United States: Cybersecurity 2017 – The Year In Preview: Emerging Security Threats

Last Updated: December 2 2016
Article by Erik L. Schulwolf

Editor's note:  This is the fourth in a continuing end-of-year series.  See our previous posts on trade secrets state regulation and law enforcement, and HIPAA compliance.  Our last two posts will focus on the energy industry, and federal regulation and law enforcement.

In 2016, new and alarming cybersecurity threats emerged, raising concerns in government, the business world, and elsewhere.  Ransomware became the most profitable form of malware in history.  A cyberattack using an army of "Internet of Things" devices caused major problems for websites such as Twitter and Netflix.  The 2016 U.S. presidential election was consumed with allegations of previous cybersecurity lapses by one candidate and ongoing hacking in support of the other.  Cybersecurity threats are unlikely to cede the spotlight in the coming year.  Below I discuss some of the major cybersecurity threats to be aware of in 2017.

Ransomware Remains a Threat

Ransomware, a form of malicious software that infiltrates computer networks or systems and encrypts data or denies access until a ransom has been paid, has been the fastest-growing cybersecurity threat during 2016.  According to the federal government, an average of more than 4,000 ransomware attacks per day occurred since the beginning of the year.  Ransomware attacks have particularly targeted the health care sector, with several hospitals seeing their networks attacked over the course of 2016.  Ransomware is delivered in a variety of ways, notably through phishing emails.

Ransomware attacks are not expected to abate in 2017.  Indeed, some are estimating as much as a tenfold increase in ransomware attacks next year.  One major concern is that the ransom amounts requested could increase dramatically as cybercriminals better understand the value of the data they are holding hostage.  Some also predict an increase in denial of service (DoS) attacks, instead of encryption, to extort victims.

Businesses, especially in the health care sector, will have to be cognizant of federal guidance in protecting against ransomware and, if necessary, responding to ransomware attacks.  In July, the HHS Office of Civil Rights (OCR) announced in guidance that ransomware attacks in many cases constitute breaches subject to the requirements of the HIPAA Breach Notification Rule.  Federal Trade Commission Chairwoman Edith Ramirez stated in September that "A company's unreasonable failure to patch vulnerabilities known to be exploited by ransomware might violate the FTC Act."  The United States Computer Emergency Readiness Team has also released detailed guidance relating to how to protect against and respond to ransomware.  These federal agencies suggest measures such as workforce training and education, frequent backups, and application whitelisting to guard against ransomware attacks.  Federal agencies such as the FBI do not support paying the ransom if attacked, but recognize that "executives, when faced with inoperability issues, will evaluate all options to protect their shareholders, employees, and customers."

Attacks in the Cloud

The trend of businesses and other organizations moving their data storage to the cloud has increased in recent years and shows no signs of slowing.  The vast amount of data being stored in the cloud may make large public cloud providers such as Amazon Web Services, Microsoft Azure, and IBM " primary targets for hackers in 2017."

Every customer represents a potential security weakness for a cloud provider, highlighting the challenges faced by cloud providers.  A hacker could infiltrate an organization with weak authentication protocols and passwords and then infiltrate the cloud provider through the organization.  An enterprise's data stored on a cloud that suffers a hack can " provide a backdoor for hackers to access other enterprise systems."

Attacks on cloud providers could take the form of data breaches involving personal financial information, health information, trade secrets, and other data.  DoS attacks on cloud providers1 could create problems for the many businesses using that provider.  The Cloud Security Alliance notes, however, that "[c]loud providers tend to be better poised to handle DoS attacks than their customers."  Ransomware attacks on the cloud may also increase, as hackers may use the cloud as a " volume multiplier" for their attacks.

One particular concern is that organizations migrating environments to the cloud are relying2 on the cloud providers alone to provide expanded security.  It is important for organizations to note that moving data to the cloud will probably not relieve them of their obligations with regard to the privacy and security of personal information.  Liability in the case of data breaches will often be an important point to negotiate in contracting with a cloud provider.  One potential resource for businesses and other organizations is the National Institute on Standards and Technology's " Guidelines on Security and Privacy in Public Cloud Computing," although keep in mind that these date to 2011.

Threats from the Internet of Things

The Internet of Things (IoT) is the buzzword used in recent years for the connection to information networks of systems and devices with mainly physical purposes.  This has potentially revolutionary implications in a variety of areas, from home appliances (imagine your alarm clock telling your toaster to begin making you breakfast) to urban management.  It is predicted that 20.8 billion "connected things" will be in use by 2020.

However, as the Department of Homeland Security has noted, "the reality is that security [in the IoT space] is not keeping up with the pace of innovation."  Only a month ago, a distributed denial of service (DDoS) attack on the cloud-based internet performance management company Dyn impacted websites such as Twitter, Netflix, and Reddit.  Security experts determined that the attack was launched using internet connected devices such as security cameras that hackers took over using Mirai, a "self-spreading malware" that targets IoT devices.  More attacks using the IoT could be on the horizon in 2017.

The IoT is a threat multiplier for a variety of reasons.  First, it vastly increases the number of access points to networks that bad actors can exploit.  Importantly, IoT devices are "by default . . . open and available to the Internet and come protected with default passwords."  Moreover, "most IoT devices are considered throwaway devices and security patches are not issued."  As Sean Gallagher notes in ArsTechnica, "even though consumer device manufacturers have become generally more serious about IoT security, there are still a vast number of devices on the Internet that are configured with default or permanent passwords—passwords that another botnet developer could easily add to a targeted library."  Perhaps most worryingly of all, as more critical systems begin to rely on the IoT, the consequences of attacks may become more dire, especially in the healthcare space.

These vulnerabilities are prompting calls for regulators to address cybersecurity for the IoT.  BeyondTrust predicts that in 2017 large-scale attacks making use of the IoT will drive new regulations.  Within the past month, the Department of Homeland Security has released non-binding principles and best practices for securing the IoT.  These include the creation of unique and difficult to crack user names and passwords for IoT devices, automatic application of patches, and applying tested cybersecurity practices to the IoT.  In early 2015 the FTC released a report on privacy and security for consumer IoT devices.  However, commentators continue to press for federal legislation in this area, notably amendments to HIPAA and the Gramm-Leach-Billey Act.

Footnotes

1. Forcepoint 2017 Security Predictions Report, available at https://www.forcepoint.com/2017predictions.

2. Forcepoint 2017 Security Predictions Report, available at https://www.forcepoint.com/2017predictions.

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