OptimumSecurity has created an infographic that is a great representation of many significant data breaches.
OptimumSecurity has created an infographic that is a great representation of many significant data breaches.
According to BDO’s analysis of risk factors listed in the most recent 10-K filings of the 100 largest U.S. retailers, risk associated with a possible security breach was cited unanimously by retailers, claiming the top spot, up from the 18th spot in 2007.
Since major retail security breaches began making national headlines in 2013, retailers have become acutely aware of the growing cyber threat and cyber-related risks. Between new point-of-sale systems and evolving digital channels, the industry faces unique vulnerabilities: Retailers are responsible for safeguarding consumer data as well as their own, in addition to protecting against potential gaps in security related to third-party suppliers and vendors.
2016 marks the 10th anniversary of our retail risk factor analysis, and throughout the decade, we’ve seen the retail landscape undergo a dramatic evolution in response to the recession, new and maturing e-commerce channels and evolving consumer preferences,” said Doug Hart, partner in BDO’s Consumer Business practice. “Retailers over the years have proven to be in tune with the industry-wide issues and trends that could pose risks to their businesses, and they are clearly not tone deaf when it comes to reacting to the urgency of cybersecurity
The following chart ranks the top 25 risk factors cited by the 100 largest U.S. retailers:
|Top 20 Risks for Retailers||2016||2015||2014|
|General Economic Conditions||#1||100%||#1||100%||#1||100%|
|Privacy Concerns Related to Security Breach||#1t||100%||#4t||99%||#8||91%|
|Competition and Consolidation in Retail Sector||#3||98%||#1t||100%||#3||98%|
|Federal, State and/or Local Regulations||#4||96%||#1t||100%||#2||99%|
|Natural Disasters, Terrorism and Geo-Political Events||#5||94%||#7||96%||#13||87%|
|Implementation and Maintenance of IT Systems||#6||93%||#4||99%||#7||92%|
|U.S. and Foreign Supplier/Vendor Concerns||#6t||93%||#6||98%||#4||96%|
|Labor (health coverage, union concerns, staffing)||#9||91%||#7t||96%||#5||94%|
|Impediments to Further U.S. Expansion and Growth||#10||90%||#12t||92%||#17||78%|
|Dependency on Consumer Trends||#11||88%||#9||95%||#6||93%|
|Consumer Confidence and Spending||#12||87%||#15||89%||#8t||91%|
|Credit Markets/Availability of Financing and Company Indebtedness||#13||85%||#11||94%||#11||89%|
|Failure to Properly Execute Business Strategy||#14||82%||#12||92%||#11t||89%|
|Changes to Accounting Standards and Regulations||#15||76%||#14||90%||#13t||87%|
|Loss of Key Management/New Management||#16t||73%||#19||80%||#16||79%|
|Marketing, Advertising, Promotions and Public Relations||#18||66%||#25||68%||#24||64%|
|Consumer Credit and/or Debt Levels||#19||62%||#27||65%||#23||65%|
Additional findings from the 2016 BDO Retail Risk Factor Report:
Cyber Risks Include Compliance Measures
As the cyber threat looms larger, retailers are bracing for new and emerging cybersecurity and data privacy legislation. Risks associated with cyber and privacy regulations were cited by 76 percent of retailers this year. This is in line with the findings from the 2016 BDO Retail Compass Survey of CFOs, in which nearly 7 in 10 retail CFOs said they expected cyber regulation to grow in 2016. These concerns have been highlighted by President Obama’s recently unveiled Commission on Enhancing National Cybersecurity and continued debate in Congress over information sharing between the government and private industry.
Retailers have not escaped regulatory scrutiny. The industry is also subject to Europay, Mastercard and Visa (EMV) standards that bolster credit card authentication and authorization. Industry analysts estimate that just 40 percent of retailers are compliant with EMV standards despite the Oct. 1, 2015 deadline.
“Mandating EMV chip-compliant payment systems is an important first step in shoring up the industry’s cyber defenses, but it’s just the tip of the iceberg,” said Shahryar Shaghaghi, National Leader of the Technology Advisory Services practice group and Head of International BDO Cybersecurity. “Online and mobile transactions remain vulnerable to credit card fraud and identity theft, and POS systems can still be hacked and provide an access point to retailers’ networks. New forms of malware can also compromise retailers’ IT infrastructure and disrupt business operations. Every retailer will experience a data breach at some juncture; the real question is what mechanisms have been put in place to mitigate the impact.”
E-Commerce Ubiquity Drives Brick & Mortar Concerns
Impediments to e-commerce initiatives also increased in ranking, noted by 57 percent of retailers in 2016, a significant contrast from 12 percent in 2007. In 2015, e-commerce accounted for 7.3 percent of total retail sales and is continuing to gain market share.
