Larry Ponemon

We are pleased to present the 2015 Cost of Cyber Crime Study: United States, the sixth annual study of US companies. Sponsored by Hewlett Packard Enterprise, this year’s study is based on a representative sample of 58 organizations in both the public and private sectors. While our research focused on organizations located in the United States, most are  multinational corporations.

This is the fourth year Ponemon Institute has conducted cyber crime cost studies for companies in the United Kingdom, Germany, Australia and Japan and the second year for the Russian Federation. This year we added Brazil. The findings from this research are presented in separate reports.

The number of cyber attacks against US companies continues to grow in frequency and severity. Recent cyber attacks include Anthem Blue Cross and Blue Shield, United Airlines, Sabre Corp. and American Airlines. In the public sector, the Office of Personnel Management sustained an attack that resulted in the theft of information about more than 4.2 million current and former federal employees and attacks against the Internal Revenue Service resulted in the theft of personal information about more than 100,000 taxpayers.

While the companies represented in this research did not have cyber attacks as devastating as
these were, they did experience incidents that were expensive to resolve and disruptive to their
operations. For purposes of this study, we refer to cyber attacks as criminal activity conducted via the Internet. These attacks include stealing an organization’s intellectual property, confiscating online bank accounts, creating and distributing viruses on other computers, posting confidential business information on the Internet and disrupting a country’s critical national infrastructure.

Our goal is to quantify the economic impact of cyber attacks and observe cost trends over time.
We believe a better understanding of the cost of cyber crime will assist organizations in
determining the appropriate amount of investment and resources needed to prevent or mitigate the consequences of an attack.
In our experience, a traditional survey approach does not capture the necessary details required to extrapolate cyber crime costs. Therefore, we conduct field-based research that involves interviewing senior-level personnel about their organizations’ actual cyber crime incidents.

Approximately 10 months of effort is required to recruit companies, build an activity-based cost
model to analyze the data, collect source information and complete the analysis.

For consistency purposes, our benchmark sample consists of only larger-sized organizations (i.e., A minimum of approximately 1,000 enterprise seats). The study examines the total costs
organizations incur when responding to cyber crime incidents. These include the costs to detect, recover, investigate and manage the incident response. Also covered are the costs that result in after-the-fact activities and efforts to contain additional costs from business disruption and the loss of customers. These costs do not include the plethora of expenditures and investments made to sustain an organization’s security posture or compliance with standards, policies and regulations.

Figure 1 presents the estimated average cost of cyber crime for the seven countries represented in this research. These figures are converted into US dollars for comparative purposes. As shown, there is significant variation in total cyber crime costs among participating companies in the benchmark samples. The US sample reports the highest total average cost at $15 million and the RF sample reports the lowest total average cost at $2.4 million.

Key findings:

Cyber crimes continue to be very costly for organizations. We found that the mean
annualized cost for 58 benchmarked organizations is $15 million per year, with a range from $1.9 million to $65 million each year per company. Last year’s mean cost per benchmarked
organization was $12.7 million. Thus, we observe a $2.7 million (19 percent) increase in mean
value. The net increase over six years in the cost of cyber crime is 82 percent.

Cyber crime cost varies by organizational size. Results reveal a positive relationship between
organizational size (as measured by enterprise seats) and annualized cost. However, based on
enterprise seats, we determined that small organizations incur a significantly higher per capita
cost than larger organizations ($1,571 versus $667).

The cost of cyber crime increases for all industries. The average annualized cost of cyber
crime appears to vary by industry segment, where organizations in financial services, energy &
utilities and defense & aerospace experience a higher cost of cyber crime. Organizations in the
consumer products and hospitality industries on average experience a much lower cost of cyber crime.

The most costly cyber crimes are those caused by denial of services, malicious insiders
and malicious code. These account for more than 50 percent of all cyber crime costs per
organization on an annual basis. Mitigation of such attacks requires enabling technologies such
as SIEM, intrusion prevention systems, applications security testing solutions and enterprise GRC solutions.

Cyber attacks can get costly if not resolved quickly. Results show a positive relationship
between the time to contain an attack and organizational cost. Please note that resolution does
not necessarily mean that the attack has been completely stopped. For example, some attacks
remain dormant and undetected (i.e., modern day attacks).

The average time to resolve a cyber attack was 46 days, with an average cost to participating organizations of $1,988,554 during this 46-day period. This represents a 22 percent increase from last year’s estimated average cost of $1,593,627, which was based upon a 45-day resolution period. Results show that malicious insider attacks can take an average of
approximately 63 days to contain.

Information theft continues to represent the highest external cost, followed by the costs
associated with business disruption. On an annualized basis, information theft accounts for
42 percent of total external costs. Costs associated with disruption to business or lost productivity account for 36 percent of external costs (up 4 percent from the six-year average).

