BOX 1 The Foreign Threat to U.S. Business Interests

Of the wide variety of information risks facing U.S. companies operating internationally, those resulting from electronic vulnerabilities appear to be the most significant. The National Counterintelligence Center (NACIC), an arm of the U.S. intelligence community, concluded that "specialized technical operations (including computer intrusions, telecommunications targeting and intercept, and private-sector encryption weaknesses) account for the largest portion of economic and industrial information lost by U.S. corporations." Specifically, the NACIC noted,

  • Because they are so easily accessed and intercepted, corporate telecommunications--particularly international telecommunications--provide a highly vulnerable and lucrative source for anyone interested in obtaining trade secrets or competitive information. Because of the increased usage of these links for bulk computer data transmission and electronic mail, intelligence collectors find telecommunications intercepts cost-effective. For example, foreign intelligence collectors intercept facsimile transmissions through government-owned telephone companies, and the stakes are large--approximately half of all overseas telecommunications are facsimile transmissions. Innovative "hackers" connected to computers containing competitive information evade the controls and access companies' information. In addition, many American companies have begun using electronic data interchange, a system of transferring corporate bidding, invoice, and pricing data electronically overseas. Many foreign government and corporate intelligence collectors find this information invaluable.

    SOURCE: National Counterintelligence Center, Annual Report to Congress on Foreign Economic Collection and Industrial Espionage, Washington, D.C., July, 1995.

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    Last Updated on 05/30/96

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