10/18/2012 11:13 am ET Updated Dec 18, 2012

The New Cyber Wars: Out of the Flame and Into the Fire

If WWI was sparked by the "shot heard round the world," and the Nazi war machine rumbling into Poland ignited WWII, the start of the next global conflagration will likely be as quiet as a click of a mouse.

In fact, that soft tick has probably already taken place. A worldwide cyber battle is currently underway.

U.S. Secretary of Defense Leon Panetta just this week warned of a "cyber Pearl Harbor," one potentially as destructive as 9/11.

Panetta's warning followed large-scale cyber strikes on a number of U.S. financial institutions as well as one on the largest oil company in the world, both traced to Iranian hackers.

The defense secretary spoke in terrifying detail of where this escalation might lead -- computer viruses derailing trains filled with lethal chemicals, hackers breaking into our electric, water and transportation systems. "We know that foreign cyber actors are probing America's critical infrastructure networks," said Panetta. What would happen if a computer virus were to shut down power grids throughout America? Imagine the chaos if all U.S. bank accounts were wiped out, if clean water stopped flowing, or if air traffic control screens suddenly went black with thousands of planes in the air?

Alarmist? Consider cyber attacks that have already taken place in the past with far less sophisticated code. In 2007, Estonia was hit by a colossal cyber strike as websites for banks, government ministries, and even the parliament were shut down. The same year, hackers took down power grids in Brazil, leaving millions without electricity.

Unfortunately, we're no longer talking solely about lone cyber-terrorists, hacktivist groups, or even rogue states such as Iran. Chinese hackers were likely behind the large-scale cyber-strike on Google in 2010, as well as similar attacks on Northrop Grumman and Lockheed Martin in which top-secret military information was targeted. Experts have named a handful of countries capable of creating sophisticated cyber-weapons. Similar to the number of countries which will have access to nuclear weapons, we can expect that number only to grow.

In the past, it was enough to put up "firewalls" around critical computer infrastructure to keep enemies out. The recently discovered Flame virus, which turned PC's into perfect spy machines for years, reminds us that cyber sleeper-cells are already inside our systems, waiting for remote orders. We need to be able to protect our crucial systems from the inside.

That is why governments must make a paradigm shift. From now on, they must assume that intruders are already within and deploy their security solutions to protect internal assets. Governments also need to update their rules of engagement, as the U.S. is doing, in order to boost deterrence against treacherous cyber-assaults on national security.

Businesses must also re-prioritize their companies' cyber-defenses. With the rate of cyber-attacks on companies skyrocketing over the past several years and with the volume of sensitive corporate data increasing by the Nano-second, companies are at greater risk than ever. Cyber-security must be a topic not only for the cabinet, but for the boardroom as well. CEOs and CFOs also have to be CICs -- commanders-in-chief -- directing their company's cyber security policy. It's a matter of corporate responsibility.

My country, Israel, can continue to play a key role in the solution. Israel is on the leading-edge of cyber-defense technology -- including several companies in our own JVP venture capital portfolio -- and can potentially become the world's cyber-security lab. Israeli Prime Minister Benjamin Netanyahu just this week spoke of creating a "digital Iron Dome" to defend against cyber-attacks, referring to Israel's unparalleled anti-ballistic system.

I have recently expressed my thoughts to the prime minister, stressing the significant role Israel's hi-tech/business sector can play in this initiative, together with the government and academia. I believe that together we can find additional solutions, encourage further investment and establish the necessary infrastructure to lead our cyber defense industry to new levels appropriate to combat the latest state-level threats.

We must ensure that Israel can provide the essential infrastructure to protect itself, and to help the world do the same. Many of the necessary tools are already in our hands. Close cooperation between our public and private sectors can bring far-reaching results within a short amount of time, putting Israel at the forefront of the effort to make the world a safer place.

Secretary Panetta's reference to Pearl Harbor and 9/11 -- in which planes were the weapons of choice -- is indeed telling. A hundred years ago, wars were fought exclusively on battlefields and seas. It took decades from the invention of the airplane for the skies to become the next dimension in world combat. We won't have that kind of time to prepare for the next dimension of international warfare -- cyberspace.

The startup nation must become the cyber nation, lest the next strike begin in silence, but end in deafening destruction.