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Larry Ponemon

The growing threat of insider fraud not a top security priority for organizations

ponemonAn Attachmate sponsored Ponemon Survey indicates the growing threat of insider fraud is not a top security priority for organizations which is proving to be a costly mistake.

On average, organisations experience approximately one fraud event per week, according to information from the second annual Attachmate and Ponemon Institute survey, “The Risk of Insider Fraud

However, only 44% of respondents say their organisation views insider fraud prevention as a top security priority, a perception which has declined since 2011.

The average cost of a data breach in a 2011 study was $194 per lost or stolen record

The survey reveals some alarming data security trends:

  • On average, it takes 87 days to first recognize that insider fraud has occurred and more than three months (105 days) to get at the root cause of the fraud.
  • 79% of respondents say that in their organization a privileged user has or is very likely to alter application controls to access or change sensitive information and then reset the controls.
  • 73% of respondents, an employee’s malfeasance has caused financial loss and possibly brand damage.
  • 81% say they already had an employee use someone else’s credentials to gain elevated rights or to bypass separation-of-duty control
  • 48% of respondents say that BYOD has resulted in a significant increase in fraud risk
  • 77% of respondents say the lack of security protocols over edge devices presents a significant security challenge and risk

This data demonstrates the invisibility of employee actions across an enterprise,” said Larry Ponemon, chairman and founder of Ponemon Institute. “While organizations may have policies and procedures to thwart insider fraud, it doesn’t mean employees will remain compliant, particularly with the rise of Bring Your Own Device (BYOD) practices

Data security and insider threats continue to be a challenge for organizations, particularly as BYOD brings complexity to enterprise risk management,” said Christine Meyers, director of Attachmate’s enterprise fraud management solutions. “Next-generation enterprise fraud management solutions, such as Attachmate Luminet, are able to correlate cross-channel activity, score risk and provide a screen-by-screen replay of what actually occurred. Add to that the proven deterrence factor that arises from being able to see and monitor use and abuse, and you can see why customers choose to deploy this technology for fraud detection

Fraud statistics

  • On average, organizations have had approximately 55 employee-related incidents of fraud in the past 12 months
  • More than one-third say that employees’ use of personally owned, mobile devices has resulted in malware and virus infections that infiltrated their corporate networks and enterprise systems and another 26% it is very likely to occur
  • 61% rate the threat of insider risk within their organization as very high or high
  • 23% say insider fraud incidents existed six months or longer before being discovered and 9% could not determine when they occurred.
  • 55% of organizations say their organization does not have the ability/intelligence to determine if the off site employee’s non-compliance is due to negligence or fraud

Threats from BYOD, Mobility & Edge Devices

For the first time the study asks questions about the effect Bring Your Own Device (BYOD), mobility and edge devices have on the risk of insider fraud. We define BYOD as the employees’ use of their personally owned mobile devices (typically smart phones, tablets and laptops) for both work and non-work activities.

An edge device is a physical device that can pass packets between a legacy network (like an Ethernet network) and an ATM network, using data link layer and network layer information. An edge device does not have responsibility for gathering network routing information. It simply uses the routing information it finds in the network layer using the route distribution protocol. An edge router is an example of an edge device.

Edge devices and BYOD make it difficult to identify insider fraud

58% agree that BYOD makes it more difficult for the security or compliance department to have complete visibility of employees’ access and computing activities. The majority of respondents (78%) do not agree that employees’ access and possible misuse of edge devices is completely visible to the security or compliance department (100% – 32% of strongly agree/agree responses).

The study defined insider fraud as the malicious or criminal attacks perpetrated upon business or governmental organizations by employees, temporary employees and contractors. Typically, the objective of such attacks is the theft of financial or information assets, which include customer data, trade secrets and intellectual properties. Sometimes, the most dangerous insiders are those who possess strong IT skills or have access to an organization’s critical applications and data.

With this research, we want to reiterate that organizations are not immune,” said Meyers. “The threat of insider fraud is a growing risk that can result in tangible financial loss to businesses. And the longer an organization takes to address it, the more costly it can become

The insider fraud survey includes results from more than 700 individuals at leading global organisations.

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Survey reveals companies are taking risks whilst outsourcing consumer data

Experian Data Breach Resolution and the Ponemon Institute survey results identify opportunity for improved data oversight.

The study, “Securing Outsourced Consumer Data”, reveals that many organizations (46%) do not evaluate the security and privacy practices of vendors before sharing sensitive or confidential information.

The survey of almost 750 individuals in organizations that transfer consumer data to third-party vendors. The survey’s aim was to increase understanding of data breach frequency when consumer data is outsourced, to determine what steps are taken to ensure vendors’ data stewardship, and to evaluate privacy and security practices between companies and outsource vendors.

