Many of us check to see if our doors are locked before we go to bed. We might be pretty sure it’s already locked, but we know it’s worth double checking just in case. It’s common sense. That’s why it’s so surprising to see, according to a recent UK report, that only a third of businesses check their own cyber security locks by conducting a cyber risk assessment.
Throughout the report, there is a stark contrast between the amount of breaches companies are experiencing and the measures they are taking to prevent these breaches from happening. For example, the report found that nearly 40% of business surveyed reported at least one attack or breach within the past 12 months. What’s more, for many of these businesses, a breach is not a one and done experience. Half of the organizations that were attacked said they’ve experienced an attack once a month and a quarter of these businesses report attacks on a weekly basis.
If your home was being broken into on a weekly basis, you’d probably start double checking those locks. Yet, according to the report, businesses are not taking the necessary steps to protect themselves. In addition to the lack of cyber risk assessments, only 33% of businesses have a formal cyber security policy. And while phishing scams accounts for 83% of the attacks businesses reported, only 14% of businesses have conducted any sort of cyber awareness training within the past year.
In a blog post on the report, Phillip Virgo makes the important point that cybersecurity measures need to be considered within the context specific to a business’ size and industry. And he’s right, there is no one size fits all approach to cybersecurity. In order for any sort of protections to be useful, it’s vital those measures are not only suited to an organization’s size and industry, but also aligns with their specific business strategy.
At the same time, however, this doesn’t mean there aren’t steps every business should be taking to protect themselves and a risk assessment is a good way to start. Anything less isn’t just leaving your door unlocked, it’s leaving the door wide open with a welcome mat out front.
Behavioral economics teaches us that we are more fearful of immediate losses than future gains. Conversely, we are also tend to choose immediate gains over protecting ourselves from future losses. Especially when the type of loss is too foreign to us or is ever changing.
We do have available to us a tool that doesn’t require a lot of tech to use but perhaps can do more to both enhance and protect our organization than any piece of software or hardware we might have: our imagination.
When things are changing, you can’t rely on static measures or processes designed to defend against what today’s threats. Because the use of technology as a business enabler is ever changing as is the nature of cyber threats, businesses need to take a dynamic approach to risk mitigation and transfer strategies and constantly imagine both the opportunities and the risks they may face tomorrow.
As a report from the UC Berkeley’s Center for Long-Term Cybersecurity and Booz Allen Hamilton states, “….failures of cyber defense in some cases — possibly the most important ones — [are] not necessarily a failure of operational rigor but equally or more so a failure of imagination.”
There are a number of tangible ways businesses can leverage the use of imagination in addressing the cyber risks that they may face. One is through an incidence response simulation. Get your team around a table. Imagine a ransomware event has occurred. What do you do? Do you pay the ransom? How long will your systems be down? How much business do you stand to lose? Brainstorm other scenarios, focusing on ones that could take you out. Risks that cause you to be shut down for an extended period of time or do irreparable harm to your ability to serve your customers or to your reputation.
Not only do these types of simulations help you be better prepared to respond if they occur, it also helps you better define what risks you might face and what defenses to build to mitigate those risks. This can therefore become the basis for your risk assessment (which, if you are simply focused on compliance you generally have to do anyway).
We often think of creativity when it comes to innovation and growth that are critical our long term success. In the ever-changing world of cyber threats, we need to be equally creative when it comes to imagining and addressing risks what are crucial for our long term viability.
Today business leaders are rightfully concerned about mitigating their organization’s cyber risks. To address this concern, many businesses have begun to hire individfuals responsible for cybersecurity and even hiring Chief Information Security Officers (CISOs) to provide security leadership at the executive level. But unfortunately, old habits die hard. Instead of integrating the cybersecurity team or the CISO into both cybersecurity and business conversations, many of these security leaders have become siloed from broader business strategy and goals. Of course, this also leaves the executive team under-informed about the nature and scope of their organization’s cyber risk profile.
One of the main tenants of a new security principle, cyber resiliency, stresses the need to integrate approaches to security and business in order for either side to succeed. In fact, organizations should even stop thinking of business and security as two opposing side of an equation and instead learn to see and promote the integration of each with the other. However, this will require both security experts and businesses leaders to put in some work.
Business-Aligned Security Leaders
A recent report by Forrester found that just four out of ten security leaders can answer the question, “How secure/at risk are we?” and less than half frequently consult business leaders before developing security strategies. This, to put it lightly, is a big problem. If security leaders are just focused on implementing and maintaining technical controls, they end up missing the bigger picture of the risk culture that surrounds those controls. It is vitally important for security teams to understand an organization’s business-critical assets and work with leadership to develop a risk mitigation plan that prioritizes those assets.
