Interesting study from the LSE on the economics and psychology of choice:

Standard economics works on the assumption that the things we want most are the things that we will enjoy best and that our imaginations are good forecasters of the impact of future events. In contrast, behavioural economics incorporates the lessons of psychology into the laws of economics and demonstrates that this isn’t always so.

Dolan explains: “It’s all about ‘attention’. The issues that we think about when we forecast our happiness and well-being are not actually the things that we pay attention to as we live our lives. And that can lead us to miscalculate the effect of events on our well-being.

“If you ask someone, for example, how much pleasure they get from driving their car on a scale of 1 to 10 and then correlate that with their car’s value, you’ll find a correlation of about 0.4. So, according to this, people who have more expensive cars get more pleasure out of driving their cars.

“Except, if you ask the question, ‘How much pleasure did you get the last time you drove your car?’ and correlate that with the value of the car, the correlation is zero. And that’s because of attention. When you are actually driving your car you are thinking about the idiot in front of you or arguing with your kids or your husband or wife – you are thinking about all those other things that are nothing to do with how flash your car is.”

So the solution is to live on a quiet road, have no kids, and stay single…then a “flash” car will achieve its expected value. Makes sense to me, actually, but not as economics. Easier to look at this study through a risk management lens and from an anthropological view.

A flash car value requires it to be displayed as the owner intends; it has to be driven or parked as a flashy object. That only happens when undesirable risks — things that diminish the appearance of flash — are kept under control.

Loss of control means lost flash. I think most could predict that basic equation yet still chose to buy a flash car to achieve happiness. That is because they will do a poor job predicting why or when they will lose control. The question thus is not whether people vote for something to make them happy but that does not, but rather why they fail to accurately predict risks to what can make them happy.

In the early 1990s I remember a bank heist in London where the robbers physically breached a large building but did not steal any money or information. Instead they removed every memory chip from every computer.

I can’t find the exact story now but the police were quoted saying something like a bag full of memory was not only worth more on the street than other stolen goods or even drugs but it was legal to trade in the open.

A similar story popped up today, but there is an additional step involved. A criminal operation was setup to skim credit cards and identity information. They then bought luxury goods like Apple computers to convert the credit into goods and sell for cash.

Bosses of each crime ring received blank credit cards from suppliers in Russia, Libya, Lebanon and China.

The bosses then hired “skimmers” who posed for jobs such as waiters and retail shop workers so they could use electronic devices to steal information from customer credit cards. That information was then sent to a “manufacturer” who programed the information into the magnetic strips of blank credit cards.

The crime rings also used card printing machines to forge credit cards and state drivers licenses to match them.

“They can actually make a license from any state in the union, print credit cards of any color and even put the holograms on there,” said NYPD deputy inspector Gregory Antonsen.

Police then said “shoppers” in the crime rings would use the forged credit cards and IDs to go on weekly shopping sprees around the U.S. at retailers such as Nordstrom’s, Macy’s, Gucci and Best Buy and sell those items mostly to people overseas.

But by far, Antonsen said, thieves spent the most time buying computer products from Apple.

“This is primarily an Apple case,” Antonsen said. “Apple is a big ticket item and a very easy sell.”

An interesting point to the takedown of this $13 million crime ring is that the PCI DSS controls again seem to be having an effect on the threats. Attackers would not have to pose for jobs taking cards if they were still able to get the cards from the back-end systems and databases or if they could install and walk away from skimmers.

RSA Europe 2011 has released a Podcast to introduce my presentation next week

GRC-303: Everything You Wanted to Know About Virtual Compliance

Oh no! Not another cloud compliance presentation. This session gives an insider look at how and why clouds fail audits – ask not what you can do for your cloud, learn how to ask what your cloud can do for you. This session offers a clear and detailed review of usual flaws in virtual environments that prevent compliance.

I posted earlier the time and place of presentation.

Los Alamos National Labs (LANL) is a security research institution responsible for American nuclear deterrence. They have invested in security management practices and moved from a federal regulatory concern to an award-winning (see below) leader in security and compliance.

How did the Lab get to this point? A major effort to measure risk, apply National Institute of Standards and Technology controls, certify the use of those controls, and arrive at standard and supported system configurations for Lab systems consumed much of 2008.

A Solutions Architect now discusses on a podcast by The Virtualization Practice how they handled the NIST Certification and Accreditation (C&A) process and received authority to operate at FISMA moderate with VMware vCloud.

At a site like LANL, workloads that cross-domains, security enclaves, or classification levels are important to understand from the beginning, not after the Cloud is deployed. The reason is that this complicates any configuration of work-loads as cross-domain traffic would need to be ensured to only come from specific locations while denying all other locations. Into this falls tools like vShield App which can keep all VMs from talking to each other, but also allow cross-talk across domains as necessary by specific VMs.

The details of the architecture also will be presented October 11th in Washington DC when LANL receives a Cloud Initiatives in Government award from SANS.

LANL’s Infrastructure on Demand features an innovative cloud security and automation architecture, leveraging VMware’s vShield and LANL-written active defense on behalf of the workload clients. Key features include:

1. Automated provisioning of workloads into secure enterprise enclaves.
2. Mapping physical security into a virtual security model using VMware vShield.
3. Employing automated remediation features to offline non-compliant workloads.
4. Extension of a private cloud security framework into a secure hybrid cloud.