Cyber security is the most prominent risk issue facing company Boards of Directors and executives worldwide. We are inundated almost daily with accounts of major corporate data breaches and compromised networks. Recent high-profile attacks such as the targeting of point-of-sale terminals at Target, Home Depot and Staples, server software at JP Morgan, and employee databases at Sony, demonstrate how vulnerable even the largest and most sophisticated companies can be. In this highly challenging environment, board members and executives are, not surprisingly, unsure of how best to protect themselves.

Proactive prevention with a focus on cyber resilience: A “how to” guide

The first and most important step is to take measures to prevent intrusions from occurring in the first place. Just as a proper diet, exercise, hand-washing and regular flu shots are important to minimizing your odds of developing the flu, maintaining standard systems hygiene is critical to protecting your organization from being infiltrated by hackers. In fact, the Center for Internet Security claims that up to 80% of cyber attacks can be prevented by:

  • Maintaining an inventory of authorized and unauthorized devices
  • Maintaining an inventory of authorized and unauthorized software
  • Developing and managing secure configurations for all devices
  • Conducting continuous (automated) vulnerability assessment and remediation
  • Actively managing and controlling the use of administrative privileges1

Unfortunately, blocking four out of five attacks still leaves open the possibility that a substantial number of attacks might succeed. And today, it’s more a matter of when rather than if you will, eventually, be successfully attacked. What happens then?

Even well prepared companies may not know immediately that they have been breached. But those that have prepared for such an event will be much better off than those that have not. Just as conducting fire drills can save lives in the event of a real fire, preparing for the aftermath of a cyber attack can make an enormous difference in how quickly your company gets back on its feet and how well officers and board members do in the limelight after a major breach becomes public.

The good news is that building a cyber-resilience action plan is a step-by-step process that any company willing to commit the time and resources can accomplish. And, after ensuring you have good system hygiene, the next step is to put the right group together to work out the details. This working group should include a cross-functional collection of senior managers (Sales & Marketing, IT, Finance, Legal, Risk, HR, etc.) each of whom is willing to meet regularly to discuss cyber security, monitor evolving threats (as seen from his or her unique perspective in the company), and participate in modeling and analyzing hypothetical attacks.

Once formed, the group can begin to map out the plan by, first, assessing the company’s cyber risk profile. A recent study from Verizon has concluded that 95% of all cyber attacks can be analyzed in terms of nine basic patterns.2 A thorough study of the patterns, facilitated perhaps by the help of an external cyber security expert, can help the group determine the types of attacks their company is most vulnerable to; preventive measures can then be tailored to these patterns.

To go deeper, the team should then develop hypothetical scenarios, based on the most relevant patterns identified above, to help identify in detail possible attack modes, targets, vulnerabilities and impacts. There is no need for, and it is in fact a detriment to require, great precision in this exercise. No one can know for certain, ahead of the event, how much damage a successful data breach will cause in terms of lost revenue, reputational harm, or stock price declines. All that is needed are rough estimates that give enough sense of scale and types of potential harm to enable the team to put together a risk mitigation strategy.

Such a strategy will involve steps to mitigate the damage to the most relevant targets in an attack. For example, if a company determines that its greatest threat is malware installations in point-of-sale software systems, directed by domestic operatives, via vendor access rights, then it might consider investments in end-to-end encryption, Application White Listing (AWL), File Integrity Monitoring (FIM), system access software, vendor access controls and regular reviews of all vendor access logs.

It is important to realize that cyber-attacks cannot be fully mitigated. In these instances, having the right cyber insurance coverage in place can make all the difference in how your company performs in the days, weeks and months following a successful attack. Cyber insurance can provide critical capital and expert assistance when a cyber-security event occurs.

Companies may also want to acquire Directors and Officers (D&O) liability insurance to protect board members company officers against claims of negligence following a breach. In addition, they may want to review their property, casualty and business interruption coverage to ensure that sufficient protection exists in the event of a successful cyber-attack on the company’s infrastructure. Fortunately this type of attack has, to date, been rare. But such attacks are not unheard of, and the potential for them is growing more likely given current geopolitical instabilities, especially for multinationals with exposure in more sensitive countries around the globe.

By taking the steps outlined above, a company can increase its cyber resiliency and be much better positioned to quickly recover from a successful cyber-attack.

To learn more, download the original article via the PDF.

Cyber Series: Intro

Constantly monitoring the cyber landscape, we keep insureds at the forefront of the industry as cyber risks continue to evolve. Our preventative tools provide our clients with the knowledge, training, security, and consultative solutions to help them stay ahead of the curve.

Cyber Risk: The Board's Role

On this edition of NACD BoardVision, Chris Clark, publisher of NACD's Directorship Magazine and Lou Lucullo, Chief Underwriting Officer, Financial Lines, Americas Region at AIG, discuss what directors can do to mitigate cyber risks, and who are the most vulnerable targets.