3 Key Points From “Unsecurity” By Evan Francen

UNSECURITY-1200x628-adNational author, speaker, consultant, and entrepreneur Evan Francen got into information security long before it was cool and buzzing in the media, and long before every so-called IT consultancy started chasing the money. In fact, he and I both dislike the money chasers. He and his growing consultancy, FRSecure are for-profit, but they don’t do it for the money.

Like a patriot who delays college to join the army amid dire national conflict, Francen offers a fact-based call to arms to fix the broken cybersecurity industry in his 2019 book “Unsecurity”. Having known him and his company for a few years, and having read the book and many on this subject, this content is worth sharing because too few people write or talk about how to actually make this industry better. Here are my three unbiased key points from his book.

1)    We’re Not Speaking the Same Language:

614hGPZRmJL._SY600_Francen opens his book with a lengthy chapter on how poor communication between cybersecurity stakeholders exacerbates trouble and risk. You can’t see or measure what isn’t communicated well. It starts because there are five main stakeholder groups who don’t share the same vocabulary amid conflicting priorities.

  1. IT: Speaks in data tables and code jargon.
  2. Cyber: Speaks in risk metrics and security controls.
  3. Business: Speaks in voice of the customer and profits.
  4. Compliance:Speaks in evidence collection and legal regulatory frameworks.
  5. Vendor: Speaks in sales and marketing terms.

Ideally, all these stakeholders need to work together but are only as strong as the weakest link. To attain better communication and collaboration between these stakeholders, all must agree on the same general security framework best for the company and industry, maybe NIST CSF with its inferred definitions or maybe ISACA Cobit. However, once you pick the framework you need to start training, communicating, and measuring against it and only it –going with its inferred definitions.

Changing frameworks in the middle of the process is like changing keys in the middle of a classical song at a concert – don’t do it. That’s not to say that once communication and risk management gets better, that you can’t have some hybrid framework variation – like at a jazz concert. You can but you need proof of the basic items first.

Later, in the chapter Francen describes the communication issue of too many translations. That’s too many people passing the communication onto other people and giving it their spin. Thus, what was merely a minor IT problem ticket turns into a full-blown data breach? Or people get tied up arguing over NIST, ISSA, ISACA, and OWASP jargon – all the while nothing gets fixed and people just get mad at each other yet fail to understand one another. Knowing one or two buzz words from an ISACA conference or paper yet failing to understand how they apply to NIST or the like does not help. You should be having a framework mapping sheet for this.

The bigger solution is more training and vetting who is authorized to communicate on key projects. The issue of good communication and project management is separate from cybersecurity though it’s a critical dependency. Organizations should pre-draft communication plans with roles and scope listed out, and then they should do tabletops to solidify them. Having an on-site Toastmasters group is also a good idea. I don’t care if you’re a cyber or IT genius; if you can’t communicate well that’s a problem that needs to be fixed. I will take the person with much better communication skills because likely they can learn what they don’t know better than the other.

2)    Overengineered Foundations:

In chapter two, Francen addresses “Bad Foundations”. He gives many analogies including building a house without a blueprint. However, I’m most interested in what he says on page 76:

  • “Problem #4 Overengineered Foundation – too much control is as bad as too little control, and in some cases, it’s even worse than no control at all.”

What he is saying here is that an organization can get so busy in non-real world spreadsheet assessments and redundant evidence gathering that their heads are in the sand for so long that they don’t see to connect the dots that other things are going array and thus they get compromised. Keep in mind IT and security staff are already overworked, they already have many conflicting dials and charts to read – amid false alarms. To bog them down in needless busywork must be weighed against other real-world security tasks, like patch management, change management, and updating IAM protocols to two-factor.

If you or your organization have an issue figuring this out, as Francen outlines, you need to simplify your risk management to a real-world foundational goal that even the company secretary can understand. It may be as simple as requiring long complex (multicharacter) passwords, badge entry time logs for everyone, encrypting data that is not public, or other basics. You must do these things and document that they have been done one at a time, engraining a culture of preventative security vs. reactive security.

3)    Cultivate Transparency and Incentives:

In chapter five, “The Blame Game” Francen describes how IT and business stakeholders often fail to take responsibility for security failings. This is heavily influenced by undue bias, lack of diversity, and lack of fact-based intellectualism within the IT and business silos at many mid-sized and large organizations. I know this is a hard pill to swallow but its so true. The IT and business leaders approving the bills for the vendors doing the security assessments, tool implementations, and consulting should not be under pressure to give a favorable finding in an unrealistic timeframe. They should only be obligated to give timely truthful risk prudent advice. Yet that same advice if not couched with kid gloves can get a vendor booted from the client – fabricating a negative vendor event. Kinda reminds me of accounting fraud pre-Sarbanes Oxley.

