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Automation: The Key to More Effective Cyberrisk Management

cybersecurity automation

In a perfect cybersecurity world, people would only have access to the data they need, and only when they need it. However, IT budgets are tighter than ever and, in most organizations, manually updating new and existing employees’ access levels on a consistent basis is a time-consuming productivity-killer. As a result, there’s a good chance an employee may accidentally have access to a group of files that they should not. As one can imagine, security that is loosely managed across the enterprise is a breeding ground for malware.

The velocity of cyberattacks has accelerated as well. It is easier than ever for cyber criminals to access exploits, malware, phishing tools, and other resources to automate the creation and execution of an attack. Digitization, Internet connectivity, and smart device growth are creating more vectors for attackers to gain an entry point into an organization’s network, and this trend only gets worse as you think about the Internet of Things, which could have concrete impact on machines from production equipment to planes and cars.

One way IT departments can help mitigate the cyberrisk of employee access overload is through automating security policies and processes such as the monitoring, detection and remediation of threats. In the past, organizations have spent a lot on prevention technologies: disparate point solutions such as anti-virus software and firewalls that try to act before an attack occurs. Prevention is important but not 100% effective. And how could technology used for prevention stop a cyber-attacker that has already infiltrated the network? If prevention were the end-all, be-all in security tools, we wouldn’t be reading about cyberattacks on a daily basis.

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As more companies realize this, a spending shift to detection and response is being driven.

To help determine cyberrisk—or better yet, safely manage your cyberrisk—you must look at the threat (which is ever growing due to constant hackers and advanced techniques), vulnerability (how open your data is to cyberattacks), and consequence (the amount of time threats are doing damage in your network). Or, more simply put: risk = threat X vulnerability X consequence time.

To manage your cyberrisk, you need to optimize at least one of the aforementioned variables. Unfortunately, threat is the one variable that cannot be optimized because hackers will never stop attacking and are creating malware at an escalating rate. In fact, a G DATA study showed that 6 million new malware strains were found by researchers in 2014—almost double the number of new strains found the previous year. Instead, what organizations can focus on is investing in the right solutions that target the remaining two variables: vulnerability and consequence.

  • Step One: Organizations must make sure they know their environments well (such as endpoints, network, and access points) and know where their sensitive information lives. It’s always a good idea to rank systems and information in terms of criticality, value and importance to the business.
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  • Step Two: Organizations must gain increased visibility into potential threat activity occurring in the environment. As is often said, there are two types of companies: those that have been attacked and those that have been attacked and don’t know it. A way to increase visibility is through the deployment of behavior-based technology on the network, like sandboxes. Organizations are now shifting their focus to the endpoint. Today’s attacks require endpoint and network visibility, including correlation of this activity. The challenge with visibility is that it can be overwhelming.
  • Step Three: There needs to be some process or mechanism to determine which alerts matter and which ones should be prioritized. In order to gain increased visibility into environments and detect today’s threats, organizations clearly need to deploy more contemporary detection solutions and advanced threat analytics.
  • Step Four: Invest more in response and shift the mindset to continuous response. If attacks are continuous and we are continuously monitoring, then the next logical step is to respond continuously. Historically, response has been episodic or event-driven (“I’ve been attacked – Do something!
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    ”). This mindset needs to shift to continuous response (“I’m getting attacked all the time – Do something!”).  A key ingredient to enable continuous incident response will be the increasing use of automation. Why? Automation is required to keep up with attackers that are leveraging automation to attack. It’s also required to address a key challenge that large and small companies face: the significant cybersecurity skills shortage.

Advanced threat analytics should be important to any organization that takes its security posture seriously. The majority of threats being faced today are getting more advanced by the minute. If an organization relies solely on legacy, signature-based detection, their defenses will be easily breached. It’s important for teams to understand that the cyber defense and response capabilities of an organization must constantly evolve to match the evolving threat landscape. This includes both automatic detection and remediation. Automatic remediation dramatically reduces the time that malware can exist on a network and also reduces the amount of time spent investigating the issue at hand. With automated security defenses, IT teams are given a forensic view of every packet that moves through the network and allows teams to spot anomalies and threats before they have a chance to wreak havoc. And since these tools are automated and work at machine speed, they can deal with a high volume of threats without necessitating human intervention, taking some of the load off overburdened security teams, and ultimately freeing them to act decisively and quickly, before network damage is done.

Enterprise Risk Lagging Globally, Study Finds

Despite a widening range of risks faced by organizations globally, less than 35% of companies say they have an enterprise risk management (ERM) plan in place. What’s more, 70% would not describe their oversight as mature, according to the Chartered Global Management Accountant (CGMA) report Global State of Enterprise Risk Oversight 2nd Edition.

The study found that 60% of boards of directors globally are pressuring their companies to increase involvement of senior management.
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The U.S. is lagging in some areas, with only 46% of its boards assigning risk oversight responsibilities to a committee compared to 70% globally.

One survey conclusion:

Unfortunately, many executives view risk management as mostly focused on compliance and loss prevention with little connection to strategy and value creation. As organizations evaluate their risk management processes, they may benefit from providing an honest assessment about the extent to which risk management in their organization is an important input to the strategic planning process. Given executives understand the importance of taking risks to generate returns, shouldn’t risk management be an important strategic tool by providing risk insights that inform strategy?

Other key findings of the study include:

Navigating the risk landscape infographic

Gauging the Impact of Reputational Risk

The following article is part of a continuing blog series that will explore ideas, concepts, discussions, arguments and applications associated with the field of enterprise and strategic risk management.