As e-commerce grows and businesses strive to meet consumers’ demand for seamless online and mobile experiences, retailers are feeling the effects in their physical locations. The recent wave of Chapter 11 bankruptcies and mass store closings among high-visibility retailers has raised concerns across the industry. Ninety percent of retailers are worried about impediments to growth and U.S. expansion this year. Meanwhile, risks associated with owning and leasing real estate jumped 14 percentage points to 54 percent this year.
Heightened worries over the impact of e-commerce on physical locations are far reaching, driving concerns over market competition for prime real estate and mall traffic to rise 19 percentage points to 46 percent. Meanwhile, consumer demand for fast shipping fueled an uptick in risks around the increased cost of mail, paper and printing, rising 10 percentage points from seven percent in 2015 to 17 percent this year.
General Economic Conditions Hold Weight
General economic risks have been consistently top of mind for retailers throughout all ten years of this survey. Even at its lowest percentage in 2008, this risk was still the second most cited, noted by 83 percent of companies.
Despite the fact that since 2013, general economic conditions have remained tied for the top risk, concerns about specific market indicators have receded.
For more information on the 2016 BDO Retail RiskFactor Report, view the full report here.
About the Consumer Business Practice at BDO USA, LLP
BDO has been a valued business advisor to consumer business companies for over 100 years. The firm works with a wide variety of retail and consumer business clients, ranging from multinational Fortune 500 corporations to more entrepreneurial businesses, on myriad accounting, tax and other financial issues.
Ilex International have launched their Breach Confidence Index. The Index is a benchmark survey created to monitor the level of confidence that British businesses have when it comes to security breaches. The Index shows high confidence levels
The Breach Confidence Index raises major concerns for British businesses. Businesses are not currently required to report security breaches and in many cases, may not even know that they have experienced one. The survey found that 49% said their business has not experienced a security breach. In comparison to actual statistics shared at the 2015 Cyber Symposium, there is a major gap between the perception and reality of security breaches among businesses.
|According to the survey the most common weaknesses resulting in a Data Breach were|
|8%||BYOD OR MOBILE ACCESS|
|6%||NON-COMPLIANCE TO CURRENT REGULATIONS|
Weaknesses relating to identity and access management considerably increase as organisations expand their workforce. Some of the most common issues highlighted by large businesses include:
All figures in the Ilex International Breach Confidence Index, unless otherwise stated, are from YouGov Plc. Total sample size was 530 IT Decision Makers. Fieldwork was undertaken between 6th – 12th August 2015. The survey was carried out online.
For any organization connected to the internet, it is not a question of if but when their business will be under attack, according to a recent cybersecurity report from Symantec, which found Canada ranked No. 4 worldwide in terms of ransomware and social media attacks last year. These increasing attacks put customer information, and especially payment data at risk for compromise.
When breaches do occur, response time continues to be a challenge. In more than one quarter of all breaches investigated worldwide in 2014 by Verizon, it took victim organization weeks, or even months, to contain the breaches. It is against this backdrop that global cybersecurity, payment technology and data forensics experts are gathering in Vancouver for the annual PCI North America Community Meeting to address the ongoing challenge of protecting consumer payment information from criminals, and new best practices on how organizations can best prepare for responding to a data breach.
A data breach now costs organizations an average total of $3.8 million. However, research shows that having an incident response team in place can create significant savings. Developed in collaboration with the Payment Card Industry (PCI) Forensic Investigators (PFI) community, Responding to a Data Breach: A How-to Guide for Incident Management provides merchants and service providers with key recommendations for being prepared to react quickly if a breach is suspected, and specifically what to do contain damage, and facilitate an effective investigation.
The silver lining to high profile breaches that have occurred is that there is a new sense of urgency that is translating into security vigilance from the top down, forcing businesses to prioritize and make data security business-as-usual,” said PCI SSC General Manager Stephen W. Orfei. “Prevention, detection and response are always going to be the three legs of data protection. Better detection will certainly improve response time and the ability to mitigate attacks, but managing the impact and damage of compromise comes down to preparation, having a plan in place and the right investments in technology, training and partnerships to support it
This guidance is especially important given that in over 95% of breaches it is an external party that informs the compromised organization of the breach,” added PCI SSC International Director Jeremy King. “Knowing what to do, who to contact and how to manage the early stages of the breach is critical
At its annual North America Community Meeting in Vancouver this week, the PCI Security Standards Council will discuss these best practices in the context of today’s threat and breach landscape, along with other standards and resources the industry is developing to help businesses protect their customer payment data. Keynote speaker cybersecurity blogger Brian Krebs will provide insights into the latest attacks and breaches, while PCI Forensic Investigators and authors of the Verizon Data Breach Investigation Report and PCI Compliance Report, will present key findings from their work with breached entities globally. Canadian organizations including City of Calgary, Interac and Rogers will share regional perspectives on implementing payment security technologies and best practices.