The reason why is because risk assessors are creating evidence of security violations that the client does not agree with or like, and thus you are creating legal risk for them – albeit well justified and by their own doing. From Francen’s viewpoint, this comprehensive honest assessment also gives the client a way to defend and limit liability by disclosing and remediating the vulnerabilities in a timely manner and under the advisement of a neutral third party. Moreover, you’re going to have instructions on how to avoid them in the future thus saving you money and brand reputation.

Overall, transparency can save you. Customers, regulators, and risk assessors view you more positively because of it. That’s not to say there are not things that will remain private because there are many, trade secrets, confidential data, and the like. My take on Francen’s mention of the trade off’s between transparency and incentives in a chapter called “The Blame Game” is that it’s no longer acceptable to delay or cover up a real security event – not that it ever was. Even weak arguments deliberately miscategorizing security events as smaller than they are will catch up with you and kick your butt or get you sued. Now is the time to be proactive. Build your incident response team ahead of time. It should include competent risk business consultants, cyber consultants, IT consultants, a communication lead, and a privacy attorney.

Lastly, if we as an industry are going to get better we’re going to have to pick up books, computers, pens, and megaphones. And this book is a must-read! You can’t be passive and maintain your expert status – it expires the second you do nothing and get poisoned by your own bias and ego. Keep learning and sharing!

The Six Most Impactful Cyber and Business Tech Trends of 2019 and What it Means for 2020.

By Mamady Konneh, MSST, and Jeremy Swenson, MBA, MSST.

Minneapolis, MN — Every year we like to review and commentate on the most impactful security technology and business happenings from the prior year. Those likely to significantly impact the coming year in unique ways. Although incomplete, these are six trends worth addressing in order of importance.

Fig 1. (Cyber Trend Mashup Overlay, + Stock Image, 2019).
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1) The Media Disinformation War Continues Embracing Artificial Intelligence:

With the advancement of communications technologies, the growth of large social media networks, and with the “appification” of everything — users have morphed beyond merely consuming information to being distributors and sometimes contributors. This ripens the ease and capability of disinformation.

Disinformation is defined as incorrect information intended to mislead or disrupt, especially propaganda issued by a government organization to a rival power or the media. For example, governments creating digital hate mobs to smear key activists or journalists, suppress dissent, undermine political opponents, spread lies and control public opinion (Shelly Banjo, Bloomberg, 05/23/2019). Today’s disinformation war is largely digital via platforms like Facebook, Twitter, iTunes, WhatsApp, Yelp, and Instagram (Fig. 2). Yet even state-sponsored and private news organizations are increasingly the weapon of choice — creating a false sense of validity. Undeniably, the battlefield is wherever a large number of followers are.

We all know that false news spreads faster than real news most of the time, largely because its sensationalized. Since disinformation draws in viewers, which drives clicks and ad revenues, it’s a money-making machine. If you can control what’s trending in the news and/or social media, it impacts how many people will believe it, which in turn impacts how many people will act on that belief, good or bad. This is exacerbated when combined with human bias or irrational emotion.

Bots and botnets are often behind the spread of disinformation, complicating efforts to trace its source and to stop it. Further complicating this phenomenon is the amount of app (application) to app permissions. For example, the CNN and Twitter app having permission to post to Facebook and then Facebook having permission to post to WordPress and then WordPress posting on Reddit, or any combination like this. Not only does this make it hard to identify the chain of custody and source, but it also weakens privacy and security due to the many authentication permissions.

Fig 2. News, Social Media, and Puppet Master of Disinformation (Right, Chandrajit Banerjee, Left Marc Creighton, 2019).
Purported Russian Disinformation Flow

Disinformation campaigns attempted to influence U.S. elections in 2016 — presidential, and 2018 — congressional (Fig. 2). The effects are not fully known to this day yet there is some undeniable impact, with debates on both sides. This taken in conjunction with outdated electoral policies and poor public-to-private partnerships support the conclusion that disinformation capabilities are on the rise leading up to the U.S. presidential election in 2020. In fact, according to one report, the number of countries engaged in disinformation increased from 48 to 70 or 150% from 2018 to 2019 (Samantha Bradshaw and Philip N. Howard, Oxford Internet Institute, 09/04/19). This is not about politics, this is about truth, appropriate technology, security improvements, and better public-private partnerships.