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In my previous article, I made the point that the public discussion of reputational risk lacks a set of common standards or definitions. This lack of consistency allows organizations to interpret or define the concept of reputational risk in very different ways. For some, reputation is beginning to be viewed as something like the “risk of risks” in the same way people are starting to discuss the concept of the “internet of things.” I questioned whether reputation or brand is actually a risk or a residual event stemming from other extenuating risk domains or actions.

Upon further reflection and discussions with academics and risk professionals who are thinking carefully about this issue, I would go further now to suggest that reputation or brand risk involves perceived or real human behaviors that are, to some extent, measured against societal, economic or moral standards. The adherence or deviation from established standards generates the basis for the risk, and the variability from the standard influences the duration of the outcome.

The bigger question is: What impact does reputational risk have on economic performance when possibly mitigated by the existence of a robust enterprise or strategic risk management methodology? Is the data available to see the “correlates” between a reputational risk event that trigger or influence operational key process indicators like EBIT, ROA, ROE and share price (public or private)?

What we do know from the Aon 2015 Global Risk Management Survey is that business leaders are concerned about reputational risk in general and the possible linkages with other hazard and operational risks within their organizations.

The respondents to the survey said that they worried that a reputational risk event would significantly impact financial performance.

reprisk1If reputation/brand risk was identified as a precipitating event, the respondents identified regulatory change, increasing competition, talent retention, cash flow/liquidity and share price volatility as “follow on” risk consequences. In effect, reputation/brand risk might constitute a “gateway” risk, where other related “follow on” risk consequences are triggered and serve to increase the overall volatility/impact of the reputation event.

Another way to view the data is to see what events could trigger a reputation event.

reprisk2In this case, the survey respondents identified nine non-correlated risks that could precipitate a reputation/brand event. Here social media plays an important role.

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The speed by which information, accurate or not, is transmitted, consumed and iterated across the nine risk categories may have a material impact on the basis and duration of the reputation/brand event. There is also an error component associated with social media.

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How many times have we witnessed an initial media report of a brand damaging event that turns out to be prematurely reported and the facts distorted, only to be corrected in a later reporting cycle?

Next up: Fat vs. thin tail distributions.

As Technology Gets Smaller, Risks Get Bigger

MicroElectronics

Microelectronics is changing the way we live, work and do business. With circuitry thousands of times smaller than a human hair, microelectronics has become the brains behind almost every business. But shrinking technology makes equipment more vulnerable to breakdowns, especially when it’s portable and fragile. To manage the risk, you need to keep up with these evolving exposures to protect your organization from loss.

Insurance is changing as well, to reflect this new technology. Think of all the equipment that relies on micro-circuitry. From building systems to communications, if it uses electricity, it likely operates with tiny transistors and microprocessors. Our claims data shows that micro-circuitry is prone to break down and is difficult to repair.

Yet, most property coverage does not cover equipment breakdowns and typical equipment breakdown insurance requires proof of physical damage. That can leave a business without coverage for repair or replacement, business interruption and data loss caused by today’s technology losses, unless the policy specifically covers microelectronics failures.

When electronics fail, the components are so small it may be difficult or impossible to see the damage. How small? Intel Corporation reports that more than 100 million of its 22 nanometer tri-gate transistors could fit onto the head of a pin; more than six million transistors would fit in the period at the end of this sentence.

With each innovation, the technology also becomes faster, more powerful and more complex. Transistors are the building blocks of integrated circuits, with billions of transistors integrated and interconnected with circuitry baked into a single microchip. Integrated circuits are used in microprocessors to run computers and programmable devices.

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What’s more, the technology is changing so rapidly, it is hard for most people to keep up. And that’s the challenge for business, industry, and their insurers. In the marketplace, new technology isn’t about theory and experimentation—equipment is an investment and a breakdown can be costly and disruptive.

The evolution of equipment with circuit board technology is causing equipment to fail differently than with previous technology. Microelectronics makes equipment more vulnerable to a breakdown, especially since it’s frequently used in the field. Increasingly, equipment damage is not detectable and sometimes not even physical.

Equipment may stop functioning for no obvious reason, with no apparent physical damage. If a wire one micron wide breaks, it’s almost undetectable. Most electronic equipment requires firmware, embedded software instructions that can become corrupted. The equipment stops working, but it’s not because of physical damage.

With the internet and cloud computing, a loss may also be virtual. Studies show the majority of U.S. businesses use the cloud; some estimates report that up to 75% or more use some type of cloud services. The loss of internet broadband service and cloud connectivity can cripple many business operations.

Gartner Incorporated, the information technology research and advisory company, estimates there will be 26 billion connected devices by 2020. Already, Wi-Fi connections and radio-frequency identification using sensors and monitors enable the remote management of everything from retail business inventories to building thermostats.

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It’s difficult to predict when the next leap will come in new technologies for microelectronics. In what seems like science fiction, some researchers aim to break through the limits of conventional electronics using silicon chips by integrating biological and nanoelectrical systems.

What will this mean for business and industry?

Some of the old concepts of property insurance, developed over a century ago, may no longer serve businesses and insurers as well. Technology is too complex. In a digital world, we live and work online. Technology connects us and provides the tools to communicate, create products and deliver services. Data is what drives a successful business.

For decades, the trigger for equipment breakdown and other property insurance has been based on loss due to physical damage that can be observed and identified. As more equipment breakdowns involve micro-circuitry, however, it’s time to take a different approach.

When purchasing equipment breakdown insurance, ask what “failures” are covered for micro-electronics. There should be no additional sublimits or deductibles—microelectronics claims should be like other equipment breakdown losses. Are cloud services covered under service interruption? Is data restoration included? When does off-premises coverage apply?

Insurers must offer new and innovative products and insurance solutions to cover today’s micro-technology for breakdowns. In a complex world, it’s as simple as that.

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