Detection and recovery are the most costly internal activities. On an annualized basis,
detection and recovery combined account for 55 percent of the total internal activity cost with
cash outlays and direct labor representing the majority of these costs. However, since 2013 this has declined from 40 percent to 36 percent in 2015. The application layer has increased in budget allocation from 15 percent in 2013 to 20 percent in 2015.

Deployment of security intelligence systems makes a difference. The cost of cyber crime is
moderated by the use of security intelligence systems (including SIEM). Findings suggest
companies using security intelligence technologies were more efficient in detecting and
containing cyber attacks. As a result, these companies enjoyed an average cost savings of $3.7
million when compared to companies not deploying security intelligence technologies.
Companies deploying security intelligence systems experienced a substantially higher
ROI at 32 percent than all other technology categories presented. Also significant are the
estimated ROI results for companies that extensively deploy encryption technologies (27 percent) and advanced perimeter controls such as UTM, NGFW, IPS with reputation feeds (15 percent).

Deployment of enterprise security governance practices moderates the cost of cyber
crime. Findings show companies that invest in adequate resources, employ certified or expert
staff and appoint a high-level security leader have cyber crime costs that are lower than
companies that have not implemented these practices. Specifically, a sufficient budget can save
an average of $2.8 million, employment of certified/expert security personnel can save $2.1
million and the appointment of a high-level security leader can reduce costs by $2 million.

Click here to read the rest of the report.

Bob Sullivan

A Volkswagen executive recently proclaimed that by 2020, all the automaker’s cars will be smartphones on wheels.

Turns out, Volkswagen cars were a little too smart for their own good. The Environmental Protection Agency on Friday accused the firm of using software to evade U.S.. emissions testing.  Computer code known as a “defeat device” recognized when the car was being tested and kicked on full emissions control systems.  The rest of the time the car chose…let’s say … “performance mode” over Earth-friendly mode.

The Obama administration has ordered the German automaker to recall half a million 4-cylinder Volkswagen and Audi cars from model years 2009-2015 cars and reprogram them.  The firm could also face fines that could range into the billions.  (At the moment, the firm hasn’t issued a statement.)

If accurate, such brazen use of software to evade federal law not only shocks the senses, it raises serious consumer protection issues. Many drivers are today rightly horrified that they were tricked into polluting the planet.  They also were driving cars with with performance that was artificially boosted — perhaps drivers would have chosen other cars if test drives of competitors’ models had been a fair fight.

In short, consumers have been hacked. Their cars’ software was doing things without their knowledge, just as if a virus writer had dropped a Trojan on their machines.

Recently, we talked about the very real fear drivers expressed to Kelley Blue Book — 4 out of 5 said car hacking will be a real problem in the next three years.

The survey referred to hacking by outside criminals, but there’s another kind of hacking going on here — when companies hack their own consumers.  Products we buy are now full of mysterious software, often instructed to do things we never imagined. TVs listen to our conversations; dating sites trick us into flirting with bots; our social networks and grocery stores talk about us; our web software tattles on us to the highest bidder;  and our cars trick emissions officials.

During an age when the very nature of advertising is constantly under siege, it makes sense that firms which already have a presence in our lives try to get a few more pieces of data out of us, and monetize that relationship just a little bit more. The temptation, if not desperation, is great.

But Friday’s Volkswagen story should be the beginning of some really serious soul searching, perhaps even a turning point for the Internet of Things.  It’s inevitable: our light bulbs, toasters, door bells, and our cars will all communicate some day soon.  We need a rock-solid ethic — not just laws, but a social morality — that machines should never do things unless people know all about them.  People should run the gadgets, not the other way around.

If we build a world of sneaky machines, we will deserve the consequences.

Larry Ponemon

With cyber attacks growing increasingly frequent and complex, cybersecurity strategies are shifting: while prevention is still important, it is more about prevailing. Cyber resilience supports businesses efforts to ensure they’ll continue to thrive despite the increased likelihood of a data
breach.

That’s the essence of cyber resilience – aligning prevention, detection, and response capabilities to manage, mitigate, and move on from cyberattacks. But are businesses ready today to face cyber threats head on? To find out, Ponemon Institute, with sponsorship from Resilient Systems, surveyed 623 IT and IT security practitioners about their organizations’ approach to becoming resilient to security threats. The findings are presented in the study, The Cyber Resilient Organization: Learning to Thrive against Threats.

In the context of this research, we define cyber resilience as the capacity of an enterprise to
maintain its core purpose and integrity in the face of cyberattacks. A cyber resilient enterprise is
one that can prevent, detect, contain and recover from a plethora of serious threats against data, applications and IT infrastructure. A cyber resilient enterprise successfully aligns continuity management and disaster recovery with security operations in a holistic fashion.

Figure 1 shows why cyber resilience is emerging as the standard for which to strive. The
protection of high-value intellectual property and compliance with laws and
regulations are best achieved with cyber resilience, according to 91 percent and 90 percent of respondents, respectively. Cyber resilience also is considered to enhance brand value and reputation (75 percent of respondents) and maximize employee productivity (72 percent of respondents).