Fig. 3. Purported Russian Disinformation Flow (Samuel Morales, 11/08/19).

Purported Russian Disinformation Flow

Moving on, large technology companies are increasingly under scrutiny to secure their platforms from disinformation campaigns. One recent example is as follows, “Twitter announced that it had removed more than 88,000 accounts that it said were engaged in “platform manipulation” originating in Saudi Arabia” (Aaron Holmes, Business Insider, 12/20/19). Since platforms like this have so much activity to monitor, many campaigns like this go on unaltered. Yet, let us not forget about the free speech rights of users and the many claims that certain tech companies are overreaching in their screening content to the level of undue bias. Resolving these two extremes is indeed a work in progress.

Another example which used AI (Artificial Intelligence) enabled disinformation is as follows: ‘“On December 20, 2019, Facebook took action against a network of over 900 pages, groups, and accounts on its own platform and on Instagram that were associated with “The Beauty of Life” (TheBL), reportedly an offshoot of the Epoch Media Group (EMG). These assets were removed for engaging in large-scale coordinated inauthentic behavior (CIB)”’ (Ben Nimmo, C. Shawn Eib, L. Tamora, et al; Graphika & the Atlantic Council’s Digital Forensics Research Lab, 12/2019). Many of these profiles were created with AI generated fake profile photos. The group amassed about 55 million followers, so their disinformation efforts largely worked.

Considering these disinformation events this past year, we think small and mid-size companies are likely the next target of disinformation campaigns. Such campaigns may aim to steal their customers, tarnish their reputation, or otherwise combine disinformation with advanced malware or other cyber fraud. They may be a direct target or a pass through medium. Small businesses are not immune from these risks even if never targeted before. While a large company could sustain several disinformation attacks, a small company could be easily run out of business by just one.

Imagine fraudulent Yelp reviews from a dental competitor who hires a non-U.S. based hacking group to have a bot army create 1,000 negative dental reviews on Yelp. Now the victim of this attack has a mess to clean up. Being a dental office, they are not tech experts, so they have to hire a tech consultancy. Yet even when hired, the full damage can never be undone. The stress and cost could drive them to shut down. Then there is the question of who pays for it? This begs the question of cyber insurance, do you have the correct coverage, is there any way your claims can be denied?

Overall, disinformation is a double-edged sword because if one country is using disinformation against another country, then that country is very tempted to use disinformation against them in response. Then when the public sees this state originated disinformation, they and their NGO (non-governmental organization) groups respond whether they believe the disinformation or not —of course with different responses. The same scenario could apply in a company to company context.

Disinformation is indeed a vicious cycle that encourages lies, ignorance, all the while damaging the value of what journalism means. In 2020 we as journalists, thought leaders, consultants and citizens must not be afraid to confront these fallacies and hidden distortions for future generations — a quality based truthful pen is a powerful sword!

2) Ransomware Doubles Attacking More Government Entities:

Ransomware heavily hit hospitals, businesses, and universities in 2019, but local governments were the top target. It attacked at least 103 local U.S. government agencies, mostly at the city and county levels (Emsisoft Malware Lab, 12/12/19). Further validating this conclusion is Barracuda Networks who found more broadly that two-thirds of all known 2019 ransomware attacks in the U.S. targeted U.S.governments (Alfred Ng, C-NET, 12/05/19). Specifically, these ransomware attacks originate mostly from phishing emails. Then the attackers implant malicious code in the targeted entities’ network, after which they encrypt their files making them inaccessible. These are for the most part not federal offices like the FBI, NSA, DOD, or the FAA — these offices have bigger budgets and better defenses.

In August 2019 twenty-three Texas cities were struck by a large coordinated ransomware attack. This overwhelmed them SO they were forced to seek advanced state assistance (Kate Fazzini, CNBC, 08/20/19). Also in 2019, seven Florida cities were struck in a similar attack: River City, Riviera Beach, Lake City, Key Biscayne, Stuart, Naples, and recently Pensacola (Rachael L Thomas, Naples Daily News, 08/20/19 & CISOMAG, 12/27/19). Moreover, the city of Baltimore, Maryland sustained two ransomware attacks in 14 months (Kate Fazzini, CNBC, 08/20/19). Fig. 4. shows the defaced City of New Orleans website which left citizens out of some services and information.

Fig. 4. City of New Orleans Website Down (NOLA.gov, City of New Orleans, 12/23/19).