Cybersecurity teams also need to be able to communicate their needs to business leadership. According to the Forrester report, more than half of security leaders lack adequate skills in benchmarking their security programs. In order to integrate cybersecurity and business needs, security teams need to develop benchmarking and risk reports that they can properly communicate to business executives. Taking a more business-oriented approach to security can also help security leaders advocate for the funds they need to reduce risk.
Cyber-Aligned Business Leaders
Of course, in order for security leaders to effectively integrate business strategy into overall cybersecurity goals, the business executives and board members need to regularly meet and communicate with their security team. To ensure this happens, it’s important for board members to assume ultimate responsibility for oversight of the organization’s security and to integrate cybersecurity discussions into the overall business strategy, risk management, and budgeting. It may even be a good idea to require cybersecurity training for all board members to ensure everyone has a proper understanding of the current threat landscape and regulations.
With a focus on outcomes, training, and a security team able to communicate benchmarks and risk reports, board members will be in a position to properly define the organization’s cyber risk tolerance that is consistent with business strategy andcurrent cybersecurity controls. Board members and executives teams must ensure the organization’s risk appetite is communicated throughout all levels of the organization and that they create a culture that reflects the cybersecurity and business interests of the organization. Many of these recommendations are included in a white paper from the World Economic Forum that details 10 essential principles and tools for boards to better integrate cyber resiliency with overall business strategy.
Today, most organizations understand the importance of maintaining an effective cybersecurity program. However, not many businesses are recognizing the interdependence of cybersecurity and business interests. And it’s a two way street. Both cybersecurity leaders and business executive and board members need to be mindful about taking a more holistic approach to cybersecurity and business for either to be effective.
You can’t protect your network from an attack or a breach if you don’t know where you are vulnerable. Some vulnerabilities are easy to see, like application patching, but others can be very difficult to spot if you don’t know exactly what you are looking for. Luckily, a piece of automation software called vulnerability scanning can help organizations detect and manage vulnerabilities across an entire network.
The scan works by first creating an inventory of servers, applications, devices, firewalls, operating systems, and anything else you include within the perimeters. The scan may also attempt to login to the network using default credentials. After completing an inventory, the scan will then cross check every item detected against a database and give a full list of known vulnerabilities.
By conducting regular vulnerability scans and including the information from those scans in a cybersecurity risk assessment, you’ll not only keep your networks more secure, but can also help reduce the cost of a breach should one ever happen. Here is a short overview of how to properly conduct a vulnerability scan and use it as a key tool for more effective risk assessments.
What to Include in Your Vulnerability Scan
When conducting a vulnerability scan, it’s important to set a scope that is appropriate for your business needs and network configuration. While every organizations should scan their entire network — along with external systems, vendor portals, and cloud services — it might be preferable to run more focused scans frequently and conduct a more expansive scan every quarter or twice a year.
Some scans can also run automatically when changes to the network are made or a new device is added. Because these scans can be intrusive, it’s possible they may cause temporary systems errors. You should also consider conducting scans after business hours or at a time when essential business operations will not be affected.
Putting Vulnerabilities into Context
The unfortunate reality is that organizations will always have some vulnerabilities. Vulnerability scans are the first part in a larger process that allows you to pinpoint your weak points and prioritize these vulnerabilities based on risk. It’s important to remember that vulnerabilities are separate from threats. A cybersecurity threat is a method of attack that exploits vulnerabilities. And fixing every single vulnerability is sort of like trying to plug a hundred of holes in a bucket all at once.
A risk assessment is therefore essential for putting your vulnerability scans into context and understanding where you need to focus your energy. When looking at a list of known vulnerabilities within your network, consider how much damage it would cause if the vulnerability is exploiting, assess the threat landscape to understand how likely an attack is, and explore what security controls are needed to fix the vulnerability. If a known vulnerability is easy to fix but would be costly if exploited, you will want to address that immediately. On the other hand, if a vulnerability would require a lot of time and money to fix, and the risk of an attack is very low, you may not need to focus on that right away. No matter what, the key is to have enough information on hand to make an informed decision on how best to protect or network and systems.
According to this year’s Cost of a Data Breach Report, the majority of malicious cyber attacks are financially motivated. So, when prioritizing risk, it makes sense to focus on cyber threats that have direct financial implications, such as ransomware and business email compromise (BEC) schemes.
Given the recent rise in ransomware attacks and the targeting of public agencies, it’s pretty likely you’ve seen some news about ransomware within the past year. And while it is certainly important to protect against the possibility of ransomware, that doesn’t mean less-publicized cyber attacks like BEC should be taken any less seriously.
In general, business email compromise involves scammers sending employees an email that looks as if it is coming from a familiar source requesting some sort of payment. Usually, scammers will impersonate frequently used vendors or even CEOs. And these scams can be costly. Last year Nikkei, a Japanese media company, suffered a loss of$29 million when a scammer impersonated a company executive.