Download a copy of Responding to a Data Breach: A How-to Guide for Incident Management here.
The original PCI SSC press release can be found here.
Banks with weak cybersecurity controls could be downgraded even if they haven’t been attacked, Standard & Poor’s said Monday in a report.
While it hasn’t yet downgraded a bank based on its computer security, the ratings company said it would consider doing so if it determined the lender was ill-prepared to withstand a data breach. It would also drop a bank’s rating if an attack caused reputational harm or resulted in losses that hurt profit, S&P said.
We view weak cybersecurity as an emerging threat that has the potential to pose a higher risk to financial firms in the future, and possibly result in downgrades
S&P analysts led by Stuart Plesser wrote in the report.
Cyberattacks have become a growing threat for banks, with more than a dozen U.S. depository institutions reporting hacks in 2012 and 2013 that prevented consumers from accessing their websites, according to the report. Last year, the personal data of tens of millions of JPMorgan Chase & Co. customers were compromised in a breach. The bank spent $250 million on cybersecurity in 2014 and will increase that to $450 million by next year, S&P said.
Hostile nation-states, terrorist organizations, criminal groups, activists and, in some cases, company insiders are behind most of the global cyberattacks on banks, S&P said. South Korea financial institutions have experienced security breaches in recent years, while a Russian security company working with law enforcement said it uncovered a two-year, billion-dollar theft from banks around the world by a gang of cybercriminals, according to the report, which didn’t identify the lenders.
S&P classified the global risk of cyberattacks as “medium,” saying large banks have taken steps to mitigate the danger. Bigger institutions have an advantage over smaller ones because their revenue base can defray some expenses, according to the report.
Few banks have disclosed the amount they’re spending to guard against attacks, S&P said. Still, any cuts to technology units as part of larger cost-savings efforts would be “disconcerting.”
Cyberdefense is a continual battle, particularly as technology evolves,” according to the report. “Many tech experts believe that if a hostile nation-state put all its resources into infiltrating a particular bank’s tech system, it would probably prove successful
The original article was published in Crain”s New Yokr Business.
An ISACA survey of more than 900 cybersecurity experts shows that
The 2015 Mobile Payment Security Study from global cybersecurity association ISACA suggests that people who use mobile payments are unlikely to be deterred by security concerns.
Other data from the survey show that cybersecurity professionals are willing to balance benefits with perceived security risks of mobile payments:
Mobile payments represent the latest frontier for the ongoing choice we all make to balance security and privacy risk and convenience,” said John Pironti, CISA, CISM, CGEIT, CRISC, risk advisor with ISACA and president of IP Architects. “ISACA members, who are some of the most cyber-aware professionals in the world, are using mobile payments while simultaneously identifying and contemplating their potential security risks. This shows that fear of identity theft or a data breach is not slowing down adoption and it shouldn’t as long as risk is properly managed and effective and appropriate security features are in place
Reports say that contactless in-store payment will continue to grow. Overall, the global mobile payment transaction market, including solutions offered by Apple Pay, Google Wallet, PayPal and Venmo, will be worth an estimated US $2.8 trillion by 2020, according to Future Market Insights.
ISACA survey respondents ranked the major vulnerabilities associated with mobile payments:
What Consumers Need to Know
According to those surveyed, currently the most effective way to make mobile payments more secure is using two ways to authenticate their identity (66%), followed by requiring a short-term authentication code (18%). Far less popular was an option that puts the onus on the consumer installing phone-based security apps (9%).
People using mobile payments need to educate themselves so they are making informed choices. You need to know your options, choose an acceptable level of risk, and put a value on your personal information,” said Christos Dimitriadis, Ph.D., CISA, CISM, CRISC, international president of ISACA and group director of information security for INTRALOT. “The best tactic is awareness. Embrace and educate about new services and technologies
Understand your level of risk: Ask yourself what level of personal information and financial loss is acceptable to balance the convenience of mobile payments.
Know your options: Understand the security options available to manage your risk to an acceptable level. Using a unique passcode should be mandatory, but also look into encryption, temporary codes that expire and using multiple ways to authenticate your identity.
Value your personal information: Be aware of what information you are sharing e.g., name, birthday, national identification number, pet name, email, phone number. These pieces of information can be used by hackers to gain access to accounts. Only provide the least amount of information necessary for each transaction.
Security Governance for Retailers and Payment Providers
In the emerging mobile payment landscape, ISACA notes that there is no generally accepted understanding of which entity is responsible for keeping mobile payments secure—the consumer, the payment provider or the retailer. One approach is for businesses to use the COBIT governance framework to involve all key stakeholders in deciding on an acceptable balance of fraud rate vs. revenue. Based on that outcome, organizations should set policies and make sure that mobile payment systems adhere to them.