Key takeaways include the following:
The state of cyber resilience needs improvement. Only 25 percent of respondents rate their
organizations’ cyber resilience as high (7+ on a scale of 1 = low resilience to 10 = high resilience)
based on the definition described in the introduction. Moreover, a key component of cyber
resiliency is the ability to recover from a cyber attack and only 31 percent rate this as high.
Prevention is also rated fairly low at 33 percent. The ability to detect and contain cyber attacks is rated much higher by 45 percent and 47 percent of respondents, respectively.

Only 25 percent of respondents rate their organizations’ cyber resilience as high based on the definition described in the introduction. Moreover, a key component of cyber resiliency is the ability to recover from a cyber attack and only 32 percent rate this as high. Prevention is also rated fairly low. The ability to detect and contain cyber attacks are rated much higher by 44
percent and 47 percent of respondents, respectively.

Human error is the enemy of cyber resiliency. The IT-related threat believed to have the
greatest impact on an organization’s ability to be cyber resilient and the most likely to occur is
human error. Persistent attacks are considered to have the second greatest impact on cyber
resiliency but are less likely to occur. Planning and preparedness is key to cyber resiliency. It is interesting that a lack of knowledgeable staff or enabling technologies is not as much a hindrance as not devoting the necessary time and resources to planning and preparedness (65 percent of respondents) or insufficient risk awareness, analysis and assessments (55 percent of respondents).

The majority of companies are not prepared to respond to a cyber security incident.
Despite the importance to preparedness to cyber resilience, 60 percent of respondents either say their organization either does not have a cybersecurity incident response plan (CSIRP) (30
percent of respondents) or it is informal or “ad hoc” (30 percent of respondents). Only 17 percent of respondents have a well-defined CSIRP that is applied consistently across the entire
enterprise.

A high level of cyber resiliency is difficult to achieve if no one function clearly owns the
responsibility. Only 24 percent of respondents say the Chief Information Officer (CIO) is
accountable for making their organizations’ resilient to cyber threats. This is followed by 20
percent who say it is the business unit leader and 10 percent who say no one person has overall
responsibility.

Collaboration among business functions is essential to a high level of cyber resilience but it rarely happens. Only 15 percent of respondents say collaboration is excellent. Almost one third of respondents (32 percent of respondents) say collaboration is poor or non-existent.
Leadership and responsibility are critical to improving collaboration.

Organizational factors hinder efforts to achieve a high level of cyber resilience. The
importance of cyber resilience is often not recognized by senior management. Only 44 percent of respondents believe their organizations’ leaders recognize that cyber resilience affects enterprise risks and brand image. About half (50 percent of respondents) say cyber resilience does affect revenues. Other factors that are a hindrance are insufficient funding and staffing.
Preparedness and agility are most important to achieving a high level of cyber resilience.
Respondents were asked to rank those factors considered important to achieving a high level of
cyber resilience. Once again preparedness to deal with cyber threats is critical followed by agility and a strong security posture.

Technologies that enable efficient backup and disaster recovery operations are by far
most important to building a cyber resilient enterprise. Seventy-seven percent of
respondents say technologies that support efficient backup and disaster recovery operations are essential or very important. Also important are technologies that provide advance warning about threats and attackers (59 percent of respondents) and those that provide intelligence about the threat landscape (58 percent of respondents).

Read more about resilience, and a Q&A with Larry, at ResiliantSystems.com

Larry Ponemon

CMOs know that website performance in turn drives marketing performance. While marketers
control some of the factors that sharpen the online experience—accurate content and prudent
use of banner ads, for example—the more technical factors are in the hands of colleagues in IT.
Ideally, Marketing and IT collaborate to deliver excellence. Doing that means knowing what visitors like, and don’t.

The purpose of this research, conducted by Ponemon Institute and sponsored by Neustar is to understand the online experience from the customer’s point of view. What expectations do
consumers have for the reliability of the website, security of information they share, and
availability of information? What is the tolerance or tipping point for problems like unavailable
sites, slow-loading pages, or inscrutable navigation?

We surveyed 761 consumers in the United States between the ages of 18 and 65+. On average,
respondents spend 59 hours per week online mostly doing email, shopping, and social
networking. Some respondents do more advanced activities such as posting blogs and creating
websites.

The findings reveal that consumers expect a high level of website performance—and their
frustrations are aimed at marketers and engineers alike.

Perceptions about a website’s security can decide whether consumers stay or go. As
shown in Figure 1, 78 percent of respondents say slow load times cause
them to worry about security. However, just over half of respondents (54 percent
of respondents) are concerned about the reliability of slow loading web pages. The
findings in this research also reveal that 69 percent of respondents have left a
website because of security concerns. Other concerns, but to a lesser extent, are
annoyance with feature ads that interfere with content (55 percent of respondents)
and feature ads that redirect them to different sites (52 percent of respondents).

