Experts predict that heightened expectations among consumers,
advocates and regulators will require organizations to step up cyber
measures in the year ahead
Kroll, the global leader in risk mitigation and response solutions,
today released its third annual Cyber Security Forecast, a prediction of
the most significant cyber issues organizations will confront in 2014.
The latest forecast highlights seven trends identified by Kroll and
suggests that a changing tide in cyber standards, both social and legal,
will require organizations to take stronger actions and safeguards to
protect against reputational, financial and legal risks.
1. NIST and similar security frameworks will become the de facto
standards of best practices for all companies. Between the Snowden
fallout and increased scrutiny by the FTC and other regulators in the
U.S. and around the world, cyber security strategies that were largely
designed for companies that were part of the "critical infrastructure"
will become more of an expectation for everyone, from conducting an
effective risk assessment to implementing sound cyber security practices
and platforms. Whether compulsory or unstated, these standards will
drive organizational decision-making with regard to cyber security.
Organizations that don't follow suit may find themselves subject to
shareholder lawsuits, actions by regulators, and other legal
"This trend will move the U.S. in the direction of the EU, where there
is a greater recognition of privacy as a right," said Alan Brill, senior
managing director at Kroll. "As new laws evolve that reflect the NIST
guidelines and look more like the EU privacy directive, some U.S.
companies will find themselves ill-prepared to effectively respond to
the regulations. To minimize their risk, organizations will have to get
smart on these standards and make strategic business decisions that give
clients and customers confidence that their information is protected."
2. The data supply chain will pose continuing challenges to
even the most sophisticated enterprises. It is not unusual for
companies to store or process the data they collect by using third
parties. However the security that these third parties use to safeguard
their client's data is frequently not understood until there is a
breach. Additionally, companies may believe that their subcontractors
will notify and assist them in the event of a breach. Unfortunately,
this is often not the case. Companies will need to vet their
subcontractors closely and get specific as to the technical and legal
roles and responsibilities of their subcontractors in the event of a
"Kroll has responded to breaches where subcontractors not only failed to
provide timely notice that they were breached, but also refused to
cooperate with the investigation. Companies should know who they are
giving their data to and how it is being protected," said Tim Ryan,
managing director and Cyber Investigations practice leader. "This
requires technical, procedural, and legal reviews."
3. The malicious insider remains a serious threat, but will
become more visible."Et tu, Brute?" Whether it was Shakespeare's
Caesar or America's Benedict Arnold, we have long known the pain of
betrayal by those we trust. Information technology simply made the
betrayer's job easier. In 2014, a significant number - if not almost
half - of data breaches will come at the hands of people on the inside.
However, as the federal government and individual states add muscle to
privacy breach notification laws and enforcement regimes, the hidden
nature of insider attacks will become more widely known.
"There's a tremendous amount of data compromised today where the act is
never discovered or disclosed. People discount the insider threat
because it doesn't make the news. Instead, we see headlines about
external credit card breaches and theft of personally identifiable
information, because regulations mandate accountability and punishment
is expensive. The insider threat is insidious and complex. Thwarting it
requires collaboration by general counsel, information security, and
human resources. SEC breach disclosure of "material losses" may be the
model for rules requiring a company to be more transparent and
answerable for allowing bad actors to go unpunished," said Ryan.
4. Corporate board audit committees will take a greater
interest in cyber security risks and the organization's plans for
addressing them. With more and more data breaches - from theft of
trade secrets to loss of customer information - in the headlines,
corporate audit committees are beginning to focus on the connection
between cyber security and an organization's financial well-being. As
such, they will expand their attention beyond the financial audit
process to the organization's strategic plans for protecting non-public
information and risk mitigation plans for responding to a possible
breach. CIOs and IT leadership should prepare accordingly.
"Organizations recognize that it's their duty to protect against the
loss of information and its associated risks," said Brill. "As corporate
boards carry out their fiduciary responsibilities, they must also
protect the company from possible shareholder lawsuits that allege the
company's cyber security wasn't at a level that could be reasonably
viewed to be 'commercially reasonable' and that incident response plans
weren't in place to mitigate the risk. The challenge they face is
determining what is a reasonable level of security and response, and who
should make that call - is it their IT team, an industry expert, an
independent third party?"
5. Sophisticated tools will enable smart companies to quickly
uncover data breach details and react faster. Companies realize that
even the best firewalls and intrusion detection systems cannot stop all
attacks; the most secure firms experience computer security incidents.