In fact, BEC scams have repeated topped the FBI’s annual Internet Crime Report as the costliest form of cyber crime. And, when you compare the costs of BEC and ransomware attacks, it becomes pretty clear which one poses the greater risk.
Cost Comparison (in millions)
Source: FBI Internet Crime Report (2015-2019)
While FBI’s report shows a sharp increase in ransomware losses in recent years, BEC scams continue to outpace ransomware by a staggering margin. If you were responsible for prioritizing risk activities in your organization, where would you focus? When you follow the money, the answer is pretty obvious. The good news, however, is that a lot of the procedures, guidelines, and training that can be done to prevent BEC can also help ransomware, such as anti-malware software and email authentication. It can be easy to base your cybersecurity processes off of what you see in the headlines, but that won’t always give you an accurate view of your risk profile. It’s essential to conduct regular risk assessments to gain a clear understanding of the biggest threats your organization faces.
The fear of experiencing a cyberattack is rightfully keeping businesses owners up at night. Not only would a cyber attack give your security team a headache , but could have profound and irreversible financial implications for your businesses. In fact, according to a report by IBM and the Ponemon Institute, the average cost of a data breach in the U.S. is a over $8 million. And with 30% of companies expected to experience a breach within 24 months, it’s no surprise that business are seeking coverage. The problem, however, is that businesses and insurance companies alike are still grappling over exactly what is and is not covered when a cyber event occurs.
Some businesses are learning this the hard way
Recently, a phishing campaign successfully stole the credentials of an employee at a rent-servicing company that allows tenants to pay their rent online. The phishers used the employee’s credentials to take $10 million in rent money that the company owed to landlords. The company had a crime insurance policy that covered losses “resulting directly from the use of any computer to fraudulently cause a transfer,” but soon found out their claim was denied. Among the reasons the insurer gave for denying the claim was that, because the funds stolen were owed to landlords, the company did not technically suffer any first-party losses and there were not covered by the insurance policy.
In another case, the pharmaceutical company Merck found itself victim to a ransomware attack that shut down more than 30,000 of their computers and 7,500 servers. The attack took weeks to resolve and Merck is now claiming $1.3 billion in losses that they believe should be covered by their property policy. The problem, however, is that the attack on Merck was actually a by-product of a malware campaign that the Russian government was waging against Ukraine and happened to spread to companies in other countries. The insurer therefore denied the claim, stating their property coverage excludes any incidents considered an “act of war.”
Silence is Deadly
The Merck example above also illustrates the concept of “silent”, or “non-affirmative” cyber. Basically these are standard insurance lines, like property or crime, in which cyber acts have not been specifically included or excluded. Merck was filing the claims against the property policy because it sustained data loss, system loss and business interruption losses. Silent cyber is difficult for a carrier to respond to (which is why the carrier in this case is looking to the war and terrorism exclusion to deny coverage) and even more challenging to account for. That’s one reason both carriers and businesses are looking to standalone cyber insurance, which provides both the insured and carrier with a lot more clarity as to what is covered. (Although, carriers can deny coverage in situations where the attestations about the quality of security up front do not measure up at claim time.)
Predicting the Unpredictable
It’s commonly said that insurers will do anything to avoid paying out claims, but the issue with cyber insurance coverage goes much deeper. Instead, the problem centers around a number of uncertainties involved in categorizing and quantifying cyber risk that makes comprehensive policy writing a near impossible task. For one, cyber insurance is a new market dealing with a relatively new problem. There are therefore not as many data points for insurers to accurately quantify risk as there are for long-standing forms of insurance.
The real problem, however, is that cyber incidents are extremely difficult to predict and reliably account for. Whereas health and natural disaster policies, for example, are based on scientific modeling that allows for a certain degree of stability in risk factors, it is much harder for insurance companies to predict when, where, and how a cyber attack might happen. Even Warren Buffett told investors that anyone who says they have a firm grasp on cyber risk “is kidding themselves.”
Reading the Fine Print
It’s important to understand that, despite the relatively unpredictable nature of cyber incidents, there are plenty of steps businesses can and should take to understand and mitigate their risk profile. Organizations with robust risk management practices can significantly reduce their vulnerability and a strong security posture goes along way towards minimizing their risks and providing a strong defense when a claim strikes.
Unfortunately, this puts a lot of the responsibility on individual businesses when evaluating their cyber exposures and the insurance coverages which might be available to respond. A good insurance broker who has expertise in cyber is essential. Much like the threat landscape, cyber insurance coverage is constantly evolving, and it is to all parties, from businesses to carriers, to keep up.
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