Seventy-one percent of respondents say that data breaches negatively impacted their perception of company’s brands. On average, respondents have received two notifications from
organizations telling them that their personal information was lost, stolen or compromised. Even after more than a year, 24 percent of respondents say they still do not perceive those companies’ brands in a positive light.

Overall, fifty-five percent of respondents believe security is important to the perception of a
company’s brand and 50 percent say the same about privacy (protection of identity and other
personal information). Not surprising, respondents overwhelmingly expect financial sites to be
secure (95 percent of respondents).

A bad experience is measured in dollars, not just performance metrics. Sixty-one percent of
respondents say they would be willing to give a website that goes offline only two chances before giving up. Consumers are most likely to discontinue using unavailable sites in financial services (80 percent of respondents) and retail (59 percent).

They are also willing to wait no more than an average of 10 seconds to wait for a website to load.

In fact, seventy-eight percent of respondents are very concerned about the security of web pages that load longer than expected. Forty-one percent of respondents say response time is most important when making a payment (at checkout) and navigating to other web pages within the site (23 percent).

Read the full report at Neustar.

Charlie Miller, who helped find the flaw, installing the patch. Click for Twitter feed.

Bob Sullivan

Consumers are becoming more and more aware that hacking isn’t just a gadget nuisance any more.  Computer security problems, like viruses, increasingly come with real-world consequences — like the potential to screw with an airplane’s flight system, or more recently, a car.  Wired’s Andy Greenberg last month revealed to the world the latest hacking horrible — security researchers were able to “kill” a Jeep while he was in it.

“Though I hadn’t touched the dashboard, the vents in the Jeep Cherokee started blasting cold air at the maximum setting, chilling the sweat on my back through the in-seat climate control system,” Greenberg wrote. “Next the radio switched to the local hip hop station and began blaring Skee-lo at full volume. I spun the control knob left and hit the power button, to no avail. Then the windshield wipers turned on, and wiper fluid blurred the glass.”

Later, the hackers demonstrated they could stop and steer the car remotely using a software vulnerability.  Yikes.

The digital carjacking incident incident was a huge embarrassment for Jeep maker Fiat Chrysler, which recalled 1.4 million cars to fix the software.

But pity poor Chrysler, which just happened to be the first car maker to end up with egg on its face.  Increasingly, cars are run by computers, and increasingly, that means hacks like this are inevitable.

Consumers  seem to implicitly understand this.  Kelley Blue Book jumped at the news to churn out a survey of users showing that, yes, they all know about the Jeep incident, and yes, they all (Ok, 4 out of 5) think car hacking will be a problem within the next three years. Much to my surprise, many even said they’d pay for hacking protection services, with $8 a month being the preferred cost.  I smell a marketing opportunity for antivirus makers!  I also smell a rat — why should consumers have to pay extra to keep computer criminals out of their cars?  (And while I’m at it, could I make a final, fruitless plea to save at least some dashboard gauges and knobs?  I *hate* digital displays.)

On to the results:

• 72 percent said they are aware of the recent Jeep Cherokee hacking incident.
• 41 percent said they will consider this recent vehicle hacking incident when buying/leasing their next car.
• 78 percent said vehicle hacking will be a frequent problem in the next three years or less.
• 33 percent classified vehicle hacking as a “serious” problem; 35 percent classified it as a “moderate” problem.
• 58 percent do not think there will ever be a permanent solution to vehicle hacking.
• 41 percent think pranking is the most common reason for hacking a vehicle; 37 percent think theft is the most common reason for hacking a vehicle.
• 81 percent think the vehicle manufacturer is most responsible to secure a vehicle from hacking; only 11 percent consider themselves most responsible to secure a vehicle from hacking, and 5 percent see it as the responsibility of their wireless provider.
• 64 percent would prefer to go into a dealership to get a vehicle’s security patch installed; only 24 percent would prefer to do it wirelessly, and a mere 12 percent would prefer to have the software mailed so they could install it themselves.
• 47 percent said they would go to a dealership “immediately” if they knew they had to install a security patch to protect their vehicle from hacking; 31 percent said “within a week,” and 17 percent said “within a month.”
• 44 percent would prefer to be notified via mail, and 41 percent would prefer to be notified via e-mail, in the event their vehicle was recalled.  Only 11 percent preferred notification via a phone call, and 5 percent preferred text.
• 52 percent indicated they would be willing to pay for a monthly subscription to ensure that their vehicle would be completely protected from hacking, with $8 being the average respondents would be willing to pay each month.

“Technology offers a wide range of enhanced convenience for today’s new vehicle buyers, but it also offers the increasing potential for unauthorized access and control,” said Karl Brauer, senior analyst for Kelley Blue Book.  “Cyber-security is still a relatively new area of specialization for automakers, but it’s one they need to take seriously to ensure they are ahead of the curve.  If automotive engineers find themselves playing catch-up in this field, it could have disastrous results for both consumers and the industry.”

Charlie Miller, who helped find the flaw, installing the patch. Click for Twitter feed.

