United States: Cyber Update: Five Tips From The Front Lines Of Practice To Limit Your Company's Losses from A Breach

Last Updated: April 4 2017
Article by John E. Clabby and Joseph W. Swanson

We help companies prepare for, respond to, and clean up data breaches and related events. We are lawyers, but in this role, we often look over the shoulders of cybersecurity technical experts, who are advising companies on the nuts and bolts of protecting against, containing, and eradicating intrusions. Below, we share our top five tips based on our last several months of experience. We hope these tips, which are both legal and technical in nature, will help your team better protect your company, customers, employees, and other valued partners.

(1) Limit the number of administrator passwords and protect them.  Administrative passwords are like house keys; not every contractor and visitor to the home needs a full set. It makes sense to have a separate key made for the pool guy, specific to the side gate only. Most companies are familiar with the "policy of least privilege," which provides that each employee only be given access to that part of the system integral to his or her function. A compromised administrator account can wreak far more damage than can the properly restricted account of a customer services representative, because the administrator credential can penetrate more deeply into a company's networks, including perhaps to its vendors and customers. A company should also revisit the strength of administrator passwords, how they are protected "at rest," and how they are changed and rotated. Lastly, consider separate, "normal" accounts for administrators, so these employees are not running Outlook and Facebook while logged in as an administrator. 

(2) Keep a list of names and numbers, with backup names, for key contacts in a breach.  An incident response guide can have all the latest bells and whistles from NIST and similar resources, but it will be as helpful as a copy of Moby Dick in a crisis if it is not user-friendly. For continuity's sake, guides should list participants by role and job description rather than by name. For example, the guide might direct the responding engineer to first call the "Assistant General Counsel for Northeast Operations" before taking action. But if the name and contact number for that in-house attorney is not immediately accessible, it is impossible for the engineer to call the right person quickly. One way to address this issue is for the guide to have as an attachment or document referenced within it a list of names, numbers, and backup names and their numbers, for each of the critical roles. This list, like the guide itself, should be available offline –being unable to access your working materials during a breach because they are stored only on the breached system is getting kicked when you are already down. 

(3) Know who the company's point of contact is for working with the bank that processes your customers' credit card payments. Merchants that accept credit cards must follow the Payment Card Industry's Data Security Standards (PCI DSS). For the merchants, the key relationship in a breach is not the card brand but their acquiring bank (or acquirer), the bank that processes credit card payments for the retail company.  It is these banks' arrangements with the card brand that require PCI DSS in the first place, and most merchants agree to indemnify the acquiring bank from any loss the card brand experiences from a breach of the merchant's systems. This regime typically also requires the merchant to report breaches of credit card information to the acquiring bank on a short time frame, often shorter than would be required to report to a customer, state Attorney General, or even an insurer. And the penalties in this regime are significant.  Recent public settlements in a few of the mega-breaches have reminded merchants of all types of what is perhaps the most credible source of litigation risk for companies after significant breaches. The practical takeaway:  companies that accept payment from credit cards should have a plan for communicating with their acquiring bank quickly after a breach. The starting point for this planning is to understand who at the company has the ongoing relationship with the acquiring bank.

(4) Deploy redundant wire controls to prevent email fraud. The number of companies that have been duped into misdirecting wire transfers because a criminal has spoofed or hacked an executive's email address has only increased. Such hacks often net the criminal several hundred thousand dollars, which is enticing because that payout may be more immediate than one from a hack where the only profit is the sale of stolen information. Preventing these instances requires a combination of systems solutions, awareness training, and installation of redundant controls. For example, a treasury employee should check an email wire authorization by using the phone number in the file, not a phone number provided in the email itself.  Particular care should be taken for wire requests that come in during executive travel and on Friday afternoons. In our experience, solutions to these schemes can be as simple as a half-page laminated checklist affixed to the cubicle wall of all those authorized to disburse wires.

(5) If the document retention policy allows deletion, then delete. Most discussions of document retention policies start and end with litigation risk and regulatory compliance.  Employees become so terrified of deletion that their electronic records resemble a running diary of their work life, going back a half-dozen years. In the same way that making a corporate budget can free a company from the guilt from spending, a modern document retention policy encourages deletion of data either after those required periods run or because a particular category of data is not covered by retention periods. All things being equal, the less data you keep on your systems, the less data is available for exposure or misuse. Apart from deletion, another strategy is to limit how much email can be maintained on the exchange server for each user and simultaneously encourage the use of an archive or a document management program, both of which offer better protections from hackers. Companies whose employees keep corporate trade secrets, wire transfer instructions, travel schedules, and customers' personal information in their email accounts may be prime targets for phishing campaigns. If such a campaign succeeds, all of those saved emails are a treasure trove for the perpetrator.   

Five Tips to Limit Your Company's Losses from a Breach:

  1. Limit the number of administrator passwords and protect them.
  2. Keep a list of names and numbers, with backup names, for key contacts in a breach.
  3. Know who the company's point of contact is for working with the bank that processes your customers' credit card payments.
  4. Deploy redundant wire controls to prevent email fraud.
  5. If the document retention policy allows deletion, then delete.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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