Members of the IT or information security group taking part in the discussion should also ensure they are keeping up to date with the latest cybersecurity developments and credentials. A joint 2015 ISACA/RSA study shows that nearly 70% of information security/information technology professionals require certification when looking for candidates to fill open security positions.
The full ISACA Press Release can be found here.
According to a report commissioned by the Metals Service Center Institute (MSCI), cyber security poses complicated threats for metals companies.
The report was compiled by graduate students at the Boeing Center for Technology, Information & Management (BCTIM) at the Olin School of Business at Washington University in St. Louis.
Other research has shown that cybercrimes are growing more common, more costly, and taking longer to resolve. According to the findings of the fifth annual Cost of Cyber Crime Study conducted by the respected Ponemon Institute the 2014 global study of U.S.-based companies found:
With data breaches happening frequently, our members and all companies must be concerned about the safety of their data and honestly ask themselves if they are as well protected as they think they are,” said M. Robert Weidner, III, MSCI president and CEO. “The potential damage to the company is compounded by how long it would take to be up and running again and at what cost and the cost of lost revenue
These concerns and questions prompted MSCI to ask BCTIM to research the cyber security threat, specifically as it relates to the metals industry.
From the report, three key lessons for executives concerned or dealing with cyber security emerged:
The ‘EU28 Cloud Security Conference: “Reaching the Cloud Era in the European Union” brought to the foreground the current cloud landscape. The aim of the conference was to bring together practitioners, academics and policy makers to discuss the level of cloud computing security in the context of current and future policy activities. The conference included presentations and panel debates on legal and compliance issues, technical advancements, privacy and personal data protection, critical information infrastructures and cloud certification.
During the conference the important role of cloud computing was acknowledged for the development of the digital economy in Europe. Cloud computing is becoming essential for users, including individual consumers, businesses and public sector organisations. However, recent figures indicate that users’ concerns on cloud security are still the main barrier to the adoption of cloud services in Europe.
Key conclusions highlight that:
Furthermore, cloud security was discussed in relation to the recent regulatory and policy initiatives, such as the ongoing data protection reform, the proposal for a Network and Information Security directive, cloud computing communication and the Digital Single Market strategy. There was consensus that further policy actions on cloud security could support trust and confidence in cloud services by addressing the key findings and issues deriving from the conference.
There are significant gaps in cybersecurity knowledge, shared visibility and mutual trust between those who serve on organizations’ board of directors and IT security professionals. These gaps between those responsible for corporate and cyber governance and those responsible for the day-to-day defense against threats could have damaging impacts on organizations’ cybersecurity posture, leaving them more vulnerable to attack and breaches.
This data comes from a new survey, Defining the Gap: The Cybersecurity Governance Survey, conducted by the Ponemon Institute and commissioned by Fidelis Cybersecurity.
Cybersecurity is a critical issue for boards, but many members lack the necessary knowledge to properly address the challenges and are even unaware when breaches occur. Further widening the gap, IT security professionals lack confidence in the board’s understanding of the cyber risks their organizations face, leading to a breakdown of trust and communication between the two groups.
The survey asked more than 650 board members and IT security professionals (mainly CIOs, CTOs and CISOs) for their perspectives regarding board member knowledge and involvement in cybersecurity governance.
Key findings include:
Lack of Critical Cybersecurity Knowledge at the Top
76% of boards review or approve security strategy and incident response plans, but 41% of board members admitted they lacked expertise in cybersecurity. An additional 26% said they had minimal or no knowledge of cybersecurity, making it difficult, if not impossible, for them to understand whether the practices being discussed adequately address the unique risks faced by their organization. This renders their review of strategy and plans largely ineffective.
Limited Visibility into Breach Activity
59% of board members believe their organizations’ cybersecurity governance practices are very effective, while only 18% of IT security professionals believe the same. This large gap is likely the result of the board’s lack of information about threat activity. Although cybersecurity governance is on 65% of boards’ agendas, most members are remarkably unaware if their organizations had been breached in the recent past. Specifically, 54% of IT security professionals reported a breach involving the theft of high-value information such as intellectual property within the last two years, but only 23% of board members reported the same, with 18% unsure if their organizations were breached at all.
As the breadth and severity of breaches continues to escalate, cybersecurity has increasingly become a board level issue,” said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute. “The data shows that board members are very aware of cybersecurity, but there is still a lot of uncertainty and confusion. Many lack knowledge not only about security issues and risks, but even about what has transpired within their own companies, which is shocking to me. Without an understanding of the issues, it’s impossible to reasonably evaluate if strategies and response plans are effectively addressing the problem
Absence of Trust Between Boards and IT Security Professionals
The board’s lack of knowledge has created a further divide. Nearly 60% of IT security professionals believe that the board does not understand the cybersecurity risks of the organization, compared to 70% of board members who believe that they do understand the risks.
