Cybersecurity & Risk Management 2021

While the profile of cyber security has certainly increased in recent years, the events of the last 18 months have reinforced the importance of properly staffed and sufficiently funded cyber security programs. The COVID-19 pandemic has greatly increased the attack surface for malicious actors, both internal and external, and companies must be prepared to evolve as quickly as cyber criminals. Our experts Marianne Bailey and Don Heckman share their insights on the cybersecurity and risk management with Financier Worldwide Magazine. 

In your opinion, what are the major cyber threats to which today’s companies are vulnerable?

Given the risks, do you believe companies in your country of focus are placing enough importance on cyber security? Are board members taking a proactive, hands-on approach to improving policies and processes?

Cyber security is an evolutionary process and companies tend to spend what they feel they must to manage the risk of doing business in this globally connected digital world. Board members realize there is significant risk and they are constantly upping their game to address that risk. Most companies or organizations do not understand or appreciate the extent of their risk from a cyber attack. Very few have taken a hard look at what is required for their company to become cyber resilient. Today, regulations are the primary mechanism driving focus in this area.

To what extent have cyber security and data privacy regulations changed in your country of focus? How is this affecting the way companies manage and maintain compliance?

US cyber security and privacy regulations continue to be of focus across individual states, as well as the federal government. California voters passed the California Privacy Rights Act, which will significantly alter the state’s current law when fully enacted in 2022. Currently, at least 11 other states are considering privacy-related legislation in 2021. Federal privacy and cyber security legislation is expected to regain focus under the Biden administration, given the EU-US Privacy Shield invalidation last year and the recent SolarWinds hack. Given that the US does not have a uniform federal regulation for either privacy or cyber security, companies that do business in the US must understand and demonstrate compliance in each state they operate in. It can be a challenge to remain compliant, as these regulations are rapidly evolving and sometimes contradict each other.

In your experience, what steps should companies take to avoid potential cyber breaches—either from external hackers or internal sources such as rogue employees?

To avoid potential cyber breaches, companies should have a documented comprehensive cyber security program that includes people, technology and operations. It should implement cyber security best practices and promote a culture where cyber security is everyone’s responsibility. Some best practices that have the most impact for preventing breaches include ensuring you know what assets are in your environment, and that they are configured securely and patched with the most up-to-date software. Companies should strongly authenticate every user with multifactor authentication and allow users access only to what they need to do their jobs. Users, especially privileged users, should be monitored for abnormal behavior. And finally, companies should have a robust training program for every employee, since more than 90 percent of breaches are caused by human error.

How should firms respond immediately after falling victim to cyber crime, to demonstrate that they have done the right thing in the event of a cyber breach or data loss?

Every firm should develop and exercise an incident response plan. Figuring out what to do in the middle of a breach is unacceptable in today’s cyber and regulatory world. Companies must activate their incident response plan. They must also contact their office of general counsel (OGC) to determine reporting obligations, based on the specific details of the event. A further important step is to turn on logging for high-value assets if it is not enabled and start collecting data. Companies should also collect network traffic flow logs and isolate compromised endpoints from the network and begin rebuilding clean and secure versions of the endpoints. Before resuming production, companies should test rebuilt endpoints to ensure they are clean and secure and perform forensic analysis of the endpoints that have been or may have been compromised. Compromised user account passwords must also be changed, which may require all users to change their account passwords, depending on the severity of the incident. Finally, companies must also update outbound firewall rules to block unusual traffic and remind employees about safe email and web-browsing practices.

In what ways can risk transfer and insurance help companies and their directors and officers to deal with cyber risk, potential losses, and related liabilities?

Cyber security insurance is designed to protect insured companies against losses resulting from cyber incidents. Most of these policies require the insured companies to implement cyber security best practices and adopt preventive measures to obtain either increased coverage or better rates. These safeguards can improve overall cyber risk management for the insured companies. That said, we would caution companies to not be too reliant on insurance or just implementing the minimum standards. They should be continually looking to improve their cyber security program. While insurance can potentially shield your company from financial losses, it cannot protect the impact to your company brand from the loss of customer trust resulting from an incident.

What are your predictions for cyber crime and data security in your country of focus over the coming years?

Cyber crime will continue to evolve, expand and become more sophisticated, which will drive an increase in data security regulations, technologies and professionals across the US and around the world. As a result of the pandemic and the rapid adoption of remote work environments, the attack surface of many companies has greatly expanded, creating new opportunities for cyber criminals. The number of cyber attacks in 2020 were significantly greater than the previous year and continued to evolve and become more sophisticated. As cyber security teams try to make use of artificial intelligence and machine learning for cyber defense, so do the attackers. Sophisticated advanced persistent threat actors will probably take a more hands-on approach to their attacks to strategically insert and maneuver to avoid detection. Attacks will continue to be successful, which will increase the calls for legislation and regulation and could drive the US to adopt a uniform federal privacy law. These attacks will highlight the need for improved data protection strategies and drive adoption of data security technologies. Finally, the demand for data protection and privacy professionals will continue to grow, and supply will not keep up with demand for these individuals.