Cloud Data Breaches mo’ Money

IT people need to beef up their opinions about cloud security, says a recent report by the Ponemon Institute called “Data Breach: The Cloud Multiplier Effect.”

3DYes, data breaches occur in the cloud. In fact, it can be triple the cost of a data breach involving a brick and mortar medium.

The report put together data from the responses of over 600 IT and IT security people in the U.S. The report has three observations:

  • Many of the respondents don’t think that their companies are adequately inspecting cloud services for security.
  • The cost of a data breach can be pricey.
  • When a business attempts to bring its own cloud, this is the costliest for high value intellectual property.

More Results

  • 72% of the participants thought that their cloud service providers would fail to notify them of a breach if it involved theft of sensitive company data.
  • 71% believed this would be the same outcome for customer data breaches.

Many company decision makers don’t think they have a whole lot of understanding into how much data or what kind is stored in a cloud.

  • 90% thought that a breach could result when backups and storage of classified data were increased by 50 percent over a period of 12 months.
  • 65% believed that if the data center were moved from the U.S. to a location offshore, a breach could result.

All of these findings mentioned here are the result of self-estimations rather than objective analysis of real breaches.

Ponemon also determined that if a breach involved at least 100,000 records of stolen personal data, the economic impact could jump from an average of $2.4 million to $4 million, up to $7.3 million. For a breach of confidential or high-value IP data, the impact would soar from $3 million to $5.4 million.

In addition to the self-reporting loophole, the report had a low response rate: Only 4.2 percent of the targeted 16,330 people responded, and in the end, only 3.8 percent were actually used. Nevertheless, you can’t ignore that even self-estimated attitudes paint a dismal picture of how cloud security is regarded.

Robert Siciliano is an identity theft expert to discussing  identity theft prevention. For Roberts FREE ebook text- SECURE Your@emailaddress -to 411247. Disclosures.

SEC comes down on Breached Companies

If you’re wondering if businesses, who’ve been targets of cybercrime, have been properly handling the fallout, you have company: The U.S. Securities and Exchange Commission.

1SThe SEC is investigating this very issue. Key Questions Include:

  • Did the businesses adequately protect data?
  • Were investors properly notified about the breach’s impact?

One of the companies being investigated is Target Corp.

The SEC, historically, has concentrated on giving guidance to companies regarding disclosure of data-breach risks, and the SEC has traditionally also assisted with ensuring that financial companies were well-equipped against hackers.

But the SEC doesn’t like when there seems to be incomplete disclosures of the data breaches or some kind of perceived misleading information.

For example, Target didn’t disclose its breach until the day after it was first reported—by renowned security blogger Brian Krebs.

Just how much should companies say about breaches? This is being debated among regulators, corporate attorneys and activist investors.

Nevertheless, public companies owe it to investors to inform them of material compromises that could affect the investors’ decisions to sell or buy shares. A material attack, says the SEC, includes one that makes a company greatly boost what it spends on defenses, and one in which intellectual property is stolen.

Businesses in general would rather keep silent about breaches to avoid negative fallout. At the same time, it’s not easy to come up with evidence that a business should have disclosed more about a data breach than it actually did. A stolen trade secret, even, won’t necessarily be harmful to a big company’s growth or profits. The interpretation here varies almost as much as the different kinds of cyber attacks do.

Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.

Post-Data Breach Reputation Building

You WILL be hacked. Remember that mantra if you’re a business. Business leaders need to realize the effect that a data breach would have on customers and clients—an aftermath of distrust which can take a lot of time and money to rebuild.

4HInteractions is a customer experience marketing group that released a study called “Retail’s Reality: Shopping Behavior After Security Breaches.” One of the findings is that 45 percent of shoppers don’t trust retailers with their personal information. Following a data breach, 12 percent of faithful shoppers cease shopping at that store, and 36 percent shop there less. And 79 percent of those who’d continue shopping there would more likely use cash—which means buying less.

So that’s a retailer’s worst nightmare: Non-trusting customers who are spending less (not to mention the ones who quit shopping there altogether).

This leaves retailers with two options: prevent all data breaches (not an attainable goal) or devise a plan to minimize the disastrous aftermath.

Communication and transparency with customers is crucial in the aftermath of a breach. Customers want to know that a company will rise to the occasion in the event of a breach and are more interested in how the retailer will deal with the fallout, rather than how a retailer will prevent it. After all, consumers tend to realize that hacking these days is just a part of life.

Companies should not wait till a breach occurs to figure out how to retain customer trust; they should plan ahead. Companies should be able to assess the risk related to the data they collect and have a breach response plan in place prior to a data breach.

The IT department is often on center stage following a breach, but marketing, customer service, and HR departments are also very important.