City Of New Orleans Hack

Foolish as it may sound local governments are more frequently opting to pay the ransomware rather than rebuild their systems. After seeing Atlanta spend $2.6 million in 2018 to restore its systems rather than pay the $52,000 ransom (Lily Hay Newman, Wired, 04/23/18) — many officials have decided that it’s cheaper to pay the hackers. One researcher confirmed this as follows; ‘“These government organizations are not always well-equipped on cybersecurity concerns, which makes them easy targets,” said Kevin Latimore, enterprise malware removal specialist for security software provider Malwarebytes. “Not only do they have the potential to pay, but they are a soft target”’ (Alfred Ng, C-NET, 12/05/19). More examples of this include Lake City, Florida who paid $426,000 to hackers via Bitcoin, and Riviera Beach Florida who paid hackers $600,000 via Bitcoin in 2019. Much of this will be covered by their cyber insurance but it complicates future payouts making denials and premium increases more likely (Scottie Andrew and Saeed Ahmed, CNN, 06/27/19).

For the coming year, this means that local governments need to harden their networks, better train their staff and hire private-sector talent. If they have paid ransom ware once they should expect and prepare for another attack soon, yet this does not rush onboarding of new vendor tools as vendors need to be risk assessed. Moreover, they outsource key IT tasks when they cannot meet the required service or security. Lastly, paying ransomware is not a long-term solution and it increases the likelihood of another attack, plus there is no guarantee they have not copied your data.

3) Insurance Companies Paying Ransoms Are Likely Encouraging More Attacks for Profits:

When organizations have cyber insurance, they are more likely to pay ransom demands. This results in ransomware being more profitable than it would otherwise be and thus incentivizes more well-funded attacks (Emsisoft Malware Lab, 12/12/19). Yet if insurance companies did better due diligence reviewing prospect customer cyber risk processes, tools, SOC reports and the like — there would likely be less grounds for claims denials and fewer simple claims like ransomware, etc. In some cases, the customer is incented to prove their cyber due diligence to justify a favorable risk rating and lower insurance premiums. However, the rigor of this due diligence is inconsistently applied in favor of sizeable companies where more dollars and complex risk exists. Yet can you imagine being a large insurance company asking a government entity for any documentation like this… it might be difficult. Even small county governments often have many unhelpful bureaucrats who are overconfident thus choking the needed risk management process. Private companies have the same issue, but they have less bureaucratic insulation. Overall, better public-private partnerships are needed.

This year we confirmed that cyber liability insurance risk assessment is still a contradictory mess. The carriers are profit-driven while they often confuse customers on what a policy means, especially small and medium-sized businesses that are not tech-focused. The risk assessment standards are immature, not organization specific, and they are outdated with current technology. If ransomware incentivizes cyber insurance, then what about the likely situation where an organization gets hit with ransomware, then the carrier pays it less the deductible, but then the ransomware demands a second payment. Carriers, adjusters, risk assessors, and even companies have not thought this through well enough. Most likely the carrier will deny the second payment demand and often in tandem with costly litigation.

Whatever the size or your organization, you should undergo strict security reviews in the insurance underwriting process. If the carrier does not ask anything or much about your technology or security, you might as well not pay for the coverage because it’s weak at best. Whatever risk diligence completed in underwriting the coverage, you should not publicly disclose that you have such coverage because cyber extortionists could then view you as a target. Cyber insurance should not be considered as an alternative to adequately funded and resourced security programs, rather it’s a failsafe. Our related article from this summer clarifies some of these complexities 10 Things IT Executives Must Know About Cyber Insurance!

Fig. 5. Cyber Security Spending Greatly Outpaces Cyber Insurance Spending, (Gartner, Munich Re, Microsoft, Marsh, 2019)

Cyber Security Spending Greatly Outpaces Cyber Insurance Spending 2019

Lastly, we observed that cyber insurance spending is not growing as fast as cybersecurity spending from 2018 to 2019 (Fig 5). While for 2019 to 2020 there is a $116 billion dollar estimated difference (Fig 5.). This trend is generally good because you cannot insure away what you have not built securely in the first place. In physical security terms, that would be like a bank having wide open doors and windows often yet wanting to get robbery insurance when they are incenting robbery. Of course, this is far more complicated in cyberspace and insurance companies and risk assessors are moderately speculative at best. We anticipate more partnerships with tech-savvy insurance brokers in 2020, more cyber insurance training, and perhaps new FinTech insurance startups can reduce risk and drive efficiencies while the legislators and large companies catch up.

