rise in cyber attacks at us companies “this threat to our country’s economic and national...
TRANSCRIPT
Rise in cyber attacks at US companies
“This threat to our country’s economic and national security, and to companies’ bottom line, is real and it is growing.”Jay RockefellerSenator & Commerce
Committee Chairman
in letter to Chairman of SEC
April 9, 2013
Sources: http://thehill.com/blogs/hillicon-valley/technology/292919-rockefeller-asks-sec-to-step-up-cybersecurity-disclosureshttp://www.nytimes.com/2013/05/13/us/cyberattacks-on-rise-against-us-corporations.html?pagewanted=all&_r=0http://www.bloomberg.com/news/2013-05-14/iran-based-hackers-traced-to-cyber-attack-on-u-s-company.htmltechland.time.com/2013/09/26/major-u-s-data-providers-hit-by-cyber-attacks/http://www.npr.org/blogs/alltechconsidered/2013/08/30/217296301/firms-brace-for-possible-retaliatory-cyberattacks-from-syria
Magnitude of the Threat
• Cybercrimes are widespread, systemic and insidious• Annual cost is approximately $100 billion per year • Double-digit year-over-year growth in incidents• 90% of U.S. companies surveyed had detected
computer security breaches* • 74% acknowledged financial losses as a result
*Source: 2011 Computer Security Institute survey
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Verizon 2014 Data Breach Investigations Report (April 23, 2014)
• Nearly 200 breaches of payment systems used by retailers, hotels and restaurants
• Cyber education and “hygiene” critical in protecting payment systems
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Business Consequences
• Harm to business, “franchise” risk, company valuation, stock price, etc.
• Long-term financial and business damage • Theft of valuable intellectual property and business
plans• Theft of customer data and funds• Disruption of critical operations and corporate web
sites • Headline and reputational harm
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Potential costs
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Financial losses for company Average cost of $500,000 and 24 days to identify and resolve an attack
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Cyber crime cost companies $300bn - $1trillion total in 20131
Financial losses for shareholders ~5% drop in share price for public companies
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Brand reputation Value of brand can decline 17-31%, depending on nature and industry
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Your reputation
Sources: 1: 2013 Cost of Cyber Crime Study: United States, Ponemon Institute, October 2013, http://www.hpenterprisesecurity.com/ponemon-2013-cost-of-cyber-crime-study-reports2: “Anatomy of data breaches and their impact on market value,” Electronic International Interdisciplinary Conference 2012 http://www.eiic.cz/archive/?vid=1&aid=2&kid=20101-1313: Poneman Institute, Reputation Impact of Data Breach, October 2011 http://www.scmagazine.com/breaches-lead-to-major-reputation-brand-damage/article/215595/
Legal Consequences
• Governmental investigations and sanctions (SEC, DOJ, State Attorneys General, FTC, etc.)
• Consumer litigation• Class action lawsuits• Shareholder derivative demands• Special Board/Litigation Committees and potential
claims against the corporation
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Push for government regulation
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Cyber Intelligence Sharing & Protection Act To provide for the sharing of certain cyber threat intelligence and cyber
threat information between the intelligence community and cybersecurity entities, and for other purposes.
Passed House of Representatives in April; Senate will not vote but is drafting competing legislation
White House Executive Order – Improving Critical Infrastructure Cybersecurity (February 12, 2013) Establish top-to-bottom review of federal government’s efforts to defend
our nation’s information and infrastructure In conjunction, SEC Division of Corporation Finance issued guidance
instructing companies to disclose cyber attacks or risks associated with breaches if such attacks or breaches are likely to be material to investors
Proactive Response Plan
• Detailed, step-by-step Incident Response Plan• Analysis of insurance policies to determine coverage• Legal counsel and key service providers “on speed dial” • Crisis communication strategy and trained spokespeople• Government affairs/communications with regulators• Readiness exercises that simulate an actual attack• Business continuity planning• Security audits of key vendors• Litigation and regulatory preparedness
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Detailed, step-by-step Incident Response Plan
Adequate insurance coverage (consider Cyber policy)
Legal counsel and other service providers “on speed dial”
Crisis communication and Litigation strategies
Government affairs/communications with regulators
Readiness exercises that simulate an actual attack
Business continuity planning
Security audits of key vendors
Cybersecurity Strategic Planning Checklist
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Privacy and security guidelines for boards
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Establish ‘tone from the top’ through top-level
policies
Review roles and responsibilities; ensure
risk/accountability shared throughout organization
Ensure regular information flows to executives and board, including cyber incidents and breaches
Review annual IT budgets for privacy and security,
separate from CIO’s budget
Conduct annual reviews of enterprise security
program, review findings, ensure gaps and
deficiencies are addressed
Evaluate adequacy of security around board
materials and communication
Source: Governance of Enterprise Security: How Boards & Senior Executives are Managing Cyber Risks, CyLab 2012 Report – Carnegie Mellon University
Technology in the boardroom
In-person at Time of Meeting
Courier Delivery
Unsecure Email
Mobile App /
PDF Reader
Secure Email
Internal Portal
Secure Board Portal
PDF-BasedPortal
Cloud File
Sharing Service
s
Key concerns Privacy Limited administrator control Hacking and other security
vulnerabilities Purchase of additional secure
container technology
Board portal technology brings a new standard of cyber security
Control access to data
Data encrypted in transit and on all devices
Does not track Director’s electronic footprint
Regular, repeated third-party audits and penetration testing
Local redundancy, data back-up and recovery