Nonstop Cyber Attacks Drive Israel to Build Hack-Proof Defense

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(Bloomberg) -- In 2013, Israel Electric Corp. registered several hundred potential hacks on its grid each hour.

Last year, the figure grew -- to 20,000.

None succeeded. Israel Electric, which controls more than 80 percent of the country’s power production, has dramatically increased its cyber personnel, developed new defense tools and enhanced employee training, said Yosi Shneck, senior vice president of information and communications. The new protections reflect a nationwide effort to make Israel one of the most hack-proof countries in the world.

This year alone, the government established a national authority to help oversee protection of critical civilian systems, the military announced a reorganization of all its anti-hacking units into one command and the central bank became what may be the first in the world to define mandatory cyber-defense steps for financial institutions.

“If I ranked the existential threats, cyber would come right behind nuclear weapons,’ said Carmi Gillon, former head of the Shin Bet domestic security service and chairman of Cytegic, a company that has developed a digital dashboard and tools to help keep companies protected.

Israel and the U.S. face some of the most serious cyber assailants in the world, said Daniel Garrie, executive managing partner of cyber-consulting firm Law & Forensics in New York. That forces them to be ‘‘light years ahead’’ in prevention.

While attempted hack attacks on Israel reached 2 million a day during last year’s fighting in Gaza, the country has yet to report destructive events such as the theft of data from about 22 million people at the U.S. Office of Personnel Management.

Hacking Call

The threat is growing. Anonymous, a loosely connected global hacker collective, called in April for a hacking onslaught on the country. The Jewish state was the second-most-hit in the world after the U.S. that month, according to monitoring website Hackmageddon.

The attacks did little more than deface websites. Anonymous claimed Facebook credentials and phone numbers of hundreds of Israelis were posted online.

In March, Check Point Software Technologies Ltd., a cybersecurity company, detected malware that it suspected came from Lebanon. The alleged targets were defense contractors as well as telecommunications and media companies in 10 countries, including Israel. No further details were given.

Two Cables

Only two cables link Israel’s Internet network to the world, giving its companies an advantage on the digital battlefield, said Yaron Blachman, director of cyber and technology consulting at PricewaterhouseCoopers Israel. ‘‘They can just turn to their Internet service provider and disconnect,” he said.

Israel started building up its defenses more than a decade ago. In 2002, the government created the National Information Security Authority to protect critical infrastructure. In 2012 it established the National Cyber Bureau, an agency within the office of Prime Minister Benjamin Netanyahu that coordinates and advises on policy. The authority established this year will be responsible for protecting civilian entities such as banks, said Yitzhak Ben-Israel, who helped found it.

It isn’t enough just to have sophisticated defenses, said Amos Yadlin, a former military intelligence chief who now heads Tel Aviv University’s Institute for National Security Studies.

“You can’t be a good defender unless you understand the offense,” he said. “Therefore, defensive efforts must overlap to some degree with offensive efforts, including those of intelligence collection.”

Flame Virus

For instance, Iran says Israel tried to sabotage its nuclear program with the Stuxnet virus. It also attributed the Flame virus, which wreaked havoc on Iranian computer systems in the energy sector, to “illegitimate regimes.” Israeli officials have declined to confirm or deny whether the country was involved.

Learning to fend off attacks can be profitable. Israel Electric formed a unit called CyberGym with security consulting firm CyberControl to offer companies around the world a simulated control center to practice protecting their networks.

And the new Israeli focus is leading to acquisitions and investments. Elbit Systems Ltd., Israel’s biggest publicly traded defense company, in May bought a cybersecurity division from Nice Systems Ltd. for $158 million. Two months before that, Alibaba Group Holding Ltd. invested in Jerusalem Venture Partners to work with Israeli cybersecurity startups and protect its own operations.

Cytegic chief executive officer Shay Zandani, who established the information-security department in the Israeli Air Force in the 1990s, says many Israeli corporations aren’t protected against the kind of threats they face. In 2014, one in 10 cyber breaches was in the banking industry, according to a report by FireEye Inc.

Bank Protections

Attacks and attackers targeting the Israeli financial sector have increased and become more sophisticated, according to a May report by Cytegic and cyber consulting firm Konfidas. Lenders have largely been unsuccessful in reining them in, it said. The industry targeted most by hack attacks: information technology.

The Bank of Israel says it appears to be the first central bank in the world to define mandatory steps for cyber defense. Its regulations, issued in March, put pressure on the board of directors and senior management to insure lenders are safe.

“Israel is a geopolitical target and attacking the banking sector can damage our economy,” said Rachel Jacoby, head of the OpRisks management unit for technology and cyber at the central bank.

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