Bob Sullivan

Consumers are becoming more and more aware that hacking isn’t just a gadget nuisance any more.  Computer security problems, like viruses, increasingly come with real-world consequences — like the potential to screw with an airplane’s flight system, or more recently, a car.  Wired’s Andy Greenberg last month revealed to the world the latest hacking horrible — security researchers were able to “kill” a Jeep while he was in it.

“Though I hadn’t touched the dashboard, the vents in the Jeep Cherokee started blasting cold air at the maximum setting, chilling the sweat on my back through the in-seat climate control system,” Greenberg wrote. “Next the radio switched to the local hip hop station and began blaring Skee-lo at full volume. I spun the control knob left and hit the power button, to no avail. Then the windshield wipers turned on, and wiper fluid blurred the glass.”

Later, the hackers demonstrated they could stop and steer the car remotely using a software vulnerability.  Yikes.

The digital carjacking incident incident was a huge embarrassment for Jeep maker Fiat Chrysler, which recalled 1.4 million cars to fix the software.

But pity poor Chrysler, which just happened to be the first car maker to end up with egg on its face.  Increasingly, cars are run by computers, and increasingly, that means hacks like this are inevitable.

Consumers  seem to implicitly understand this.  Kelley Blue Book jumped at the news to churn out a survey of users showing that, yes, they all know about the Jeep incident, and yes, they all (Ok, 4 out of 5) think car hacking will be a problem within the next three years. Much to my surprise, many even said they’d pay for hacking protection services, with $8 a month being the preferred cost.  I smell a marketing opportunity for antivirus makers!  I also smell a rat — why should consumers have to pay extra to keep computer criminals out of their cars?  (And while I’m at it, could I make a final, fruitless plea to save at least some dashboard gauges and knobs?  I *hate* digital displays.)

On to the results:

• 72 percent said they are aware of the recent Jeep Cherokee hacking incident.
• 41 percent said they will consider this recent vehicle hacking incident when buying/leasing their next car.
• 78 percent said vehicle hacking will be a frequent problem in the next three years or less.
• 33 percent classified vehicle hacking as a “serious” problem; 35 percent classified it as a “moderate” problem.
• 58 percent do not think there will ever be a permanent solution to vehicle hacking.
• 41 percent think pranking is the most common reason for hacking a vehicle; 37 percent think theft is the most common reason for hacking a vehicle.
• 81 percent think the vehicle manufacturer is most responsible to secure a vehicle from hacking; only 11 percent consider themselves most responsible to secure a vehicle from hacking, and 5 percent see it as the responsibility of their wireless provider.
• 64 percent would prefer to go into a dealership to get a vehicle’s security patch installed; only 24 percent would prefer to do it wirelessly, and a mere 12 percent would prefer to have the software mailed so they could install it themselves.
• 47 percent said they would go to a dealership “immediately” if they knew they had to install a security patch to protect their vehicle from hacking; 31 percent said “within a week,” and 17 percent said “within a month.”
• 44 percent would prefer to be notified via mail, and 41 percent would prefer to be notified via e-mail, in the event their vehicle was recalled.  Only 11 percent preferred notification via a phone call, and 5 percent preferred text.
• 52 percent indicated they would be willing to pay for a monthly subscription to ensure that their vehicle would be completely protected from hacking, with $8 being the average respondents would be willing to pay each month.

“Technology offers a wide range of enhanced convenience for today’s new vehicle buyers, but it also offers the increasing potential for unauthorized access and control,” said Karl Brauer, senior analyst for Kelley Blue Book.  “Cyber-security is still a relatively new area of specialization for automakers, but it’s one they need to take seriously to ensure they are ahead of the curve.  If automotive engineers find themselves playing catch-up in this field, it could have disastrous results for both consumers and the industry.”

Ashley Madison website. Turns out “shhhh” isn’t effective security.

Bob Sullivan

Some secrets are more valuable than others. And some secrets are more valuable TO others.  In perhaps the most predictable extortion hack ever, cheating website Ashley Madison has confirmed to Brian Krebs that some of its data has been stolen.  It now appears that tens of millions of people are at risk of being exposed.  As you’ve already deduced, Ashley Madison users are not really all that worried about having the credit card numbers stolen and used for fraud.

According to Krebs, the hackers — who go by the name The Impact Team — say they will slowly dribble out data from the site until its owners take the cheating site, and companion site “Established Men,” offline.

“Avid Life Media has been instructed to take Ashley Madison and Established Men offline permanently in all forms, or we will release all customer records, including profiles with all the customers’ secret sexual fantasies and matching credit card transactions, real names and addresses, and employee documents and emails,” Krebs quotes the hackers from a post they left behind.

This is hacking 2.0.  It’s not about the data, it’s about the context.  Using stolen data, like credit cards, to get money is hard work.  Extorting someone who has more to lose than money is a lot more profitable.

