How Recent Data Breaches are Changing the Face of Cybersecurity for the Private Sector

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://www.jdsupra.com/legalnews/how-recent-data-breaches-are-changing-th-68621/

If "The Year of the Breach" and the rapid start to data breaches in 2015
have taught us anything, it is that any company is susceptible to a cyber
attack; and, while data breaches are not a new concept, the way the private
sector must start to think about them is. One of the more recent well-known
breaches produced a vast array of non-traditional compromised information,
ranging from valuable intellectual property (IP) to sensitive employee
information to embarrassing emails from executives. The most recent
large-scale, confirmed breach also involved compromised employment
information, and while there is yet no indication that medical diagnosis or
treatment information was exposed, it is safe to assume that attackers will
attempt to go after such information in the near future, as the healthcare
industry increasingly gets targeted. On the other hand, there are also
other attackers out there who are solely focused on obtaining identity
records (SSNs, dates of birth, first and last names, addresses, etc.)
because of their value in hijacking accounts and perpetrating finely-tuned
social engineering attacks.

Since the large number of data breaches in 2013 made the headlines, many
consumers—and possibly even the media outlets—may be numb to the news of
yet another data breach, but we think the most recent breaches have changed
the cybersecurity landscape for the private sector.

State-Sponsored Cyber Attacks Aren't Limited to Traditional Military Targets

Before the recent news reports, state-sponsored cyber attacks could
traditionally be categorized as being matters of national security or
defense and unrelated to the general business world. There certainly have
been state-sponsored attacks on private and public companies, but none have
gone as public as they have in late 2014 and early 2015; and, to the extent
the private sector was targeted by state actors, the business sector
generally contemplated this as involving critical infrastructure. However,
recent breaches have blurred the line between traditional military targets
and conventional criminal activity against the business sector.

Early reports are pointing the finger at China for what may prove to be the
largest breach in the history of the healthcare industry, and the Federal
Bureau of Investigation (FBI) publicly confirmed that North Korea was
responsible for a recent well-known cyber attack against the entertainment
industry.  Before December 2014, a major entertainment corporation and the
maker of the ever-popular game console might have considered themselves at
risks of online hacking—after all, hackers often enjoy messing with
millions of gamers and making systems "go dark" on Christmas morning—but
this perception changed once North Korea launched its cyber attack.  In
that moment, going to the movies was no longer thought of as a holiday
family outing, as the hackers threatened 9/11-style attacks at the premiere
of a U.S. film.  While a data breach was, by no means, a far-fetched
concept for such an entity, surely most company executives—and the general
public—did not envision that a cyber attack would devolve into terroristic
threats.

Consequently, when national actors are involved, there is an intermingling
of state and private interests that is otherwise not present with the
traditional private sector attack. This structure has the potential to
change the dynamics of a data breach investigation:  with the latter, the
company typically has the authority to decide whether to involvement law
enforcement; whereas, with the former, federal law enforcement will likely
take the reigns and insert itself into the matter.

Money Isn't Everything

Historically data breaches in the business world have been thought of as
being financially motivated (e.g., credit card numbers, SSNs, bank account
information, etc.). When discussing the "data breach" topic, financial
institutions and the retail industry are the primary potential targets that
come to mind. However, recent breaches demonstrate that cyber attacks on
businesses can be politically motivated and, if nothing else, used as a
method of inducing sheer embarrassment for the victims. Further, even where
attacks are motivated by financial gain, the scope has extended beyond the
customary monetary crimes directed at individuals to include economic
advantages at the national level, with state actors targeting major U.S.
businesses. As a result, companies can no longer think about and plan for
data breaches solely in the context of credit card and bank account
numbers; there may be other pieces of data of significant interest to the
attackers, which the company has not taken into account in its breach
preparedness program.

The Resulting Harm May Be Irreversible

When the impact of a cyber attack is limited to financial harm, such as a
stolen credit card number, there is a strong possibility that the damage
can (ultimately) be amended. Banks can reverse fraudulent charges, and
consumers can enroll in credit protection services to prevent future
malicious activity, such as a cyber criminal opening a new line of credit
in the victim's name. However, when consumers experience invasions of
privacy that go beyond monetary impacts, there is often no remedy for the
impending harm.

For example, with respect to health information, as soon as a patient's
medical diagnosis has been released to the public, the information is out
there forever, and there is no taking it back. Such harm extends well
beyond the financial implications of what was once thought of as the
traditional data breach. Family members could, for example, find out about
a loved one's terminal illness before he or she was ready to share this
information.

Similarly, when employees' salary information is made publicly available,
you cannot "erase" it from the memory of his or her colleagues, who are now
negotiating for higher pay. And while one may ask for forgiveness, you
certainly cannot expunge the stigma associated with salacious and inane
comments made over email that have now come to the public light. Thus,
risks to a company's brand and reputation are tremendously higher when the
potential harm to the victims exceeds the parameters of financial impacts.

