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Security's Fighter Pilots
From: InfoSec News <isn () c4i org>
Date: Thu, 31 May 2001 05:11:32 -0500 (CDT)


By Robert Bryce, Interactive Week
May 28, 2001 5:51 AM ET 

Rick Fleming vividly remembers the look on the executives' faces. The
officials already knew that their credit union had some
Internet-related security problems. But when Fleming, vice president
of security operations at Digital Defense, showed them a slide of the
computer screen used by the credit union's tellers - a screen that was
obtained by Digital Defense's hackers over the Net - "their faces just
went white," Fleming says with a chuckle.

During another presentation to a different set of clients, Digital
Defense flashed each manager's supposedly secure computer password on
the wall of the conference room. The two demonstrations are among the
company's most memorable events. Created just 18 months ago by a group
of former Air Force information warfare veterans and a talented group
of young hackers, Digital Defense, in San Antonio, is finding a ready
market for its security services.

Although dozens of security firms are already providing risk
assessment, security monitoring and other security consulting
services, Digital Defense is proving it can play with the big boys.
Earlier this month, it signed a deal with Grupo Financiero
Banamex-Accival, one of Mexico's largest banks, to do information
security analyses on all 1,200 of the bank's branches. Banamex is the
target of a $12.5 billion takeover by Citigroup.

By targeting the financial sector, Digital Defense is aiming at the
richest segment of the Internet security business. IDC recently
estimated that spending on information security in the banking sector
will rise from $1 billion this year to nearly $1.9 billion by 2004.
Add another $1 billion or so that will be spent by the insurance,
financial services and medical sectors, and it becomes apparent that
information security is growing into a very big business.

In the U.S., there are more than 20,000 banks and credit unions, all
under increasing pressure to make sure their Internet-related
operations are secure. Much of that pressure is coming from a federal
law known as the Gramm-Leach-Bliley Financial Services Modernization
Act. By July 1, all financial entities in the country are supposed to
have policies and infrastructure in place to assure the privacy and
security of consumer-related information. That law, combined with
recent highly publicized hacker attacks on targets such as Microsoft
and the White House, has meant a surge in demand for security
services. And yet, Joe Cooper, Digital Defense's founder and
president, says much of his time is spent educating clients.

Companies "are just now waking up to risks they face," Cooper says.
After doing security assessments on about 60 credit unions, Digital
Defense claims it has had a 100 percent success rate in breaking into
its clients' networks.

Pentagon Offspring

Founded in January 2000, digital defense is largely a product of the
Pentagon. About a half-dozen of the company's senior people are
retired Air Force computer security specialists. Marc Enger, the
company's executive vice president of security operations, retired
with the rank of colonel and was operations director at the Air
Intelligence Agency, the Air Force's intelligence and computer
security arm. Many of the company's other personnel worked at Computer
Sciences Corp., which employs hundreds of people at the Air Force's
Information Warfare Center in San Antonio. According to Cooper, only
one of the people at the firm has not worked either inside the
military or as a government contractor to the military.

The company got its start after Cooper and Fleming were asked to
assess the security at a small San Antonio credit union. After
completing that job, they began looking at the broader credit union
market and saw a potential niche. A few months later, armed with
$700,000 in venture capital, Digital Defense opened its doors. Today,
the company is nearing profitability. Cash flow is reportedly strong
and Cooper sees a bright future. The private firm would not release
revenue figures.

Employing two dozen people, Digital Defense has done security work for
dot-coms and insurance companies, as well as credit unions. It is also
training examiners at the National Credit Union Administration to
analyze the security systems used by various credit unions.

"They are coming from an audit background," Cooper says. Auditors are
accustomed to following checklists to examine compliance on matters
such as accounting and operations. Security is much harder to assess.
So Cooper is training the examiners to "go from a checklist
environment" to knowing how to "determine if someone's firewall is

A pivotal growth area for Digital Defense and other security firms is
in managed security services, an area in which larger companies such
as Counterpane Internet Security, Internet Security Systems and
NetSolve already have a strong foothold. Digital Defense aims to
increase its share of the market by providing less frequent monitoring
at a lower price. "We are not trying to offer total security or
intrusion detection services, just vulnerability analysis," Enger
says. "When we find a problem, we tell our clients how to fix it."

That approach appealed to Gil Roman, information systems director at
Pacific Service Credit Union in Walnut Creek, Calif. Pacific Service
offers Internet-facing services, including home banking and online
auto loans. "We have to be very, very, concerned about security,"
Roman says.

After looking at a number of security firms, Roman decided to sign a
three-year contract with Digital Defense at $1,650 per month. The deal
requires Digital Defense to do annual security audits and remote
penetration tests, as well as monthly external and internal
vulnerability assessments. Digital Defense will also provide daily
updates on new vulnerabilities and advise the credit union about the
best way to configure new hardware and software. Roman says the key
factor in his decision was that "their prices were good."

As the market expands, Digital Defense faces the same problem that
other small businesses face: hiring enough talented people to keep the
business growing. To deal with the Banamex contract and other
business, Digital Defense will likely have to double its work force by
year's end. But it must be careful in hiring. Digital Defense's
employees have access to financial records and information that could
easily be misused. Enger believes some of the company's best recruits
will come out of the military because they "are prequalified in terms
of their security backgrounds."

And if Digital Defense can't get the people it needs, Enger says,
"it's going to be difficult to grow."

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