When Sony was hit by a combination hack / extortion plot in December, I described this new era of hacking.  Sony corporate emails were stolen by hackers, who then embarrassed the heck out of the firm. Execs said inappropriate, even racist, things.  Actresses were insulted and underpaid.  It all reminded me of a smaller, but no less scary, incident several years ago involving a government contractor named HB Gary, which had Anonymous similarly terrorized.

Criminals don’t have to steal financial information to make money hacking. They just have to steal any data that’s valuable to anyone.

Making matters worse for corporate security teams is this reality: In recent years, they’ve all invested heavily in protecting financial data, spending money fortifying the most valuable data.  Credit cards, yes. Email servers, maybe not. Slowly, this will change.  But right now, every executive at every firm in the country should be hard at work doing an honest assessment about what their valuable data really is.   Then, they need to invest wisely in protecting data that might seem inconsequential if stolen in one context, but a disaster of stolen in another.  Because every company will have to plan for ransom and extortion requests now.

It’s hard to understand why Ashley Madion’s owners didn’t see this coming…particularly when AdultFriendFinder.com was hacked two months ago.  But that is how these things go.

The next question in this incident is: How will Avid Life Media get out of this mess?  One possibility is paying a ransom.  A few months ago, I started researching ransom and what I’ll call “data kidnapping” after I’d gotten a whiff this was going on.  The raging success of malware called cryptolocker, which forced victims to pay a few hundred dollars’ ransom to unscramble their data, certainly proved extortion demands can work.  Cryptolocker made $27 million just in its first two months, from both home users and small organizations. 

When I talked to Lisa Sotto, a cyberlaw expert at Hunton & Williams,  about this recently, she said she believed things were only going to get worse.

“That’s exactly how I see it going. Companies and individuals paying, because they potentially have no choice,” Sotto said to me. In fact, ransoms are already common, she said. “I do not believe there is a heck of a lot of negotiation involved…They are not asking for exorbitant amounts, so for the most part, what I hear is people are paying.”

In February, a blog post by Christopher Arehart made me even more convinced that ransom and extortion are hacking 2.0. Arehard is is the global product manager for crime, kidnap/ransom and extortion, and workplace violence expense insurance for the Chubb Group of Insurance Companies.  In his post, he warned companies that cyber-insurance policies often don’t cover extortion situations.

“Cyber liability insurance policies may  help companies deal with first-party cleanup costs, the cost of privacy notifications and lawsuit expenses, but these policies may only provide limited assistance with extortion threats. Extortion threats should be investigated and handled by professionals and small businesses need to know where to turn for assistance,” he wrote.

He then wrote that many businesses should consider adding the same kind of insurance that multinational companies purchase when they must send employees into dangerous parts of the world.

“A kidnap and ransom policy — technically a kidnap, ransom and extortion (KRE) policy — responds when an extortion threat has been made against a company, before there has been any data breach,” he wrote.

I tried to ask Arehart and Chubb about incidents involving extortion or “data kidnapping,” but the firm just pointed me back to his blog.

“Although some criminals eventually back down and do not follow through with their extortion threats, some threats do get carried out and these incidents can often be expensive. The tools available to criminals are vast and they have the power of the Internet behind them. Businesses, especially small businesses, need access to security consultants to help them manage these threats. A KRE policy would provide small businesses with access to those professionals.”

In other words, kidnapping and ransom policies aren’t just for dealing with employees who might run into the Mexican drug cartel any more.

They are for anyone who has data that might be valuable to someone, in some future context.  Secrets are almost always valuable to someone.

Ashley Madison website. Turns out “shhhh” isn’t effective security.

Bob Sullivan

Some secrets are more valuable than others. And some secrets are more valuable TO others.  In perhaps the most predictable extortion hack ever, cheating website Ashley Madison has confirmed to Brian Krebs that some of its data has been stolen.  It now appears that tens of millions of people are at risk of being exposed.  As you’ve already deduced, Ashley Madison users are not really all that worried about having the credit card numbers stolen and used for fraud.

According to Krebs, the hackers — who go by the name The Impact Team — say they will slowly dribble out data from the site until its owners take the cheating site, and companion site “Established Men,” offline.

“Avid Life Media has been instructed to take Ashley Madison and Established Men offline permanently in all forms, or we will release all customer records, including profiles with all the customers’ secret sexual fantasies and matching credit card transactions, real names and addresses, and employee documents and emails,” Krebs quotes the hackers from a post they left behind.

This is hacking 2.0.  It’s not about the data, it’s about the context.  Using stolen data, like credit cards, to get money is hard work.  Extorting someone who has more to lose than money is a lot more profitable.

When Sony was hit by a combination hack / extortion plot in December, I described this new era of hacking.  Sony corporate emails were stolen by hackers, who then embarrassed the heck out of the firm. Execs said inappropriate, even racist, things.  Actresses were insulted and underpaid.  It all reminded me of a smaller, but no less scary, incident several years ago involving a government contractor named HB Gary, which had Anonymous similarly terrorized.

Criminals don’t have to steal financial information to make money hacking. They just have to steal any data that’s valuable to anyone.

