United States: Recent Trends, Future Predictions, And Effective Risk Assessments

Risk assessments are a fundamental part of any organization's risk management process. But many organizations still do not incorporate true risk assessments into their information-security planning, even though doing so makes good business sense and is required by many standards and regulatory frameworks (the HIPAA Security Rule, PCI-DSS, and the NY Department of Financial Services Cybersecurity Requirements all require risk assessments, to name just a few). If you're not incorporating a true risk assessment into your security program, 2018 is a good year to start. A properly completed risk assessment will help your organization understand and mitigate its most critical risk scenarios, and will prepare your organization to respond favorably to regulator inquiries during an audit or after a security incident at a time when regulatory scrutiny is likely to increase.

If you have completed a recent risk assessment, remember that an assessment is not a point-in-time compliance exercise. Rather, it's a continuous process of reflection and improvement to help your organization stay ahead of evolving threats and vulnerabilities. In that spirit, the start of the new year is a good time to think about how recent trends and predictions for 2018 might affect your organization's risk assessment. As you review the trends and predictions below, consider these questions: How does our organization address these issues today? How will we address them in our next (or first) risk assessment? And do the trends reflect a significant change in attacker activity or other assessment factors that should prompt us to rethink and update our organization's most recent assessment?

To help answer these questions, I've included with each item some considerations that might affect your organization's identification of threats, vulnerabilities, likelihood, and impact—the basic elements of any risk assessment. On to the trends:

  • Increase in widespread destructive attacks and collateral damage. The 2014 Sony hack raised awareness of destructive cyber attacks, and we saw more destructive attacks in 2017. The NotPetya attack, for example, wiped and disabled systems around the globe, causing widespread outages in major industries. This attack, and WannaCry before it, exposed deficiencies in many organizations' vulnerability management programs and demonstrated the need to consider vulnerabilities in both external and internal systems. The attacks also exposed deficiencies in some organizations' disaster recovery plans. Data recovery from secure backups is a part of disaster recovery and business continuity, but so is the ability to failover hardware and networks to back up systems (or quickly restore the hardware and networks to a known good state) in the event that more than just data is lost. Finally, these attacks remind us we need to think more broadly about attacker targeting—many organizations affected by these attacks were not specifically targeted, but were instead collateral damage in an attack that spread like wildfire across insecure systems on the internet.

    • Assessment considerations:

      • Does our vulnerability management program evaluate vulnerabilities on both external and internal systems?
      • Have we scoped our vulnerability assessments and penetration tests to give an accurate picture of potential risk, or have we scoped these projects down to where they are creating a false sense of security?
      • Does our organization have a program in place to identify and remediate vulnerable systems within an appropriate window of time? Have we taken steps to automate our vulnerability program and make it continuous?
      • Are we prepared to recover data and infrastructure lost or disabled from a catastrophic natural disaster, environmental event, or malicious attack?
      • Have we properly assessed the likelihood that a catastrophic event will affect our organization as collateral damage in a sophisticated or widespread attack?
  • Organizations of all sizes in the crosshairs. Although high-profile breaches such as those at Uber and Yahoo dominated this year's media coverage, we've also seen smaller organizations affected by significant incidents. In the retail and hospitality industry, expect increased attacks on smaller and mid-sized businesses running insecure systems as their larger counterparts implement EMV (chip-and-pin or chip-and-signature), point-to-point encryption, and tokenization solutions. And partly because of the EMV rollout, which limits an attacker's ability to use stolen card data for card-present fraud, expect e-commerce attacks to increase against merchants of all sizes (for both card theft and stolen-card use). Likewise, the proliferation of business-email compromises—whether at businesses' on-premise service or Office 365 accounts—will continue with attackers targeting small and medium-sized businesses running insecure email systems. The compromised email systems and networks will be sold on the black market and fuel a range of frauds, from real-estate wire fraud and internal wire fraud to W-2 theft, tax scams, and other novel frauds.

    • Assessment considerations:

      • Has our organization properly assessed the likelihood it will be targeted by an opportunistic attacker? Do we recognize that our company's relative size or obscurity does not protect us from exposure on the internet?
      • For retail organizations, have we tried to limit the impact of an incident by implementing EMV (which doesn't prevent theft of sensitive data, but can limit an organization's exposure because of EMV safe-harbor programs in card network liability assessment rules)? Have we reduced the likelihood that an incident will occur (and reduced our compliance obligations) by implementing point-to-point encryption and tokenization systems? Have we segmented our payment card environments from the corporate environment and secured remote access through multi-factor authentication?
      • For retailers who have implemented segmentation and advanced protections such as point-to-point encryption, have we validated these controls are working as expected with appropriately scoped penetration tests or other validation tests? Or if the technology has not been rolled out to all locations (e.g., legacy systems, e-commerce servers), have we hardened those systems against attack?
      • For online retailers, have we hardened our web servers, ensured they are updated as part of a regular vulnerability management program, and protected our servers with network security tools such as a web-application firewall? If we develop our code internally, are the coders competent and using secure coding practices? Have we taken advantage of options to outsource our payment process to more secure third-party payment systems? Have we evaluated our fraud and chargeback controls recently to account for an increase in online, card-not-present fraud?
      • For all businesses, do we educate our employees about current trends in phishing attacks and frauds? Have we developed controls to limit critical transactions and protect the release of sensitive information (e.g., requiring accounts payable staff to validate email instructions to wire funds over a certain amount, or requests to send W-2 or employee information)?
      • Have we implemented basic controls, such as secure two-factor authentication, to protect remotely accessible resources such as our Exchange and Office 365 accounts and network access?
  • Continued increase in fileless malware attacks. We continue to see an increase in attacks that deploy fileless malware and rely on native system tools (e.g., PowerShell and Windows Management Instrumentation). These attacks evade traditional security controls such as antivirus because there are limited artifacts for the tools to detect. Although this trend has been present for several years, more tools now incorporate and simplify these attacks and our incident-response experience demonstrates their frequent use. Although defenses exist, they require upgrading systems, tools, and network security devices. For example, enhanced PowerShell monitoring is available in PowerShell version 5 and, to a lesser extent, patched versions of PowerShell 4. Fileless attacks will continue and organizations should evaluate their ability to detect and respond to these attacks.

