Bracing for the long, cold winter

I think we all knew the financial industry (mostly here in the US) was in the deep doo-doo. But I don't think the depth of the issues were known to most.

Just over the past weekend, Lehman Brothers has filed for bankruptcy and Merrill Lynch pulled a rabbit out of a hat and got Bank of America to pay a 70% premium to acquire them. It seems BofA wasn't happy with catching a falling knife again (after Countrywide) and turned on the gravity inverter to make it seem like Merrill was worth more, not less than Wall Street figured on Friday.

So over the past few months, Bear Stearns and Lehman are gone. Merrill is subsumed (though their brand will live on within BofA) and you've got a death watch on other major financials like WaMu, Wachovia, and AIG. Will this "crash" rival the issues of the 1930s? I don't know, but we probably need to start planning because our rainy days are upon us.

How will this affect the security industry? Your guess is as good as mine. Alan speculates a bit and I do think that many of the financials will be spending less money ON EVERYTHING, including security. But the US Feds and other verticals (like retail) are picking up the slack. So I think that's probably a break even proposition.

Darwin will re-establish his dominance and I believe we'll see a few more security companies becoming extinct. The strongest (and biggest) will gain market share and the marginal companies will go away. Especially given the reality that VCs have no reasonable exit paths right now, so they aren't going to rescue any of the walking dead in the space. And it's not like you can go down to your bank and get a line of credit nowadays.

From a practitioner's perspective, get ready for the long, cold winter - even if you live in a warm region. The global economy is going to get worse before it gets better. It's fiscally responsible to tighten your belt and focus on the projects that save you money and time, as opposed to those "nice to have" technologies that address emerging attack vectors.

And work on your containment plans. Remember, Bear and Lehman never saw it coming, and you probably won't either. So make sure you are in a good position to REACT FASTER and contain the damage. While the grizzlies are hibernating, we security folks need to make sure there is a world to wake up to when the spring thaw happens a few months from now.

Photo: "Car crash - Stourbridge" originally uploaded by Ian Hampton