CCM SECTOROPTICS
WITH MICHAEL SONI

Cyber-Terrorism – The War Below the Surface

Monday, August 22, 2005

Recently, as reported in the press, there have been a number of worms reeking havoc on the internet.  Competing Zotob worms were attacking operating systems last week, causing problems for CNN, The New York Times, and the Associated Press.  The attacks were no small feat, given the relative sophistication of in-house networks for these media organizations.

A worm is a self-replicating computer program which is similar to a computer virus.  The first program written to develop an internet worm was authored by Robert T. Morris, currently an assistant professor at MIT.  It was originally written as an experiment that is said to have gotten out of hand.  We have seen many high profile worms such as Code Red in 2001 and the SQL Slammer that ripped through South Korean economy in 2003.

Worms and other computer viruses that are spread through the internet are a form of terrorism called cyber-terrorism.  Wars are fought on many battlefields and the internet is no exception.  The internet is considered a key asset and is covered by the Homeland Security Mission- Protection of Critical Infrastructure and Key Assets.  The internet is basically a system of networks, that if sufficiently interrupted, has the potential to severely cripple society.  Consider for a moment the average person’s dependence on the internet, now consider society’s dependence on the internet.  A major disruption to the internet via a worm, or some other form of cyber-terrorism, has the potential to bring the economy to grinding halt. 

The danger of a major attack on western internet infrastructure is considered by experts to be a distant possibility because of the dollars spent to defend against that possibility. Having said that, serious attacks do happen and they have the potential to cause severe damage such as the $2 billion in worldwide economic losses caused by Code Red in 2001.

Cyber-Terrorists need not be perpetrated by Islamic fundamentalists.  Quite the contrary, the more likely profile is that of a non-Islamic actor.  Cyber-Terrorism is undertaken by dissidents in, or near, the hacking community.  There is a perception that cyber-terrorism is non-violent form of dissent, given that it is not intended to cause death or injury.  The intended target is society and the economy. 

The Secretary of the Department of Homeland Security, Michael Chertoff, as recently as July 29th made comments relating to the rising threat of cyber-terrorism.  He correctly stated, “the challenge cyber-terrorism poses is that you don’t need to be a group to commit cyber-terrorism, a 16 year old kid on the other side of the world can do the type of damage it used to take armies to do.”  Quite a telling statement.

Cyber-Terrorism, as a tool in Cyber-War, will continue to be with us.  Although western internet infrastructure may not be dealt a death-blow resulting in system shutdowns and other related implications; the prevention of such a scenario will be due to the continued efforts of companies that attempt to stay a step a head of any potential attacks by developing products to secure our internet infrastructure.

Below I will list some companies that are involved in fighting Cyber-Terrorism.

Cyber-Security Companies

McAfee                                    (NYSE: MFE)
Symantec                                (NASDAQ: SYMC)
Computer Associates                (NYSE: CA)
Internet Security Systems         (NASDAQ: ISSX)
Trend Micro                             (NASDAQ: TMIC)

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Disclaimer

Michael Soni, is President & CEO of Cronus Capital Markets- a firm specializing in sector research, intelligence, and media. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. CCM transforms “Top-Down” research into intelligence by identifying sectors within the capital markets that, in addition to their inherent strengths, will benefit from participation in larger trends and cycles.

CCM enhances SectorOptics, by deconstructing and filtering the capital markets, in order to identify sectors experiencing a higher frequency of opportunities. By enhancing SectorOptics, CCM focuses the lens with which capital market sectors are viewed, resulting in greater clarity.

Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback – click here to send him an email.


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