Making matters worse for corporate security teams is this reality: In recent years, they’ve all invested heavily in protecting financial data, spending money fortifying the most valuable data.  Credit cards, yes. Email servers, maybe not. Slowly, this will change.  But right now, every executive at every firm in the country should be hard at work doing an honest assessment about what their valuable data really is.   Then, they need to invest wisely in protecting data that might seem inconsequential if stolen in one context, but a disaster of stolen in another.  Because every company will have to plan for ransom and extortion requests now.

It’s hard to understand why Ashley Madion’s owners didn’t see this coming…particularly when AdultFriendFinder.com was hacked two months ago.  But that is how these things go.

The next question in this incident is: How will Avid Life Media get out of this mess?  One possibility is paying a ransom.  A few months ago, I started researching ransom and what I’ll call “data kidnapping” after I’d gotten a whiff this was going on.  The raging success of malware called cryptolocker, which forced victims to pay a few hundred dollars’ ransom to unscramble their data, certainly proved extortion demands can work.  Cryptolocker made $27 million just in its first two months, from both home users and small organizations. 

When I talked to Lisa Sotto, a cyberlaw expert at Hunton & Williams,  about this recently, she said she believed things were only going to get worse.

“That’s exactly how I see it going. Companies and individuals paying, because they potentially have no choice,” Sotto said to me. In fact, ransoms are already common, she said. “I do not believe there is a heck of a lot of negotiation involved…They are not asking for exorbitant amounts, so for the most part, what I hear is people are paying.”

In February, a blog post by Christopher Arehart made me even more convinced that ransom and extortion are hacking 2.0. Arehard is is the global product manager for crime, kidnap/ransom and extortion, and workplace violence expense insurance for the Chubb Group of Insurance Companies.  In his post, he warned companies that cyber-insurance policies often don’t cover extortion situations.

“Cyber liability insurance policies may  help companies deal with first-party cleanup costs, the cost of privacy notifications and lawsuit expenses, but these policies may only provide limited assistance with extortion threats. Extortion threats should be investigated and handled by professionals and small businesses need to know where to turn for assistance,” he wrote.

He then wrote that many businesses should consider adding the same kind of insurance that multinational companies purchase when they must send employees into dangerous parts of the world.

“A kidnap and ransom policy — technically a kidnap, ransom and extortion (KRE) policy — responds when an extortion threat has been made against a company, before there has been any data breach,” he wrote.

I tried to ask Arehart and Chubb about incidents involving extortion or “data kidnapping,” but the firm just pointed me back to his blog.

“Although some criminals eventually back down and do not follow through with their extortion threats, some threats do get carried out and these incidents can often be expensive. The tools available to criminals are vast and they have the power of the Internet behind them. Businesses, especially small businesses, need access to security consultants to help them manage these threats. A KRE policy would provide small businesses with access to those professionals.”

In other words, kidnapping and ransom policies aren’t just for dealing with employees who might run into the Mexican drug cartel any more.

They are for anyone who has data that might be valuable to someone, in some future context.  Secrets are almost always valuable to someone.

Larry Ponemon

Security risks are pervasive and becoming more difficult to prevent or minimize. Without the support of senior management, much needed investments in people, processes and technologies are not made. The findings of the research reveal the difficulty IT security practitioners face in achieving a stronger security posture because of inadequate budgets and the lack of C-level and boards of directors’ involvement in decisions related to IT security investments. This suggests the importance of IT security practitioners becoming more integral to their companies’ IT spending and investment process.

Ponemon Institute is pleased to present the 2015 Global Study on IT Security Spending & Investments. The purpose of this study is to understand how companies are investing in technologies, qualified personnel and governance practices to strengthen their security posture within the limitations of their budget.

We surveyed 1,825 IT management and IT security practitioners in the following global regions: North America, Europe, Middle East, Africa (EMEA), Asia, Pacific, Japan (APJ) and Latin America (LATAM) in a total of 42 countries. All respondents are involved to some degree in securing or overseeing the security of their organizations’ information systems or IT infrastructure.

They are also familiar with their organization’s budget process and/or spending on IT security activities. According to participants in this research, boards of directors and C-level executives are not often briefed and often not given necessary information to help them make informed budgeting decisions. As shown in Figure 1, 51 percent of respondents do not agree (34 percent) or are unsure (17 percent) that C-level executives are briefed on security priorities and what investments in technology and personnel need to be made.

Fully 64 percent of respondents do not agree (41 percent) or are unsure (23 percent) their boards of directors are made fully aware of security priorities and required investments. The study reveals the following problems with today’s approach to security spending and investments:

• The CEO and boards of directors are rarely believed to be most responsible for ensuring IT security objectives are achieved. Very few participants say their CEO or boards of directors are held most responsible for ensuring IT security objectives are met (6 percent and 3 percent of respondents, respectively). As a consequence of this lack of accountability, only 24 percent of respondents strongly agree that their organization sees security as one of the top two strategic priorities across the enterprise.