    • Assessment considerations:

      • To limit the likelihood and impact of an attack, does our organization actively monitor and alert to suspicious activity that could indicate a fileless attack?
      • Has our organization deployed more than standard antivirus (which relies only on file signatures to detect malicious activity), including other advanced tools such as a Host Intrusion Detection System (HIDS) (which can identify malicious behaviors and activity without predetermined signatures)?
  • Cloud data leakage. 2017 was a year of unauthorized data exposure from misconfigured cloud storage services, with new reports sometimes arriving weekly. Although criminals exploited the misconfigurations in some cases, security researchers are hunting for and exposing many issues, making detection and disclosure more likely. In either case, these data incidents can damage a firm's reputation, reduce customer trust, trigger obligations to investigate and notify affected individuals, and invite regulatory inquiries. In response to these incidents, cloud providers and third parties rolled out significant new tools in 2017 to enhance monitoring, logging, and alerting to malicious activity in cloud environments, but many organizations are not aware of or not taking advantage of these tools. Regulators are taking note and will likely increase inquiries into unsecured cloud instances.

    • Assessment considerations:

      • Does our organization have a process to review and approve new cloud deployments to ensure that privacy and security impacts are being assessed?
      • Does our organization have personnel with training and experience to secure our cloud deployments?
      • Are we monitoring our cloud infrastructure, taking advantage of new monitoring tools, and retaining logs to support incident investigations?
      • Do we know whether the third parties we deal with are storing data in cloud environments, and have we evaluated the security of their operations?
      • Have we included our cloud environments and third parties in our risk assessments?
  • Indirect supply-chain attacks. We saw several high-profile examples in 2017 of indirect attacks facilitated by intrusions into software and hardware supply chains. Avast, maker of the popular privacy and data destruction software CCleaner, announced that an attacker compromised its software development process and installed a mysterious backdoor in the software distributed through legitimate channels to perhaps several hundred thousand systems (it appears that the second stage of malware was reserved for systems at only a handful of targeted companies—demonstrating, once again, how unsuspecting organizations can be caught up in sophisticated attacks even if not directly targeted). And the NotPetya attack appears to have been distributed through compromised E.Doc accounting software servers. Although less publicized, we also saw malware distribution through legitimate channels, including Google Play, and WordPress plugins. These attacks will likely continue by attackers looking for a way to distribute malware to many targets of opportunity, or to specific targets whose weak link is their supply chain.

    • Assessment considerations:

      • Does our organization have a policy and process to address use of personally owned devices?
      • Do we educate our users (and particularly developers) on the dangers of downloading unknown software and apps, or any software and apps from unconfirmed sources?
      • Do our software vendors and outsourced developers have an obligation to notify us if they discover an intrusion in their environment that might affect the integrity of the software we've purchased from them?
  • Increased regulatory scrutiny and calls for additional legislation. Following 2017's high-profile breaches, we should expect to see increased scrutiny from regulators throughout 2018 and additional calls for legislation. New York's attorney general, Eric Schneiderman, for example, announced proposed legislation (the SHIELD Act) in November 2017, to add additional protections from data breaches. And on December 1, Florida Senator Bill Nelson introduced the proposed Data Security and Breach Notification Act, which would, among other things, require companies to report data breaches within 30 days (with exceptions to investigate and contain the breach), impose criminal penalties for knowingly concealing a data breach, and preempt state breach notification laws for entities covered by the legislation. In sum, regulators and lawmakers will expect increased transparency and be watching to ensure incidents are reported within a reasonable period of time. Organizations should ensure they have prepared the people and processes to meet these obligations.

    • Assessment considerations:

      • Do we have a realistic incident response plan in place? Have we tested the plan and do we update it regularly in response to changing circumstances?
      • Does our organization have monitoring, logging, and data retention in place to support a timely investigation in the event of a significant incident? Do we have similar capabilities for our data stored with third parties or in the cloud? Have we tested or evaluated these processes to ensure they will work in a real incident?

These trends highlight just some areas your organization should be evaluating in its risk assessment process. Please contact us if you would like to learn more, if we can help your organization evaluate the sufficiency of a prior assessment, or if you would like to work with us on developing a strong assessment and risk management program.

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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