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Cyber Security Conference

BLOOMBERG NEWS SERVICE April 18, 2000
By Katherine M. Reynolds

Washington, April 18 Microsoft Corp., JCPenney Co., IBM Corp., and other companies are spending more money to guard against computer hackers, executives said at a White House conference aimed at finding ways to beef up the security of electronic commerce.

Concerns about security breaches have prompted companies to boost technology spending to 3, 4 or 5 percent of their operating budgets, up from about 1 percent, said Richard Clarke, President Bill Clinton's coordinator for infrastructure protection.

"Well-managed companies will have to make the adequacy of their information technology systems an absolute central priority in terms of the management of business risk," Treasury Secretary Lawrence Summers told the conference.

The government needs to work with companies to develop the best ways to protect information technology, an industry that generates $800 billion a year for the U.S. economy, White House Chief of Staff John Podesta said at the first of six conferences on computer security.

Company and government officials focused today on how to stop the spread of computer viruses and avert the kind of attacks that earlier this year temporarily disabled Web sites of Yahoo! Inc., Amazon.com Inc. and E*Trade Group Inc.

Consultants, Software
Other incidents included the theft and online posting of customer credit card numbers from online retailer CD Universe, and user passwords being pilfered from a California Internet service provider controlled by SBC Communications Inc.

The attacks on Yahoo and other companies will end up costing more than $1.2 billion in losses, missed revenue and security upgrade expenses, Yankee Group estimated.

Companies' efforts to protect themselves could mean work for consultants like Arthur Andersen and security software makers such as Check Point Software Technologies Ltd. and VeriSign Inc.

Microsoft employs 50 full-time people focused on information security, up from seven employees two years ago, chief information security officer Howard Schmidt said. The company buys 70 percent of its security software from outside companies and uses the big six accounting firms to assess its systems, Schmidt said.

On top of anti-virus software and firewalls, IBM has devoted resources to testing its systems for flaws, said J. Bruce Harreld, IBM's senior vice president for strategy. "Today's strategy needs to be much more holistic," he said.

J.C. Penney has hired consultants and stepped up spending on software to guard against attacks that could disrupt business, reveal confidential information or hurt the company's reputation, chief information officer David Evans said. The company expects $300 million in revenue from Internet-related business this year, up from $100 million the previous year, Evans said.

Sharing Ideas
Financial services companies have decided to establish a center to share information about Internet-related threats and problems, and the Treasury Department supports this effort, Summers said.

A broader network of companies from manufacturing, technology and other sectors gathered in New York City in December and February to brainstorm about security measures, Microsoft's Schmidt said.

"Within the CIO community there is really open dialogue, especially around viruses," said Francis D. Dramis Jr., chief information and eCommerce officer at BellSouth Corp.. "We're relying on word of mouth."

BellSouth discovered 30,000 points of access for a potential wrongdoer when assessing its network recently, Dramis said.

More Federal Money
Clinton is already asking Congress to provide more money to combat computer sabotage. He's seeking $138 million in fiscal 2001, which begins Oct. 1, for Justice Department efforts to crack down on computer crimes. That's a 28 percent increase from this year.

The president has also proposed doubling the U.S. research and development budget for information technology to $2 billion from $1 billion in the current fiscal year, Clark said.

The administration doesn't plan to impose new security rules on private companies, but will try to facilitate information- sharing, research and education about the issue, officials said. "This is the first time in American history that the federal government alone cannot protect the infrastructure," Commerce Secretary William Daley said.

Yet companies shouldn't worry so much about security that they lose out on opportunities available on the Internet, said Jacqueline K. Wagner, general auditor at General Motors Corp.

"There is an acceptable level of risk that each corporation must accept in order to compete in the marketplace," Wagner said.

 

   2000-2004 Fred H. Hutchison. All Rights Reserved.

Edited on: May 19, 2006