So What Does This Mean for the Business World?

The recent breaches tell us that no matter who you are or what your
organization does, your company could be the next data breach victim, and
the new cyber landscape only reinforces the need to address these issues on
the frontend. The bottom line is that affected customers are not going to
care if the attacker is China or a teenage hacker in the basement; they
will care that the attack happened in the first place. Thus, no matter the
motivation driving the attack or the responsible party behind it, it is
imperative that businesses exercise breach preparedness.

Have a Plan

If your business touches the Internet in any way (and all do) you have to
be thinking about information security and incident response—and the time
to do so is not after your first breach happens. Create policies and
procedures to address potential cyber incidents, and ensure that these
protocols encompass all relevant aspects of your organization (e.g., IT,
legal, compliance, public relations, etc.).  Furthermore, as previously
discussed, attackers are no longer focused solely on financial data;
therefore, companies must be sure that relevant policies contemplate
"non-traditional" data and incorporate procedures designed to address the
protection and handling of such data accordingly.  Companies must also
conduct regular reviews and periodic trainings to make certain that the
policies are up-to-date and well understood across the organization.

Regulators have repeatedly stated that there is no such thing as perfect
security and that just because a breach happens does not mean that a
company violated the law. What matters is that companies are making a
substantial effort to address and prepare for the cyber threat and are
taking matters like information security and privacy seriously. Testing, as
will be touched on below, is one of the main things regulators want to see
and have said that doing so will inform their prosecutorial discretion.
Having a comprehensive cyber incident response plan is the first step in
demonstrating a genuine concern for these matters.

Establish Relationships with Regulators, Law Enforcement and Other
Necessary Vendors

Just as with creating written policies, the time to establish relationships
with law enforcement, regulators, and third-party vendors is not mid- or
post-breach. Law enforcement has an interest in "catching the bad guys"
just as much as the company who suffered the breach, and this is especially
the case in instances where the culprit is a state actor. It is often
forgotten that consumers, businesses, law enforcement and regulators alike
all have a common interest in preventing data breaches and mitigating the
impacts of malicious cyber activity.

Similarly, it is critical that companies develop relationships and make
arrangements with third-party vendors, such as credit monitoring companies,
forensic firms, law firms, public relations firms, etc., in advance of a
major incident. Attempting to coordinate mass mailings, manage the
extremely high volume of inquiries that will be flowing into call centers,
and articulate meaningful and sound public statements at the height of a
crisis (all the while trying to determine what actually happened) only adds
"fuel to the fire." Establishing relationships with these entities before
you are obligated to engage them further substantiates that your
organization is taking these matters seriously and will be beneficial if
and when the time comes for their involvement down the road by facilitating
a more streamlined and manageable incident response process.

Test, Test, Test

A company can have a seemingly perfect plan on paper, but it can be
rendered meaningless if the policies are not effective and internalized by
key players in the process. Companies who test their incident response
policies have a significant advantage over those who first execute these
procedures amidst a real life crisis, from both a practical as well as a
liability standpoint.

Responding quickly and accurately to the public is critical. Delay
increases liability risk as well as costs.  For example, the California
Attorney General (AG) took action against a company that had a security
incident and waited approximately three months after completing forensics
and one month after finishing its contents inventory to notify impacted
customers. As a result, the company is now obligated to provide
notification to affected consumers on a "rolling basis," must notify as
soon as an impacted individual is identified, and must do so even if its
investigation is ongoing.1 In addition, less than a week into the most
recent major breach, at least six state AGs as well as state insurance
commissioners have launched investigations into the incident.

Cyber exercises allow organizations to identify gaps and rectify "problem
areas" before an actual breach occurs and, ideally, avoid repeating past
mistakes. Moreover, exercises further solidify that your company is taking
privacy and security seriously and can help to inform prosecutorial
discretion of regulators in the future (i.e., if regulators see that you
are regularly testing your cybersecurity policies and programs, they may be
less likely to launch an investigation or bring an action against you, as
they will be more concerned with those companies who suffered a breach but
were not testing). Finally, as prevalent as data breaches have become,
consumers are expecting that companies address and prepare for these risks.

It is important to note that cyber testing should be a continuous process.
As new threats emerge and as the landscape continues to change, companies
must continually test their programs to ensure that current vulnerabilities
are adequately addressed. Beth Dugan, Deputy Comptroller for Market Risk at
the Office of the Comptroller of the Currency, emphasizes that companies
must establish "a tone at the top" with periodic risk assessments to
develop "a sound security culture." Deputy Dugan went on to state:

"Recovery and restoration plans need to be re-evaluated for technology
environments that present different or new risks. Given the importance of
the cyber threats and their potential impact, they must be a priority and
addressed within a firm's risk governance framework and culture."

While the next target may be unknown, the next data breach is
inevitable—and what that company is doing now to prepare for that event
will dictate the severity and impending aftermath thereof.

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