Insider Threats and Risks To Proprietary Information, Trades Secrets, IP and Data Security

Michael D. Moberly   December 26, 2011

This is directed to the ever-growing number of management teams and boards who recognize their expanding fiduciary responsibilities to stay abreast of well-grounded research to better manage and mitigate the rising number and variants of insider risks/threats to company’s proprietary information and data security.

As employee allegiance and loyalty become more nebulous more challenges will surely lie ahead for companies to sustain control, use, ownership, and value of their intangible assets, IP, trade secrets, and proprietary/sensitive information.  Below are highlights of relevant, timely, and forward looking studies conducted by DoD’s Personnel Security Research Center.

For those unfamiliar with PERSEREC (Personnel Security Research Center), it is a relatively small, non-descript arm of the Department of Defense headquartered in Monterrey, California that houses an extraordinary group of researchers dedicated to conducting a broad range of, often times, collaborative research, on matters related to personnel security.  While the products are primarily directed to DoD and various entities within the U.S. intelligence community, I find most of their research has many applications to the private sector.

In a relatively recent report produced by PERSEREC titled ‘Allegiance in a Time of Globalization’ (Defense Personnel Security Research Center, Technical Report 08-10, December, 2008) Katherine Herbig provides much needed, in my judgment, insights, perspectives, and facts regarding the single concept of ‘employee allegiance’.

One reason I am interested in Herbigs’ research on employee allegiance is that I facilitated two focus groups of highly experienced information/data security practitioners.  The group’s collective mission was to serve as a reality check for a prototype of an insider risk audit tool being developed by PERSEREC.

‘Given the current context of globalization,’ Herbig suggests, ‘questions about how to assess, investigate, and adjudicate employee allegiance are of increasing concern’. While Herbig suggests these ‘concerns’ are relevant to the personnel security community and counterintelligence agencies, I might also add those same concerns have relevance to the private sector particularly insofar as protecting – preserving information-based intangible assets, proprietary/sensitive information, intellectual property, and trade secrets.

But, as Herbig points out, employee allegiance is increasingly difficult to assess in the context of globalization.  One challenge Herbig points out is that ‘since 1990, more countries are offering dual citizenship to individuals who immigrate and naturalize elsewhere, all the while, trying to bind those same citizens to their countries of origin’.

Such practices have, in turn, allowed larger numbers of people to ‘collect dual or multiple citizenships’, which, according to Herbig (and, I agree) serve to dilute the conventional meanings attached to of citizenship and allegiance’

It’s not necessarily a quantum leap then to project even more complex challenges will surely lie ahead in terms of companies being able to consistently and effectively safeguard their intangible assets, trade secrets, sensitive/proprietary information and intellectual property rights in business transactions where those assets are in play.  This takes on, in my view, even greater significance when considered in light of the economic fact that today, 65+% of most company’s value, sources of revenue, and building blocks for growth and sustainability lie in – evolve directly linked from intangible assets and IP not tangible (physical) assets.

When Herbig’s work is examined in parallel with the findings of another PERSEREC study (below) it conveys even more challenges that lie ahead insofar as companies being able to consistently safeguard their sensitive information, i.e.,

  • Growing numbers of employees have/retain emotional, ethnic, and financial ties to other countries fostered by technologies that allow global communication that serve to sustain those ties, one product of which is less inclination to seek U.S. citizenship…
  • Fewer employees are deterred by a traditional sense of (employer) loyalty. More inclination to view theft of information assets (espionage) to be morally justifiable if sharing those assets will benefit the world community or prevent armed conflict…
  • Greater inclination for employees engaged in multinational trade/transactions to regard unauthorized transfer of information assets or technology as (a.) a business matter rather than (b.) an act of betrayal or treason…
  • Growing allegiance to the/a global community, i.e., increasing acceptance of global as well as national values. Tendency to view human society as an evolving system of ethnically and ideologically diverse and interdependent people making illicit acts easier to rationalize…

The inspiration for the above was sparked by (1.) ‘Allegiance in a Time of Globalization’ (Defense Personnel Security Research Center, Technical Report 08-10, December, 2008)  and (2.) ‘Technological, Social, and Economic Trends That Are Increasing U.S. Vulnerability To Insider Espionage’ Defense Personnel Security Research Center Lisa A. Kramer, Richards J. Heuer, Jr., Kent S. Crawford Technical Report 05-10 May, 2005 International Journal of Intelligence and Counterintelligence as ‘America’s Increased Vulnerability to Insider Espionage’ (20: 50-64, 2007)


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