and financial reporting


That should now change.

In October 2011ce, the SEC’s Division of Corporate Finance issued a Disclosure Guidance (available at the SEC site) ‘suggesting’ (in fact requiring, or adding liability if someone doesn’t follow) a far more detailed and comprehensive discussion of information security risks.

In the next blog entry, I will discuss, analyze, and explain my views of this Guidance, as an Information Security Risk professional.



Note:  I am not an attorney and this blog does not intend to represent legal advice.  For legal advice, consult an attorney.