The gap in knowledge and limited visibility into breach activity means board members don’t have the information they need to make smart cybersecurity governance decisions, and IT security professionals don’t have the support, monetary or otherwise, to maintain a strong security posture,” said retired Brig. Gen. Jim Jaeger, chief cyber services strategist at Fidelis. “Board members don’t need to be cyber experts, but they should have a thorough knowledge of the risks their organization faces and be able to provide the support needed for the security teams to protect against those risks
Additional Key Findings Include:
Marsh has undertaken an in-depth study into organisations’ attitudes towards the cyber threat, the management control processes they have in place, and their understanding and use of cyber insurance as a means of risk transfer. The benchmarking data in this report was collected from risk professionals and CFOs from large and medium-sized corporations from across the UK.
Spotlight on cyber risk to UK companies:
Firms across the UK continue to place cyber among their leading risks in terms of the likelihood and severity of impact; however, suggest there is still a lot of work to do to improve understanding and management.
Interestingly, there has been a substantial drop in the percentage of respondents who feel they have a “complete understanding” compared to last year (down from 34% to 18%).
This comes at a time when cyber risk is being elevated as a board agenda item, suggesting that executive-level interrogation has exposed a pre-existing overconfidence in the level of knowledge and understanding within certain organisations.
If this is the case, then it is clear those tasked with creating and delivering critical management information relating to cyber risk need more help and guidance to get them to a position where the level of management information is adequate.
Cyber risk is ranked as a tier one threat according to the UK National Security Strategy, and it is therefore surprising that 26.4% of UK companies surveyed do not consider it to be material enough to even get on the risk register. Just 16.6% of companies place cyber as a Top five risk on the risk register, while the remainder place it outside of the Top 10.
73% of respondents from the manufacturing industry say that cyber risk does not appear in the Top 10 risks on their corporate risk registers, the highest proportion of industry segments we surveyed.
This is perhaps understandable due to a low level of high-profile cyber incidents within the industry; however, as a key target for industrial espionage, and with instances of industrial control technology being compromised recently reported, one could argue that the threat is being underestimated.
The fact that fewer than 31.9% of respondents have identified one or more cyber scenarios that could most affect their organisations suggests that the lack of a complete understanding and absence/low positioning of cyber on the risk register is, for many companies, filtering through to a lack of definition around specific scenarios that might impact their businesses.
Board-level ownership of cyber risk exists in 19.4% of UK organisations. While this figure is broadly in line with last year’s findings (20%), it remains very low. Meanwhile, IT departments continue to take primary responsibility for cyber risk in 55.5% of organisations. Cyber risk is increasingly recognised as a business risk rather than simply a technical control, and, within this context, it is disappointing to note that there is no material upwards movement in risk management and board functions seizing responsibility from IT (the percentage has risen incrementally to 15.3% from 14% in 2014). IT departments might know how to implement cybersecurity; however, the inability of IT to drive value for the organisation or the potential for significant damage to be caused as a result of a security breach, most certainly is a business risk, the consequences of which will be felt at the highest levels of the organisation should it occur.
Boards therefore need to take ownership of cyber risk before a cyber event forces it on to the board agenda, and communicate the identified security priorities to IT departments so that they can align their activity and resources against the business’s risk management agenda.
Lack of data continues to prevent companies from adequately assessing cyber risk
The percentage of firms that have experienced a cyber-attack in the past 12 months has risen to 40.3%, albeit marginally (from 31% in 2014).
However, compared with other statistics (HM Government’s 2015 Information Security Breaches Survey states that 90% of large organisations and 74% of small organisations have suffered a security breach), this figure is still low, indicating that many of the respondents to this year’s survey are either particularly fortunate or (more likely) unaware of breach events within their firms.
Interestingly, 100% of respondents in two industries, communications, media, and technology and energy reported that they had been subject to a cyber-attack in the past 12 months. This most likely reveals a more enlightened position of those organisations rather than any high level of vulnerability.
In terms of organisations that have conducted or estimated the financial impact of a cyber-attack, this year’s survey results are somewhat contradictory to earlier findings. As such, it would be reasonable to question the rigorousness of the financial analysis around those numbers and how many are in fact high-level estimates rather than worst loss values calculated from detailed information and knowledge of cyber risk and individual exposures.
61.1% of organisations have not yet made any attempt to estimate/calculate loss estimates, however, suggesting that they are operating in the dark when it comes to the financial impact upon their businesses.
This puts them in a poor position to transfer the risk or even to appreciate whether a cyber event might threaten the viability of the company. Event modelling, combined with financial stress testing, is required to evaluate both the total financial loss attaching to an event and the shorter-term availability of cash to maintain trading.