4) Mobile Ecosystem Security Considerations Multiply:

Since the release of the first iPhone in 2007, the appification of everything is the new norm. Since computing power and memory on smartphones nearly doubles about every two years (Gordon Moore’s Law, 1958); the information security risk on these devices gets more complicated and multiplies with each new app installed.

Here are some recent top metrics from one independent blog study (Ian Blair, BuildFire, 2019):

  1. There are 2.8 million apps available for download on the Google Play Store — More apps equals more risk exposure.
  1. The Apple App Store has 2.2 million apps available for download.
  2. Mobile apps are expected to generate $189 billion in revenue by 2020.
  3. 49% of people open an app 11+ times each day.
  4. 21% of Millennials open an app 50+ times per day.
  5. 57% of all digital media usage comes from mobile apps.
  6. The average smartphone owner uses 30 apps each month — Touching many or all of the mobile ecosystem components in Fig. 6. — Thereby increasing complexity.

Fig 6. Mobile Ecosystem Components (Rohit Kumar, 2019).
Mobile Ecosystem 2019

The Apple App Store has a closed API (application programming interface) and thus less apps, unlike the Google Play App Store which has an open API and more apps. Thus, in prior years Apple’s App Store was regularly perceived as more secure than Google’s Play Store. However, in the fall of 2019, a reported 18 malicious apps were able to bypass Apple’s vetting system. Wired described it as follows, “it started small. Wandera’s security software flagged some unusual activity on a client’s iPhone. A lone speedometer app had made unexpected contact with a so-called command and control server, which had previously been identified as issuing orders to ad fraud malware in a separate Android campaign. In other words, the app had gone rogue” (Brian Barrett, Wired, 10/25/19).

Although the new iPhone 11 has no CPU power increase from the prior version, the new Samsung Galaxy S 11 includes a CPU that raises the bar in some ways for both phones. The new CPU is the Qualcomm Snapdragon 865 and will come with the new Galaxy S 11 in 2020. This CPU is 5G enabled while older chips are not. It also supports up to 8K HD video which has an ultra-high resolution that translates into very large files (Jessica Dolcourt, C-Net, 12/19/19). This enables better video chat, HD gaming, and professional level photo capabilities.

Additionally, the Snapdragon 865’s two-finger biometric unlocking feature has been improved for the Galaxy S 11 thereby challenging the new iPhone 11. The CPU’s 3D Sonic Max fingerprint reader is large enough to register two fingers as one commentator detailed: “This means it’s faster to unlock, and more secure when matching up more unique data points in the form of the ridges, valleys, and pores unique to your fingers. On phones, you might get the option to set up one or two-finger unlocking, or perhaps choose to use dual-finger authentication for mobile payments only, or select apps like your banking app” (Jessica Dolcourt, C-Net, 12/19/19).

Faster CPUs in the mobile ecosystem means that there is more room for malvertising, rootkits, viruses and other exploits to hide. Combine that with the increasing number of apps users download, the permissions they give them, etc. The complexity of this increases privacy and security risk. There is a very fine line between a hacked system and consented to app permissions, yet most users have few details on what this means or how many apps they have on their mobile devices.

For 2020, we see education and awareness around the review and removal of non-essential mobile apps as a top priority. Especially for mobile devices used separately or jointly for work purposes. This begs the questions: 1) what is the best BYOD (bring your own device) policy 2) and good containerization to separate company vs. personal use apps? This requires better understanding around geolocation, QR code scanning, in text ads, micropayments, Bluetooth, geofencing, readers, and HTML5. It thus goes without saying that we feel more holes will be exposed with BYOD tools and policy as they gain more adoption 2020.

5)  Cloud Adoption Raises Privacy and Compliance Concerns:

Cloud computing grew in 2019 and is expected to grow in the coming years. Many industries are opting for cloud computing because it is less costly than on-premises and the service quality is generally better. This especially applies to small and medium businesses that often don’t have the technology resources to build their own infrastructures. According to one study, “83% of enterprise workloads will be in the cloud by 2020” (LogicMonitor, 2019). As a result, many industries are increasing their investment in cloud computing and the costs are likely to go down as cloud providers improve — the services are being democratized via niche cloud service tool startups. At present, “50% of enterprises spend on average of $1.2 million dollars on cloud services annually” (LogicMonitor, 2019).

Although cloud computing might seem cheaper than on-premises solutions, it has its downsides when it comes to security and privacy. Moving to the cloud is accepting the risk of having your data in someone else’s warehouse. Of course, the service level agreement and vendor risk assessment compliance documents will address most of this, but it’s not comprehensive. This is because cloud vendors are selective about what they disclose to customers in their annual or quarterly vendor risk review. This is because they are protecting their own privacy and the privacy of their many other clients where shared infrastructure is relevant. If you want complete privacy and control, build your own cloud but accept the higher cost.