The departments should pool together to come up with a plan to reassure customers that their security is the top priority and that should a breach occur, they will do everything possible to protect their customers and restore any and all accounts that are compromised as a result.

Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.

Mailroom Error, Big Data Breach

Data breaches need not be launched maliciously in order to be very troublesome, as was the case involving about 3,700 Medicare Advantage members. Freedom Blue and Security Blue members received risk assessment results that actually belonged to other individuals. The addresses, birthdates, member ID numbers and medical information of some members ended up in the hands of other members.

1DAnd how? An innocent mistake committed by a mailroom employee. Though there was no evidence of malicious use of this personal information, it just goes to show you how easily a person’s private information can end up in a stranger’s hands. Imagine receiving a stranger’s medical information in your mailbox. It would make you think twice about trusting the company with your personal information in the future.

Members were notified of this error after the insurer spent a month exploring how it happened. Though the unintended recipients received information about other members’ scores on mood tests, medications and results of frailty tests, at least the Social Security numbers weren’t revealed.

If a breach affects more than 500 people, law requires that the health industry alert the Health and Human Services Department, which will then launch an investigation. The affected consumers, and local news outlets, are also required to be notified.

Highmark Inc., the health insurance company whose members were affected by the mailroom breach, changed the member ID numbers of the affected members or those who might have been affected. Sixty-three members received forms pertaining to other people, and 233 never received a mailing, suggesting that their forms possibly went to other members.

As for the bumbling employee, that person was fired. The other employees are being retrained, and Highmark will implement a bar code system on all mailings, which is one proper way to track breach notification letter mailings to ensure the right pieces of mail end up in the right hands and avoid over-stuffing or mis-stuffing of envelopes..

Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.


Data Breaches May Result in Board Breakups

The ripple effect continues to haunt Target: It’s expected that seven of its board of directors members may be replaced because they failed to provide effective oversight into the corporation’s data-protection risks. Boards simply need to be more proactive in safeguarding their companies against data breaches.

2DInstitutional Shareholder Services (ISS) prepared a report on the Target data breach and aftermath. The report states that Target’s board members should have been kept in the loop pertaining to protection of sensitive information and what a breach could mean to brand reputation and customer loyalty.

“The company acknowledged the need for more stringent internal capabilities to identify potential risks with less reliance on external reports which suggested the systems were robust enough,” the report says.

The report concludes that Target failed to prepare for keeping up with today’s cyber threat technology, and that this failure comes from the audit and the corporate responsibility committees.

ISS says that these committees are responsible for being in charge of risk assessment and management. This includes the risk of fraud. The inadequate oversight in these areas paved the way to the disastrous data breach.

The ISS report should be a wakeup call to board members of all businesses. Board members need to realize the importance of directing more time, energy and money toward improving security programs.

Though the dismissal of seven of Target’s total of 10 board members may seem radical, it also has a fair degree of rationale because it sends the message that boards and senior executives need to be held accountable for their company’s cyber security.

Boards need to be practically fused with their organization’s IT experts and executive team so that they have an intimate knowledge of the steps a company is taking to protect customer information—even if none of the board members are security experts. The ramifications from poor handling of a data security incident are now things that even board members must be aware of and work to prevent.

Robert Siciliano is an Identity Theft Expert to AllClear ID. He is the author of99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.

Data Breach Response Planning 101

Don’t think in terms of “if” you’ll suffer a data breach, but rather, “when.” Once you establish this mindset, it’s time for you to develop a response plan. After all, a security system that’s impenetrable has yet to be invented.

4HWhat’s even more, an amazing number of businesses don’t even have the best security system available. So again, the data breach is a “when,” not an “if.”

For starters, a response plan should include as much information about the incident as possible, remaining transparent (consult your legal team about the types of information that should and should not be disclosed) and being aggressive at managing the circumstances.

Another area to consider when developing a response plan is how the data breach will impact customers and clients—namely, their trust in the company. The Ponemon Institute states that much of the damage from a data breach stems from the loss of customer trust in the company.

Though the average number of customers who vanish following a data breach came in at 4 percent, says the study, there are enterprises that see an average “customer churn” rate of 7 percent. While it may seem small, it will undoubtedly be noticeable when it comes to the bottom line, , and the healthcare and pharmaceutical industries are just the type to suffer this degree of loss.

So how can a company prepare to retain as many customers as possible following a data breach? Be prepared, and this preparation should include a way to stay level-headed.

One way to stay cool and collected is to avoid jumping the gun when the breach occurs, because if the business is too hasty at revealing the breach, the organization will have that much less time to respond in an efficient, optimal matter. Thus, take the time to consult with experts and gather all of the facts before reacting.

Robert Siciliano is an Identity Theft Expert to AllClear ID. He is the author of99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.