• Who owns the IT security budget? It is not the CISO. Only 19 percent of respondents say the IT security leader has control over how resources are allocated. Instead it is the CIO/CTO and business leaders who own the budget. This suggests the importance of security leaders learning how to influence these individuals if they are going to change how budgets are allocated.

• Security spending is not on the board’s agenda. Despite the increase in well-publicized security breaches, IT security investments are not getting the board’s attention and support. Without support from C-level executives and boards it is understandable that 50 percent of respondents say budgets will be flat or decreasing in the next two years.

• The budgeting process is too complex. The majority of respondents say the annual budget process is too complex (53 percent of respondents). This might lead to poor investment decisions such as purchasing technologies that do not lead to a stronger security posture or delayed investment in much needed resources.
• Many organizations are stuck in a middle stage of maturity. Necessary funding and proper planning are critical to move to a more mature security posture. Only 43 percent of respondents say their organizations’ IT security budgets are adequate and most security programs are only partially deployed.

• Companies are disappointed in technology purchases. According to the research, a lack of qualified personnel is undermining the effectiveness of technology solutions and the overall security posture of organizations. This is mainly because they don’t have the necessary in-house expertise and vendor support. Such buyer’s remorse may discourage companies from considering state-of-the art technologies.

• Compliance with regulations is difficult without adequate resources. The majority of respondents (58 percent of respondents) do not have sufficient resources to achieve compliance with security standards and laws. Non-compliance puts organizations at risk for legal action and fines.

Want to read the rest of this report?  Download it from Dell here. 

Larry Ponemon

Security risks are pervasive and becoming more difficult to prevent or minimize. Without the support of senior management, much needed investments in people, processes and technologies are not made. The findings of the research reveal the difficulty IT security practitioners face in achieving a stronger security posture because of inadequate budgets and the lack of C-level and boards of directors’ involvement in decisions related to IT security investments. This suggests the importance of IT security practitioners becoming more integral to their companies’ IT spending and investment process.

Ponemon Institute is pleased to present the 2015 Global Study on IT Security Spending & Investments. The purpose of this study is to understand how companies are investing in technologies, qualified personnel and governance practices to strengthen their security posture within the limitations of their budget.

We surveyed 1,825 IT management and IT security practitioners in the following global regions: North America, Europe, Middle East, Africa (EMEA), Asia, Pacific, Japan (APJ) and Latin America (LATAM) in a total of 42 countries. All respondents are involved to some degree in securing or overseeing the security of their organizations’ information systems or IT infrastructure.

They are also familiar with their organization’s budget process and/or spending on IT security activities. According to participants in this research, boards of directors and C-level executives are not often briefed and often not given necessary information to help them make informed budgeting decisions. As shown in Figure 1, 51 percent of respondents do not agree (34 percent) or are unsure (17 percent) that C-level executives are briefed on security priorities and what investments in technology and personnel need to be made.

Fully 64 percent of respondents do not agree (41 percent) or are unsure (23 percent) their boards of directors are made fully aware of security priorities and required investments. The study reveals the following problems with today’s approach to security spending and investments:

• The CEO and boards of directors are rarely believed to be most responsible for ensuring IT security objectives are achieved. Very few participants say their CEO or boards of directors are held most responsible for ensuring IT security objectives are met (6 percent and 3 percent of respondents, respectively). As a consequence of this lack of accountability, only 24 percent of respondents strongly agree that their organization sees security as one of the top two strategic priorities across the enterprise.

• Who owns the IT security budget? It is not the CISO. Only 19 percent of respondents say the IT security leader has control over how resources are allocated. Instead it is the CIO/CTO and business leaders who own the budget. This suggests the importance of security leaders learning how to influence these individuals if they are going to change how budgets are allocated.

• Security spending is not on the board’s agenda. Despite the increase in well-publicized security breaches, IT security investments are not getting the board’s attention and support. Without support from C-level executives and boards it is understandable that 50 percent of respondents say budgets will be flat or decreasing in the next two years.

• The budgeting process is too complex. The majority of respondents say the annual budget process is too complex (53 percent of respondents). This might lead to poor investment decisions such as purchasing technologies that do not lead to a stronger security posture or delayed investment in much needed resources.
• Many organizations are stuck in a middle stage of maturity. Necessary funding and proper planning are critical to move to a more mature security posture. Only 43 percent of respondents say their organizations’ IT security budgets are adequate and most security programs are only partially deployed.

• Companies are disappointed in technology purchases. According to the research, a lack of qualified personnel is undermining the effectiveness of technology solutions and the overall security posture of organizations. This is mainly because they don’t have the necessary in-house expertise and vendor support. Such buyer’s remorse may discourage companies from considering state-of-the art technologies.

• Compliance with regulations is difficult without adequate resources. The majority of respondents (58 percent of respondents) do not have sufficient resources to achieve compliance with security standards and laws. Non-compliance puts organizations at risk for legal action and fines.

Want to read the rest of this report?  Download it from Dell here.