Fig. 7. Public Cloud Challenges Influencers Survey (LogicMonitor, 2019).

Public Cloud Challenges Influencers Survey LogMonitor 2019The above survey by a vendor Logic Monitor confirmed that security, governance and compliance, and privacy were top challenges in 2019. We think these challenges will hold steady in 2020, while costs will likely decrease for basic use cases. If organizations continue to struggle with cloud trained employees, it will negatively impact vendor lock-in. This can be bad from a failover perspective. We think organizations should spend more on cloud trained staff. They should also make sure that they are selecting more than two or three cloud providers, all separate from one another. This helps staff get cross-trained on different cloud platforms and add ons, but it also mitigates risk and makes vendors bid more competitively.

6) Supply Chain Cyber Security Threats Increase:

All organizations depend on other entities for goods and services. Everything from manufacturers, distributors, marketers, attorneys, drivers, resellers, software providers, accountants, and more. The flow of this from start to finish is called the supply chain, and vendor management is the biggest part of it. As a result, it becomes challenging for organizations to identify and assess the security of every vendor they do business with. In fact “at least 59% of organizations have suffered from cyberattacks through third-party companies” (Olivia Scott, Supply Chain Brain, 10/09/19). Depending on the vendor and the connection point there may be more or less steps. More steps increases complexity and often decreases transparency, which in turn often increases risk.

Every aspect of supply chain has an internet-connected component from UPS Package scanners, to invoice creation, inventory management, quality control, and more. Vendors who say or suggest they are not internet-connected are usually wrong because they forgot one thing like utility applications, HVAC applications, coffee machine apps, navigation apps, payment processing apps, and their own 3rd parties that have access to customer data via the vendor, etc.

People often need clarification on what is a 4th party vendor. They are the vendors that your 3rd party vendor contracts with to meet your needs. With a 4th party vendor, you will have less insight into their infrastructure and process, if at all. Most likely any risk documentation you get from them with come via your 3rd party vendor. A lot of misinformation and hidden risk is here. Vendors managers need good communication skills and business tact to deal with this.

In the context of cybersecurity, supply chain is posing a growing threat because most of the parts of our computers and smartphones are made in other parts of the world, including the software used to run these machines. For example, iPhone chips are made by Taiwan Semiconductor Manufacturing Company (TSMC) who works with other vendors for even the smallest of components in a highly complex supply chain, acting as a manufacturer and assembler. If there is a security hole in one of the iPhone components, the customer Apple may not be the first to know because TSMC or their 3rd and 4th party vendors may not know about it or may not disclose it. This negatively impacts Apple and iPhone users.

Observing this paradox, security pioneer Bruce Schneier stated, “the computers and smartphones you use are not built in the United States. Their chips aren’t made in the United States. The engineers who design and program them come from over a hundred countries. Thousands of people have the opportunity, acting alone, to slip a backdoor into the final product” (Bruce Schneier, New York Times, 09/25/19). Thus the supply chain path needs to be scrutinized for security compliance regularly, especially in the context of large-scale hardware manufacturing for data-centric products like smartphones, cars, computers, and medical devices — few devices are not data-centric these days.

In sum, supply chain is here to stay because organizations will need to collaborate with one another in order to conduct their business efficiently. According to the Ponemon Institute, 3rd party misuse was the second-biggest security threat in 2019 (Olivia Scott, Supply Chain Brian, 10/09/19). Yet we need a reminder that supply chain is no longer merely transportation and inventory management, even if we are a goods and services company like a small construction company with no website. We need to rethink of supply chain as more digital and more data-centric than we did in prior years. It is a part of core business operations.

Thus, supply chain security should be a top priority for organizations in 2020 with a focus on 3rd party risk ranking and 4th party identification. Lastly, for big entities like government and corporate conglomerates who have many different internal organizations they interact with. They would be well advised to think of their own internal procurement process as “external supply chain” in an effort to better training and internal defenses — they are often their own worst enemy.

About the Authors:
Mamady Konneh and Jeremy Swenson 2020
Mamady Konneh (left) is a senior information security professional, speaker and mentor with 10+ years of relevant experience in security, risk management, and project management in the healthcare, finance, and retail industries. He is a dynamic team player who leads by taking initiatives in developing efficient risk mitigation and situational awareness tactics. He is proficient at assessing the needs of the business and providing the tools to resolve challenges by enhancing the business process. He holds an MSST (Master of Science in Security Technologies) degree from the U of MN where he researched global I.D. card best practices for the country of Guinea.