The majority of organisations have not planned for sources of funding; however, the 48.9% that have is an encouraging number. Since just 11.1% of companies are buying insurance, it must be the case that companies are bypassing the insurance market and finding alternative methods to fund the risk (from available cash lines or lines of credit or assets that can be disposed of rapidly, for example).
Possessing and rehearsing an incident response plan is recognised as having a very positive effect on the operational, financial, and reputational impact of a cyber- attack upon an organisation.
The effect for breaches of personal data was quantified in the Ponemon Institute’s 2015 Cost of Data Breach Study, which reveals that those companies with an incident response team in place typically make a GBP £9.50 saving on the per capita cost of a data breach, compared with the mean per capita cost.
Lack of control over suppliers/third parties a major concern
It is both a surprise and a huge concern that 69.4% of respondents to this year’s survey do not assess the suppliers and/or customers they trade with for cyber risk.
Suppliers and external organisations with whom system links are shared present one of the key vulnerabilities to UK companies. Businesses have done a lot to improve cybersecurity in the past 12 months; however, their exposure to third parties, whether service providers, product suppliers, customers, or, in the case of banks, borrowers, presents significant risks to companies’ networks. In addition to this, 51.4% are not asked to demonstrate a competent standard of IT security practices to their own bank and/or customers in order to do business with them.
While organisations can control their own networks, they have much less control over those of the suppliers/third parties that they might be linked to. Without the appropriate checks, this leaves them exposed and lacking control over standards of IT security in systems where hackers might find a “back door” into their organisation.
There therefore needs to be an improvement in supply-chain resilience to cyber-attack if organisations are going to reduce the threat arising from this key vulnerability. This is especially true for large organisations with a profile that attracts highly motivated and sophisticated hackers who might identify smaller business partners that are typically less well protected. For example, a recent report published by Marsh and the UK Government highlighted that 22% of small businesses admit they “don’t know where to start” with cybersecurity.
One of the most well-publicised cyber breaches in recent years occurred at a large US retail company after hackers stole network credentials from a third-party heating, ventilating, and air conditioning (HVAC) contractor that had an IT link with the victim’s corporate systems. Incidents like these are likely to rise in frequency until organisations place greater focus on setting out the basic technical controls that all suppliers/ contractors should have in place.
More than half of respondents are not asked to demonstrate a competent standard of IT security practices to their own banks and/or customers.
Take up of cyber insurance remains low
52.8% of respondents’ organisations are engaged with the insurance market in one way or another.
Marsh’s experience and earlier findings in this survey suggest that the remainder are not yet ready to approach the market as they have an incomplete understanding of the risk, as opposed to them making a conscious decision not to purchase insurance following a value-based judgment.
This latter explanation would tie in with the earlier finding that 68.1% of organisations have not identified one or more cyber scenarios that could most affect their organisations. Organisations such as these, because they have not carried out the financial assessment required are in a poor position to approach the insurance market and place a value on transferring the risk. The survey data therefore suggests that more work needs to be done by organisations and their professional advisers, including their insurance brokers, to help improve their understanding of cyber risk and their cyber exposures and demonstrate what value insurance can bring.
The insurance market continues to address the issues that represent organisations’ greatest concerns a standard cyber insurance policy can deliver cover against breach of customer information (31.9%) and business interruption (22.2%), while computer crime/fraud (12.5%) can be insured against via a comprehensive crime insurance policy. The insurance market is also making inroads to deliver meaningful cover for reputational loss (8.4%).
Of particular interest is that none of the respondents from the industrial sectors identified physical property damage as a priority risk, despite a lot of recent attention being given to the threat that exists to critical infrastructure and the potential for tampering with industrial control technology.
The findings suggest that companies recognise that cyber insurance is not a holistic solution in dealing with cyber exposure and that, in fact, it covers only certain specific events and outcomes.
Cyber exposure might attach itself to a number of different insurance policies that need to maintain an effective response when the loss or liability outcomes are created by cyber events. 48.6% of respondents admit to having “insufficient knowledge” in order to assess the insurances available, which may suggest a lack of insight into what can be insured by a cyber insurance policy. However, in view of the earlier findings, this figure might also indicate that a lack of understanding of their firm’s own risk profile places many respondents in a position where they are unable to make an informed judgment as to whether the cover is appropriate.
Cyber insurance is not a holistic solution in dealing with cyber exposure and covers only certain specific events and outcomes.
Clearly, there is still a lot of work that needs to be done by UK organisations in order to improve their understanding and management of cyber risk. Achieving a high level of understanding is essential as it serves as the foundation stone upon which all other cyber risk transfer and mitigation decisions need to be made.