Many companies have higher standards for their in-house data security practices than they have for vendors that they enlist to hold customer information,” said Michael Bruemmer, vice president at Experian Data Breach Resolution. “The standards should be consistent, because not adhering to the same policies leaves companies vulnerable.

When sharing sensitive and confidential consumer information, 49% said that they do not monitor or are unsure whether their organization monitors vendor security and privacy practices.

Additional key findings from the survey include:

  • 56% of respondents acknowledged incidents when their organizations did not act on a vendor’s data breach
  • Outsourcing consumer information demands oversight survey results indicate that organizations that transfer or share consumer data with vendors experience data breaches more often than not
  • 65% of respondents said their organization had a data breach involving the loss or theft of their organization’s information
  • 64% of respondents reported their organization has experienced more than one data breach
  • Training is essential to protect against data breaches. Causes for data breaches can be reduced significantly through enforcement of policies and effective training
  • 45% of respondents reported negligence as the root cause of third-party data breaches
  • 40% of data breaches were the result of lost or stolen devices
  • Security and control procedures need improvement
  • 56% said their organization learned about a data breach accidentally
  • Only 27% said the organization’s security and control procedures uncovered the incident
  • 23% said the vendor’s security and control procedures alerted the organization to a breach

It is imperative that businesses and organizations place a priority on evaluating a vendor’s ability to secure sensitive data said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute.

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What happens after a data breach?

A report by Solera Networks and Ponemon reveals rise in security breaches, with organisations taking months to detect and contain them.

The Ponemon report “The Post Breach Boom”’ commissioned by Solera Networks polled 3,529 IT and IT security professionals in eight countries to understand the steps they are taking in the aftermath of malicious and non-malicious data breaches over the past 24 months.

Highlights of the research include:

Data breaches are on the rise and organizations are unprepared to detect them or resolve them:

  • 54% of respondents said data breaches have increased in both severity
  • 52% said the frequency had increased

Additionally

  • 63% say that knowing the root causes of breaches strengthens their organization’s security posture
  • 40% say they have the tools, personnel and funding to pinpoint the root causes
  • Breaches remain undiscovered and unresolved for months. On average, it is taking companies nearly three months (80 days) to discover a malicious breach and then more than four months (123 days) to resolve it.
  • Security defences are not preventing a large portion of breaches. One third of malicious breaches are not being caught by any of the companies’ defences they are instead discovered when companies are notified by a third party, either law enforcement, a partner, customer or other party or discovered by accident.
  • 34% of non-malicious breaches are discovered accidentally
  • Malicious breaches are targeting key information assets within organization. 42% of malicious breaches targeted applications
  • 36% targeted user accounts

Details of Impact and the cost of breaches from the report

  • On average, malicious breaches cost $840,000, significantly more costly than non-malicious data breaches at $470,000.
  • The average cost of a data breach per compromised record is $194
  • However, if the root cause is the result of a malicious insider or attack the average per record cost climbs to $222
  • While breaches attributed to a negligent insider averages far less at $174 per compromised record

For non-malicious breaches, lost reputation, brand value and image were reported as the most serious consequences by participants. For malicious breaches, organizations suffered lost time and productivity followed by loss of reputation.

Following a malicious breach, organizations more often invested in enabling security technologies (65% vs. 42% of respondents). More often they also made changes to its operations and compliance processes to better prevent and detect future breaches (63% vs. 54%).

Endpoint security and encryption tools were the most popular following a non-malicious breach and SIEM and encryption tools were most frequently purchased following a malicious breach. Breaches drive increased spending on data security, according to 61% of respondents. The average increase is 20%.

52% of respondents say the breach resulted in an increase in spending on forensic capabilities. Among those organizations that spent more the increase was an average of 33%. This represents 13% more than the increase in data security funding.

Security breaches continue to occupy the headlines on a daily basis, making it clear that there is still much work to be done before companies are prepared for the inevitability of today’s advanced targeted attacks,” said John Vecchi, vice president of marketing, Solera Networks. “In a post-prevention world, organizations must shift their focus toward attaining the real-time visibility, context and big data security analytics needed to see, detect, eradicate and respond to advanced malware and zero-day attacks

“Our study confirms that organizations are facing a growing flood of increasingly malicious data breaches, and they don’t have the tools, staff or resources to discover and resolve them,” said Larry Ponemon, chairman and founder, Ponemon Institute. “Meanwhile, months are passing as their key information assets are left exposed. The results demonstrate a clear need for greater and faster visibility as well as a need to know the root cause of the breaches themselves in order to close this persistent window of exposure

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