Jeremy Swenson (right) is a senior IT consultant, writer, and speaker in business analysis, project management, cyber-security, process improvement, leadership, music, and abstract thinking. He has been employed by or consulted at many banks, insurance companies, retailers, healthcare orgs, governments, and so on over 14 years. He has an MBA from St Mary’s Univesity of MN and MSST (Master of Science in Security Technologies) degree from the U of MN.

Two Equifax Leaders Charged with Insider Trading Amid Data Breach Mess

equifax (1).jpgA former software developer for Equifax, Sudhakar Reddy Bonthu, faces insider trading charges related to the company’s massive data breach last year, according to the SEC and federal prosecutors. Allegedly, in August 2017, Bonthu was asked to participate in Project Sparta, which Bonthu’s bosses described as a major project for one of the company’s clients who suffered a major breach that exposed details of over 100 million users.

Unknown to Bonthu at the time, that client was Equifax itself, which a month prior discovered that it was hacked and an intruder stole details for over 145.5 million US and international users. Bonthu was tasked with creating “an online user interface into which users could input information to determine whether they had been impacted by the breach.” According to court documents, he was told that “the project was a high priority for the unnamed company and had a short deadline because the client intended to ‘go live’ on September 6, 2017, with the breach remediation applications designed by Equifax.”

To create the website, which later turned out to be equifaxsecurity2017.com, Bonthu was given test data and was included in mailing lists exchanging information about the still-secret breach. SEC investigators say that Bonthu concluded on his own that the secret client in Project Sparta was in fact Equifax itself.

In an attempt to obstruct his trail he used his wife’s trading account, wherefrom he purchased eighty-six out-of-the-money put option contracts for shares of Equifax common stock with an expiration date of September 15, 2017, and a strike price of $130 per share. Bonthu made this purchase despite the fact that Equifax’s policies expressly prohibit any trading in derivative securities, including put and call options.

By purchasing out-of-the-money put options, Bonthu could make money only if the market price of Equifax stock were to drop below the put option strike price before the contract expired approximately two weeks later, on September 15. If the market price did not so drop, the put options would expire and his investment would be worthless.

On September 8, the price of Equifax common stock closed at $123.23, a drop of $19.49 (nearly 14%) per share from the prior day’s closing price of $142.72. […] As a result of the precipitous drop in Equifax’s share price, Bonthu turned his initial investment of $2,166.11 into $77,333.79 in only six days. In sum, Bonthu’s ill-gotten gains from his trading in Equifax options totaled $75,167.68, a return of more than 3,500% on his initial investment.

3028.03.15equifaxchart.JPG

The SEC says Bonthu had never previously traded in Equifax options. Equifax fired Bonthu in March 2018 after he allegedly refused to cooperate on an internal investigation on charges that he violated the company’s insider trading policy. Bonthu has agreed today to a permanent injunction and to return ill-gotten gains plus interest. If the settlement is approved by a judge, this will terminate SEC civil charges.

The equifaxsecurity2017.com website, on which Bonthu worked, has been deemed one of the most poorly put together breach notification sites in recent years, with several issues affecting it.

He is the second Equifax employee charged with insider trading after Equifax’s breach last year. Earlier this March the SEC charged former CIO of Equifax U.S. Information Solutions Jun Ying. Equifax says it tipped off the Department of Justice and the SEC to Ying’s alleged insider trading.

Although Ying wasn’t directly told that Equifax had been breached, he was assigned to assist Equifax’s Global Consumer Solutions unit with what was billed as “a business opportunity for an unnamed client,” code-named Project Sparta, according to court documents. The project was designated as “urgent,” and everyone participating, including Ying and his team, were instructed to cancel their Friday evening plans and respond to all requests.

At 5:27 p.m. that day, Ying texted a co-worker that the breach they were working on “sounds bad” and noted: “We may be the one breached. . .. Starting to put 2 and 2 together,” according to the SEC complaint. Later that evening, Ying learned that Equifax’s CSO, chief legal officer and vice president of cybersecurity had all canceled their travel plans, it adds.

The following Monday, around 10 a.m., “Ying used a search engine to find information on the internet concerning the September 2015 cybersecurity breach of Experian, another one of the three major credit bureaus, and the impact that breach had on Experian’s stock price,” according to the complaint. “The search terms used by Ying were: (1) ‘Experian breach’; (2) ‘Experian stock price 9/15/2015’; and (3) ‘Experian breach 2015.’