The solution to this lies in the boardroom, and it is still a great concern that the board takes primary responsibility for cyber risk in 19.4% of organisations surveyed. Only with board-level buy-in can companies take the big strides needed to advance their knowledge and perform the financial modelling required. Proper assessment and quantification of the risk will lead to better targeted mitigation, practical improvements in risk management, and the ability to judge the value of the risk transfer options available on the market.
One particularly interesting, and somewhat remarkable, finding to emerge from this year’s survey is 69.4% of respondents’ organisations do not assess the suppliers they trade with for cyber risk. Supply chains are proven to be a critical vulnerability in corporate IT networks, yet there appears to be too little work being done to ensure that the entities with which companies share system links are following basic good security practices.
This has to improve as, for all the proactive steps taken and money invested to harden corporate networks against cyber-attacks, a security breach at a contractor or service provider, for example, could potentially allow hackers to circumnavigate all of that.
The insurance industry can play and is already playing a role in that assurance process; however, more work needs to be done in order to move the security focus away from the edge of the corporate network and to the heart of strategic decision making.
The full report with the references can be found here.
Tripwire have announced the results of a study on the cyber literacy challenges faced by organisations.
The study evaluated the attitudes of executives as they relate to cybersecurity risk decision-making and communication between IT security professionals, executive teams and boards. Study respondents included 101 C-level executives and directors as well as 176 IT professionals from both private and public U.K. organisations.
Despite the increasing number of successful cyberattacks against U.K. organisations, the study revealed that 54% of C-level executives at organisations within the Financial Times Stock Exchange (FTSE) 100 index believe their board is both cybersecurity literate and actively engaged in routine security. IT professionals from the same organisations are less confident in their boards cybersecurity knowledge, with 26% stating their boards only steps in when there is a serious incident.
While the results of the study point to executive confidence, they reveal the uncertainty of IT professionals. When asked if their board was “cyber literate,”29% of IT professionals either answered “no” or “not sure.” However, when C-level executives were asked the same question, 84% answered “yes.”.
There’s a big difference between cybersecurity awareness and cybersecurity literacy,” said Dwayne Melancon, chief technology officer for Tripwire. “If the vast majority of executives and boards were really literate about cybersecurity risks, then spear phishing wouldn’t work. I think these results are indicative of the growing awareness that the risks connected with cybersecurity are business critical, but it would appear the executives either don’t understand how much they have to learn about cybersecurity, or they don’t want to admit that they that they don’t fully understand the business impact of these risks
Other key findings include:
Most organisations are not struggling with communication tools said Melancon. They are instead struggling with finding the right vocabulary and information to accurately portray cybersecurity risk to their boards, and they are trying to find the right balance of responsibility and oversight for this critical business risk
Skyhigh Networks released its new “Cloud Adoption & Risk in the Government Report.” The Q1 2015 report reveals that shadow IT is prevalent in government agencies.
The average public sector organization uses 742 cloud services, which is about 10-20 times more than IT departments expect. Despite the security initiatives in place, such as FedRAMP, FISMA, and FITARA, many government employees are unaware of agency rules and regulations or simply ignore them and use cloud services that drive collaboration and productivity.
As agencies grapple with how to manage shadow IT and securely enable sanctioned IT, they need visibility into the real usage and risk of cloud services as well as the ability to detect threats and seamlessly enforce security, compliance, and governance policies,” said Rajiv Gupta, CEO of Skyhigh Networks. “Skyhigh manages shadow IT and securely enables sanctioned IT, allowing public sector organizations to use hundreds of cloud services while providing robust data protection services, thereby meeting data privacy requirements and conforming to regulations
Despite clear benefits of cloud services Federal agencies are slow to migrate to the cloud due to security concerns. As a result, employees adopt cloud services on their own, creating shadow IT. Under FITARA, Federal CIOs must oversee sanctioned cloud services as well as shadow IT. This new requirement underscores the uncertainty about how employees are using cloud services within their agencies.
Understanding Shadow IT
The average public sector organization now uses 742 cloud services, which is about 10-20 times more than IT departments report. What agencies don’t know can hurt them. When asked about insider threats, just 7% of IT and IT security professionals at public sector organizations indicated their agency had experienced an insider threat. However, looking at actual anomaly data, Skyhigh Networks found that 82% of public sector organizations had behavior indicative of an insider threat.
Agencies cannot rely on the security controls offered by cloud providers alone. Analyzing more than 12,000 cloud services across more than 50 attributes of enterprise readiness developed with the Cloud Security Alliance, the report found that just 9.3% achieved the highest CloudTrust Rating of Enterprise Ready. Only 10% of cloud services encrypt data stored at rest, 15% support multi-factor authentication, and 6% have ISO 27001 certification. Skyhigh Networks helps Federal agencies address these security gaps and gain control over shadow IT by providing unparalleled visibility, comprehensive risk assessment, advanced usage and threat analytics, and seamless policy enforcement.
