The unfolding crisis in San Francisco this week -- in which a city network administrator has been arrested for allegedly holding the network hostage -- represents an extreme example of the insider threat that IT security vendors and others have been sounding the alarm about for years.

The latest on the San Francisco situation is that the city's prosecutors and its mayor, Gavin Newsom, are seeking to resolve the crisis by having experts try to take back the city's compromised network from 43-year-old Terry Childs, who was arrested for alleged computer tampering when he refused to relinquish network control.

There's worry that Childs, who has worked for the city for five years but faced the sack for alleged poor performance, may have installed the means to electronically destroy sensitive documents.

Childs, who now sits in a jail cell on $5 million bond, is also a former criminal convicted of aggravated robbery and burglary stemming from charges over two decades ago, which the city knew when it hired him as a computer engineer.

The insider threat is typically disgruntled and unscrupulous employees trying to gain access to information they shouldn't, and sharing it for personal gain, espionage or revenge. Finding countermeasures now looms large in the plans of many companies--especially ones that have been hit.

"A year ago we suffered some breaches," says Steve Farrow, managing director for the UK-based operations of Pilz, the Germany-based manufacturer of industrial safety machinery. "We suffered a physical break-in where someone stole hard disks in order to steal computer data, not taking the whole machine. They targeted intellectual property linked to development plans. It wasn't encrypted."

Farrow thinks an insider was probably the culprit, though no one was caught despite police effort. In another case around the same time, says Farrow, an employee went to work for a competitor, handing the new employer electronic data about financial reports and product-launch dates. The combination of those two events spurred Pilz to undertake new defences in data protection by rolling out document-control software for security.

The software from Liquid Machines for enterprise-rights management establishes read, write and print controls on sensitive research and business information, while storing it encrypted. "Everyone in the company who has a computer is getting this," says Farrow, which means about 1,300 people. He adds that physical security has also been tightened after what was seen as an emergency at the firm.

Concerns about the potential for a rogue insider stretch far and wide.

Dale & Thomas Popcorn, the New York distributor of gourmet popcorn through retail stores and the Web, has disabled the USB thumb drive access on all of its computers as one step to prevent sensitive business data from being too-easily compromised.

"You could easily pull up a customer list and export it," says Norm Steiner, manager of IT infrastructure there, alluding to the general worry about the insider threat.

Dale & Thomas uses the Promisec software, designed to address the insider-threat potential, to continually scan to make sure computer settings are in place. All employees are denied USB thumb drive use, says Steiner, and if they think they really need access to it on their computers, they have to formerly apply for it through the IT department in conjunction with business groups, such as human resources.

"There are denials, and they get upset," says Steiner about how employees sometimes react to hearing "no."

US defence giant General Dynamics also takes the insider threat seriously. It uses the ArcSight security and event management tool to centralise collection and analysis of security events on both its own internal networks and for some federal agencies under a Dept. of Homeland Security contract. The firm is looking at expanding that capability to better monitor user application use.

By installing ArcSight's new IdentityView add-on to watch for database use, General Dynamics hopes to get better visibility into what network users are doing and whether they're authorized to do it.

"There are sensitive databases in the government that determine who can stay in the country and who can't," says Bil Garner, General Dynamics project manager. IT and applications teams create resources for users, he notes, "But who can access what is very much an issue."

General Dynamics anticipates that IdentityView will become a tool to monitor user activity and "tie an event to a user," says Garner. "Before it was just an event."

San Francisco's Terry Childs is not the first IT administrator to have been accused of going on a rampage. Other cases include that of Roger Duronio, the former UBS PaineWebber computer systems administrator, convicted two years ago for planting a malicious-code "logic bomb" that caused more than $3 million in damage and repair costs to the UBS computer network.

The motive, according to New Jersey prosecutors, was that Duronio was angry about the $32,500 annual bonus he got in 2002, which was less than the $50,000 he was expecting. He was sentenced to 97 months in prison.