“This defendant took advantage of his position as Equifax’s USIS chief information officer and allegedly sold over $950,000 worth of stock to profit before the company announced a data breach that impacted over 145 million Americans,” says U.S. Attorney Byung J. “BJay” Pak. “Our office takes the abuse of trust inherent in insider trading very seriously and will prosecute those who seek to profit in this manner. By selling when he did, Ying avoided losses in excess of $117,000.”

Earlier this month, Equifax revised its estimate of the breach’s impact to 147.9 million U.S. consumers. About 15 million U.K. consumers – of which about 860,000 are at risk of identity theft – and 8,000 Canadian consumers also saw their personal information get breached (see Equifax Breach Victims: UK Count Goes Up).

I identified Equifax’s control gaps and conflict of interest in a post shortly after the breach in 2017. I suspected then as I do now that more people will be charged related to conflict of interest with LifeLock identity theft protection.

Information sourced from Tara Siegel Bernard for the New York Times, Allison Prang for the Wall Street Journal, and the associated press. Curated and edited by Jeremy Swenson of Abstract Forward Consulting.

Review of the 2018 Verizon Data Breach Report

The 11th edition of the DBIR (Data Breach Investigation Report) was released this month. It analyzed more than 53,000 cybersecurity incidents and over 2,200 data breaches across the globe. Here is a summary of its key findings:
Ransomware continues to be a top cybersecurity threat, according to the report. Ransomware is found in almost 39 % of malware attacks – double the amount in last year’s analysis. “Ransomware remains a significant threat for companies of all sizes,” says Bryan Sartin, executive director security professional services, Verizon. “It is now the most prevalent form of malware, and its use has increased significantly over recent years.” This comes as no surprise to many city and state officials that have battled with ransomware takeovers recently. Systems in the city of Atlanta were offline for several days last month following a ransomware attack. Government offices and municipal systems have also been targeted in Baltimore, North Carolina, San Francisco, and others yet to come forward – the government does not like to admit their errors.

The report also shows that attacks on public sector organizations continue to focus on espionage. 43 % of public sector attacks were motivated by espionage. Of those attacks, 61 % were carried out by state-affiliated actors. Privilege misuse and error by insiders account for a third of breaches. Small businesses represent 58 percent of data breach victims. Over 50% of the attacks on public sector organizations were accomplished using backdoors in software, which arguably makes the case for why putting backdoors in software is a bad idea even if a government plans to use it for its own purposes – the government is far behind the private sector in incubating innovation here. Using phishing techniques to get data from individuals remains the most popular method as individuals continue to be the weakest link when it comes to security.

Fig 1. Data Breach Causes, Verzion 2018
Using stolen credentials topped the list of causes for data breaches (See Fig 1. for the other top causes). A common saying is “it’s easier to ask the employee for their password than try to guess it”, so social engineering continues to be a very useful tactic for hackers. For most employees, the only security protection system is their password. If a cyber-criminal obtains it, they can easily bypass most of the company’s security controls.

Attribution is probably one of the most difficult tasks in cyber-crime which already has more challenges than most people realize, with misdirection and lack of digital footprints to help lead to the cyber-criminal. This is likely due to several virtual machines and botnets used to facilitate the attack across several nations – all of which are likely unfriendly to the United States. Specifically, 73% of cyber-attackwere caused by outsiders. Organized crime rings are very likely using hackers as a service because 50% of cyber-attacks were attributed to organized crime. 12% was attributed to nation-states – APT (advanced persistent threats) who have unlimited funds.

Specific to Healthcare: The healthcare industry is rife with error and misuse. In fact, it is the only industry that has more internal actors behind breaches than external. In addition to these problem areas, ransomware is endemic in the industry—it accounts for 85 % of all malware in healthcare.

In total, there were 750 incidents and 536 with confirmed data disclosed. The top three patterns include: miscellaneous errors, crimeware, privilege misuse – 63 % of all incidents within healthcare. Breach threat actors breakdown: 56 % internal, 43 % external, 4 % partner, 2 % multiple parties. Breach actor motives are: 75 % financial, 13 % fun, 5 % convenience, Data compromised: 79 % medical, 37 % personal, 4 % payment.

The full report is available here.

Abstract Forward Consulting can help you review the issues in this report to build stronger security and process controls. Contact us here to learn more.

Jeremy Swenson, MBA, MSST

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