Data Breaches Equal Job Loss

Is it coincidence that Beth Jacob CIO resigned from her job as chief information officer of Target Corporation? Or could this possibly be connected to the data breach that slammed Target in December of 2013, affecting as many as 70 million customers? Being a CIO is no easy task, especially when you have thousands of criminals trying to breach your networks every minute of every day.

4DTarget also announced that its information security procedures and compliance division will be completely revamped. The retail giant will also be seeking an interim CIO.

That’s not all. Gregg Steinhafel, Target’s former chief executive, recently lost his job with the retailer due to the data breach. He had been with the company for 35 years.

Should weaknesses in computer safety be blamed on Chief Executive Officers? Yes, because ultimately, the CEO is responsible for protecting the customer’s sensitive data. For instance, Steinhafel was at the helm when thieves hacked customer data records such as credit card information and home addresses, from the retailer’s computer system. Boards are also latching onto this issue and will be very influential in the before and after of a breach.

The company CEO isn’t just responsible for sales; this individual is responsible for security. Target’s data breach is a rude awakening for CEOs everywhere; data security breaches influence sales—very negatively—not to mention customer loyalty.

And then there’s the enormous expense of recovering from the breach and regaining customer trust. In Target’s case it rings in at $17 million thus far. And it is growing. Ultimately, the costs for everything related to the data breach is projected to soar into the billions.

The Secret Service, which is involved in the ongoing investigation, reports that it may take years to nail the hackers.

Law Enforcements motto is “Serve and Protect” and people gripe “where’s a cop when you need one” suggesting Law Enforcement is supposed to be there to protect us at all times. This misconception has created an entire culture of “its not my job/responsibility/problem”. YES. IT. IS. As a company front line employee, an officer or a CEO, security is your responsibility. Security is everyone’s responsibility.

Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.

Data Brokers: Walking the Tightrope

Never mind the government nosing in on your business; there’s a much bigger snooper out there that’s mining to your personal data: thousands of companies whose names you may not even know.

2WThese “data brokers” aren’t “bad”, although a few are irresponsible. They collect and analyze your very personal information, then package it up and sell it for profit to advertisers and the government. Though this rather benign consumer marketing is nothing new, the volume and type of data has changed, thanks to the Internet, making data broking a multibillion dollar venture.

Today’s technology allows data brokers to snatch and sell information about your closest friends, medical conditions, unsavory habits, even your literal footsteps—online and offline.

Data brokers today will classify people into groups such as those with genetic diseases or poverty. These are called vulnerable consumers, with classification names such as Ethnic Second-City Strugglers.

As for medical conditions, there are classifications for particular diseases, such as multiple sclerosis and cancer. There is no legislation that regulates any of this mining into our most private information.

Surprisingly, some of these companies are also in the business of offering identity protection services to consumers.

It’s not known just where the bigger data brokers even harvest their information or to whom they are selling it.

Maybe this is because they consider their client list to be proprietary. One broker even stated that it purchases lists of financially vulnerable people from government agencies so that ultimately, those who are eligible for assistance can be identified. These government clients are public record, said the broker.

The FTC consumer protection head believes that data brokers should be required to allow consumers access to the data that’s been scooped up about them. Meanwhile, data brokers records have become attractive to criminals. Ever since the ChoicePoint breach there have been multiple info/data brokers compromised.

When considering who you choose to do business with, relationships with data brokers, especially any who are also involved with protecting your customers’ identities, should be reassessed.

Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen.See him knock’em dead in this identity theft prevention video. Disclosures.

Data Breaches: How To Protect Your Business From Internal Threats

The biggest threat to your data may not come from external hackers. Find out how to guard against intentional or accidental internal cyber breaches.

14DThe NSA leaks we keep hearing about are a constant reminder of just how vulnerable data is and how this vulnerability can result in data breaches by organization insiders. As Reuters reported, “Edward Snowden may have persuaded between 20 and 25 fellow workers at the NSA regional operations center in Hawaii to give him their logins and passwords by telling them they were needed for him to do his job as a computer systems administrator.” It’s apparent now that the nation’s most significant intelligence and security team failed to install the most up-to-date, anti-leak software.

This news coincides with two recent reports that show insiders are becoming the most significant reason data breaches proliferate. While threats to data security and privacy are often perceived to come from the outside via criminal hackers, recent research has marked internal threats as equally dangerous to customer/client data—whether breached on purpose or by accident.

According to a recent Forrester Research report titled “Understand the State of Data Security and Privacy,” 25 percent of survey respondents said that abuse by a malicious insider was the most common way in which a breach occurred in the past year at their company, while 36 percent of breaches were caused by employee mistakes, making it the current top cause of most data breaches.

