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Aspen Security Forum: Defense official says NSA leak fallout 'very substantial'

The following are updates from the Aspen Security Forum ... 

1:28 p.m. ET: A senior Defense Department official is describing the fallout from the recent NSA leaks as "very substantial," though assessments are still ongoing. 

Deputy Secretary of Defense Dr. Ashton Carter said at the Aspen Security Forum on Thursday that the "damage is very substantial" when asked about the leaks by former NSA contractor Edward Snowden. 

Carter said "job one" for the Defense Department is protecting America's networks and in the Snowden case, "we failed to defend our own networks."  

The four-day conference, opened by the President and CEO of the Aspen Institute Walter Isaacson, brings together top national security leaders in government and the private sector and will include a panel with the NSA Director General Keith Alexander.  It is expected to be the general's most wide-ranging comments on the NSA leaks since his testimony before Congress. 

Carter said two practices must be reversed and are in the process of being reversed to prevent future leaks. The deputy secretary of defense said "enormous amounts of information are concentrated in one place" which facilitated the transfer of sensitive materials by the former NSA contractor.  Carter said there is a significant move toward greater "compartmentalization" which means information is stored separately, with limited access so that it is hard for any one person to access the large pool of classified information. 

Second, Carter said the fact that a single individual had substantial access to the information, and the ability to move and store the material with few or any checks, was a problem and that would also be changing. 

While not providing specifics, Carter likened the changes to the security procedures surrounding nuclear weapons where there are checks and balances. As two examples, an individual's behavior is monitored and access to sensitive sites requires that no one work by themselves; they must work with a partner. 

Carter also said the new cyber command, which included 40 teams, 13 offensive and 27 defensive teams -- and 4,000 people -- will be ready "soon."  He added that some civilian networks are so poorly defended that it is hard for the Defense Department to help when they are attacked. 

Air Force chief warns of cyber threat -- 7:50 a.m.:

Air Force Chief of Staff Gen. Mark Welsh III says the threat that keeps him up at night is the impact of multiple cyber attacks compounded over time. 

Speaking at the opening session of the Aspen Security Forum in Colorado, Welsh said "understanding the potential impact of the threat in the cyber domain over time" is a priority. 

Welsh, who opened the annual forum which over four days brings together senior national security officials from government and experts from the private sector, also said the budget sequester is already having an impact on the operational side. He said the Air Force's "ability to respond quickly is affected." 

Welsh said the mandatory defense cuts are also "impinging on our ability to modernize over time." 

While not commenting directly on the recent NSA leaks which detailed the government's surveillance programs, Welsh said the problem boils down to controlling access. "Not everyone needs to know it," Welsh said. 

The head of the NSA, Gen. Keith Alexander, is also expected to speak at the forum and take public questions for the first time since the scandal broke. 

On cyber-security, a piece of which falls within Welsh's purview, he described "space and cyber as more contested and congested." 

The Aspen Security Forum is the premier homeland security and national security conference with a focus on evolving threats and the U.S. government's ability to do more with the budget realities. 

Fox News' Chief Intelligence Correspondent Catherine Herridge is moderating a forum panel on the post-bin Laden threat which includes former CIA and NSA Director Michael Hayden, former CIA and FBI Director William Webster, former CIA counterterrorism official Philip Mudd, former Deputy National Security Adviser to President Bush Juan Zarate and former Attorney General John Ashcroft.

Catherine Herridge is an award-winning Chief Intelligence correspondent for FOX News Channel (FNC) based in Washington, D.C. She covers intelligence, the Justice Department and the Department of Homeland Security. Herridge joined FNC in 1996 as a London-based correspondent.