"Do they not realize that the cost of lost productivity from completely un-networking and banning shared media FAR outweighs the cost of security s/w and remediation from time to time?"
In the case of a normal business, you would be right.
In the case of the US Army, you are wrong. They are perhaps the biggest target of attacks and attempts at security breaches - and they have a lot of valuable secrets. I'd say you can't even begin to estimate the costs, much less claim to know how they compare to lost productivity.
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