Another report, from MeriTalk, which focuses on the federal government, found that 49 percent of breaches happen when employees bypass existing security measures, such as when they’re Web surfing or downloading email or other files. If the federal government can’t protect itself against data leaks, how can small-business owners expect to adequately protect their business data? Let’s take a look at how these data leaks are happening to find out how you can protect against them.

Cracking The Code

We’re at a point where companies interested in protecting their data have invested significant resources into fighting off network attacks from outsiders by incorporating numerous layers of security, such as firewalls, antivirus software, antispyware, antiphishing software and security awareness training, but they’re leaving their data vulnerable to their employees. Companies may have malicious, Edward Snowden-like insiders who hack the network for information, including fellow employees’ passwords.

Or, on the less malicious end of the spectrum, employees may just make simple mistakes that leave the network vulnerable to data breaches. Because of this “hidden” vulnerability, company networks are often compared to candy bars that are hard on the outside and soft and chewy on the inside. Additional risks revolve around savvy employees who might have good intentions but may make the network vulnerable when they go outside existing security measures. They may find themselves forced to do this because of restrictions that prevent them from getting their jobs done.

The Meritalk study found:

  • 66 percent of federal network users believe security is time-consuming and restrictive.
  • 69 percent say their work takes longer because of additional cyber security measures.
  • One in five users report an inability to complete work because of security measures.
  • 31 percent of users work around security measures at least once a week.

Forrester found:

  • 36 percent of breaches stem from inadvertent misuse of data by employees.
  • 42 percent received training on how to remain secure at work, which means 58 percent haven’t had training at all.
  • 57 percent say they’re not even aware of their organization’s current security policies.
  • 25 percent say a breach occurred because of abuse by a malicious insider.

Guarding What’s Yours

The most important thing companies can do is to put the right security measures in place. Employees who need identification include those who are known to access critical data resources, such as those in accounting, human resources, administration, legal, personnel and account management as well as company officers and various contractors. Looking at data flow—that is, where data might be either vulnerable, shared across departments or bottle-necked—companies should work with each critical department to gradually implement security controls that create a delicate balance of security and productivity for day-to-day activities.

Data loss prevention begins with data discovery, classifying data in need of protection, and then determining what level of risk your company may face. Then you should complete a cost/benefit analysis and review the various technologies that can integrate with your existing systems. These include data loss prevention (DLP) technologies that provide real-time network activity monitoring, as well as system status monitoring from the inside out and the outside in.

The goal is to limit who has access to what data as well as determine why the person needs it. It’s also important to look for your vulnerabilities from outside attacks. DLP can simultaneously determine when employees are circumventing security because the system may be prohibiting them from getting their job done.

Other procedures and tools you might want to consider implementing include:

  • System-wide encryption
  • Tools that report alerts and events
  • Inspection access controls
  • Password management
  • Multifactor authentication
  • Device recognition
  • Data disposal for e-data, paper data and discarded devices
  • Transparency

This last one is critical because the more transparent your network security and security policies are, the more effective each department will be when communicating its requirements, needs, wants and differences.

The battle to fight criminal hackers from the outside must not hinder your employees’ progress on the inside. At the same time, you must protect against internal threats from employees, which is an equally dangerous risk that your IT department must acknowledge—and work to secure quickly.

Robert Siciliano CEO of, personal security and identity theft expert and speaker is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen. See him knock’em dead in this identity theft prevention video.

Courts side with Consumers in Data Breach

In general, courts don’t tend to side with consumers in data breach incidents. However, a federal court in Florida is the apple among the oranges. It approved a $3 million settlement for victims whose data was on a stolen laptop in December 2009, that contained personal health information.


The laptops belonged to AvMed, a health insurer, and the unencrypted data involved records of tens of thousands of the company’s customers.

Though the consumer-plaintiffs suffered no identity theft or other direct losses, they blamed AvMed of breach of contract and fiduciary duty, negligence and unjust enrichment.

These claims were dismissed by the U.S. District Court for the Southern District of Florida, but the plaintiffs appealed. The U.S. Court of Appeals for the Eleventh Circuit remanded the case.

AvMed’s attempt for another dismissal went down the tubes, prompting the company to enter into settlement talks with the plaintiffs.

The agreement says that each victim will get up to $10 for every year they made an insurance payment to AvMed, with a cap at $30. This is money, say the victims, that AvMed could have spent on better data security. The agreement also requires AvMed to pay damages to anyone who gets stung with identity theft.

AvMed will also employ encryption and new password protocols, plus GPS technology for its laptops.

Apparently, this settlement is the first in which the awarded victims didn’t have to show tangible evidence of loss.

Traditionally, courts nationwide don’t take on such claims, and that a claim lacks merit if it’s based on the possibility of future damages rather than actual concrete losses that have already occurred.

The ruling serves as a precedent for future data breach cases, to support customers’ stance that a segment of their health insurance premiums should fund data security placements.

Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.