But technological progress over the last 12 months will enable companies
to unravel events and see with near-real-time clarity what's happened to
their data and how much damage has been done. That is, if companies
choose to change.
"Most organizations have invested in preventative security technologies,
but remain unprepared to launch an effective response to a leak or
intrusion. Without the right tools and policies in place beforehand,
they find themselves suddenly under intense pressure to investigate,
track, and analyze events," said Ryan. "It takes more money and time to
scramble at the last minute. We've seen a dramatic improvement in
response technology over the last year. Companies have never had a
better opportunity to enhance their existing protocols with a
methodology that can mean an informed and timely response. There's no
reason not to be prepared."
6. New standards related to breach remediation are gaining traction
and will have a greater impact on corporate data breach response. Credit
monitoring will no longer be the gold standard in breach remediation in
2014, as lawmakers, consumer advocates and the public at large continue
to raise questions about the relevancy and thoroughness of this as a
stand-alone solution and demand a more effective alternative. While no
legal guidelines currently exist for consumer remediation, the FTC and
states like California and Illinois are already offering guidance that
suggest a risk-based approach to consumer remediation - one that matches
remedy to individual risk based on the unique circumstances of a breach
- will be the way of the future.
"The notion that credit monitoring is a panacea for all data breaches is
misguided. When you couple the myriad types of sensitive information
with the multitude of ways an identity can be stolen and used
fraudulently, there are many instances where credit monitoring will not
be helpful to a breach victim at all, including medical identity theft,
criminal impersonation, employment and tax fraud, etc.," said Brill.
"That's not to say that credit monitoring is useless because it's a
valuable tool when it aligns with the type of data exposed. Rather,
companies will need to gain a better understanding of their actual
breach risks, how the breach could actually affect their customers, and
the best way to remedy those specific risks and provide better
protection to the affected consumers."
7. As Cloud and BYOD adoption continues to accelerate, greater
accountability will be required for implementing policies and managing
technologies. The development and evolution of Cloud services and
BYOD has moved at a whirlwind pace, leaving IT departments scrambling to
get out in front of the technologies and employee usage. In 2014, IT
leaders will need to work closely with senior leadership and legal
counsel to adapt corporate policies in a way that addresses changing
legal risks, while effectively meeting the need of the organization.
"Up until now, cloud and BYOD adoption has been like the Wild West -
uncharted, unregulated, and few restrictions. However, we're seeing
courts issue rulings that include significant penalties where discovery,
disclosure and other legal obligations aren't being met because of the
use of these technologies," said Brill. "While it's implausible to
anticipate every possible risk presented by the use of the cloud and
BYOD, companies that have integrated these technologies into their
corporate policies, IT security, and risk management plans will be much
better prepared to fulfill their legal obligations. Organizations must
realize that even if they don't want to deal with this, they're
not going to have much choice."
For more information on Kroll, visit www.krollcybersecurity.com.
About the Experts
Timothy P. Ryan is a Managing Director with Kroll and the Cyber
Investigations Practice Leader for North America. Tim joined Kroll's
Cyber Investigations Practice after a distinguished career as a
Supervisory Special Agent with the Federal Bureau of Investigation
(FBI), where he supervised the largest Cyber Squad in the United States
and also led one of the FBI's largest computer forensic laboratories. An
expert in responding to all forms of computer crime, attacks, and abuse,
Tim has led complex cyber investigations involving corporate espionage,
advanced computer intrusions, denial of service, insider attacks,
malware outbreaks, Internet fraud and theft of trade secrets. Tim is an
adjunct professor at Seton Hall University School of Law.
Alan Brill is a Senior Managing Director for Kroll and founder of
Kroll's global high-tech investigations practice. With more than 33
years of consulting experience, Alan has assisted firms with a wide
range of technology security issues. He has worked on many large-scale
reviews of information security and cyber-incidents and has extensive
experience developing methodologies for collecting evidence from
corporate information systems and consults on everything from computer
intrusions to the misappropriation of intellectual property.
Additionally, Brill served as an instructor for the FBI, Secret Service,
Federal Law Enforcement Training Center, AICPA, and many others.
Kroll, the global leader in risk mitigation and response, delivers a
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Kroll is recognized for its expertise, with 40 years of experience
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more at http://www.krollcybersecurity.com.
Lauren Morrison, 202-857-2206