Compromised credentials can also mean disaster for Federal agencies. According to a study by Joseph Bonneau at the University of Cambridge, 31% of passwords are used in multiple places. This means that for 31% of compromised credentials, attackers can potentially gain access not only to all the data in that cloud service, but all the data in other cloud services as well. The average public sector employee uses more than 16 cloud services, and 37% of users upload sensitive data to cloud file sharing services. As a result, the impact of one compromised account can be immense.
The Skyhigh “Cloud Adoption & Risk in the Government Report” reveals that 96.2% of public sector organizations have users with compromised credentials and, at the average agency, 6.4% of employees have at least one compromised credential.
Cloud Services in the Public Sector
Most cloud services deployed in the public sector are collaboration tools. The average organization uses 120 distinct collaboration services, such as Microsoft Office 365, Gmail, and Cisco Webex. Other top cloud services are software development services, file sharing services, and content sharing services. The average employee uses 16.8 cloud services including 2.9 content sharing services, 2.8 collaboration service, 2.6 social media services, and 1.3 file sharing services. Shockingly, the average public sector employee’s online movements are monitored by 2.7 advertising and web analytics tracking services, the same services used by cyber criminals to inform watering hole attacks.
The report also reveals the top cloud services used in the public sector.
Top ten enterprise cloud services are:-
1. Microsoft Office 365
3. Cisco WebEx
5. SAP ERP
9. Oracle Taleo
10. SharePoint Online
Top ten consumer cloud services are:-
The “Cloud Adoption & Risk in the Government Report” is based on data from 200,000 public sector employees in the United States and Canada.
Securities Industry and Financial Markets Association (SIFMA) publishes recommendations for effective cybersecurity regulatory guidance
SIFMA has published its “Principles for Effective Cybersecurity Regulatory Guidance,” that provides regulators with SIFMA members’ insight on productive ways to harmonize and create effective cybersecurity regulatory guidance. SIFMA’s goal is to promote a collaborative approach to cybersecurity that can foster innovation and strengthen efforts to protect financial industry operations and most importantly our clients. This paper is one in a series of initiatives undertaken by SIFMA focused on enhancing the industry’s cybersecurity preparedness and practices.
Cybersecurity is a top priority for the financial services industry, which is dedicating significant resources to protect the integrity of the markets and the millions of Americans who use financial services every day. Effective and consistent regulatory guidance is a critical component of the broader cyber defense effort, as it promotes best practices and accountability across the financial sector,” said Kenneth E. Bentsen, Jr., SIFMA president & CEO.
Cyber attacks are increasing in frequency and sophistication, and it is critical that the industry and government collaborate to mitigate these threats. We appreciate that the public sector has embraced this partnership and we will continue to offer our insights to help them in their work
Specifically, SIFMA’s paper outlines ten foundational principles that can serve as a framework for robust and efficient cybersecurity guidance. SIFMA’s recommendations are meant to help regulators as they move forward with plans to review, update and harmonize their cybersecurity policies, regulations, and guidance, in order to strengthen the financial sector’s defense and response to cyber attacks.
SIFMA members believe there is an opportunity to enhance regulatory guidance beyond existing requirements to improve the protection of the financial sector, and that a dynamic and collaborative partnership between the industry and government is the most effective path forward to accomplishing this goal. The benefits of this partnership approach led to the development of the NIST Cybersecurity Framework, which SIFMA is actively promoting within its membership and encourages regulators to use as a universal structure that can be leveraged as a starting point for creating a unified approach to cybersecurity.
Importantly, SIFMA’s paper notes that harmonization of regulatory guidance across agencies and across borders is essential to avoid confusion in the industry and the duplication of efforts. SIFMA recommends the development of an inter-agency harmonization working group that could coordinate the review of cybersecurity regulations, ensure consistency and receive private sector input.
SIFMA’s ten principles are:
Principle 1: The U.S. government has a significant role and responsibility in protecting the business community
Principle 2: Recognize the value of public-private collaboration in the development of agency guidance
Principle 3: Compliance with Cybersecurity agency guidance must be flexible, scalable and practical
Principle 4: Financial services Cybersecurity guidance should be harmonized across agencies
Principle 5: Agency guidance must consider the resources of the firm
Principle 6: Effective Cybersecurity guidance is risk-based and threat-informed
Principle 7: Financial regulators should engage in risk-based, value-add audits instead of checklist reviews
Principle 8: Crisis response is an essential component to an effective Cybersecurity program
Principle 9: Information sharing is foundational to protection, must be limited to Cybersecurity purposes, and must respect firms’ confidences
Principle 10: The management of Cybersecurity at critical third parties is essential for firms
A full copy of SIFMA’s “Principles for Effective Cybersecurity Guidance,” can be found here.