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CHECK, PLEASE! ADDING UP THE COSTS OF A FINANCIAL DATA BREACH

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Reliance on email as a fundamental function of business communication has been in place for some time. But as remote working has become a key factor for the majority of business during 2020, it’s arguably more important than ever as a communication tool. The fact that roughly 206.4 billion emails are sent and received each day means we’re all very familiar with that dreaded feeling of sending an email with typos, with the wrong attachment, or to the wrong contact. But this can be more than just an embarrassing mistake – the ramifications could, in fact, be catastrophic.

In particular, for the financial services industry that deals with highly sensitive information including monetary transactions and financial data, the consequences of this information falling into the wrong hands could mean the loss of significant sums of money. Emails of this nature are the Holy Grail for cyber criminals. So how can financial services organisations keep their confidential information secure to safeguard their data and reputation? Andrea Babbs, UK General Manager, VIPRE, explains.

 

How much? 

According to research from Ponemon Institute in its Cost of a Data Breach Report 2020, organisations spend an average of $3.85 million recovering from security incidents, with the usual time to identify and contain a breach being 280 days. Accenture’s 2019 Ninth Annual Cost of Cybercrime found that financial services incurred the highest cybercrime costs of all industries. And while examples of external threats seem to make the headlines, such the Capital One cyber incident, unintentional or insider breaches don’t always garner as much attention. Yet they are both as dangerous as each other. In fact, human errors (including misdeliveries via email) are almost twice as likely to result in a confirmed data disclosure.

Costs will be wide ranging depending on the scale of each breach, but at a minimum there will be financial penalties, costs for audits to understand why the incident happened and what additional protocols and solutions need to be implemented to prevent it from happening in the future. There could also be huge costs involved for reimbursing customers who may have been affected by the breach in turn.

 

Priceless damage

The fallout from data breaches goes far beyond that of financial penalties and costs. Financial services businesses have reputations to uphold in order to maintain a loyal customer base. Those that fail to protect their customers’ sensitive information will have to manage the negative press and mistrust from existing and potential customers that could seriously impede the organisation as a whole. Within such a highly competitive market, it doesn’t take much for customers to take their money elsewhere – customer service and reputation is everything.

 

Check, please!

Within the financial services sector, the stakes are high, so an effective, layered cybersecurity strategy is essential to mitigate risk and keep sensitive information secure. With this, there are three critical components that must be considered:

  1. Authentication and encryption: Hackers may try to attack systems directly or intercept emails via an insecure transport link. Security protocols are designed to prevent most instances of unauthorised interception, content modification and email spoofing. Adding a dedicated email to email encryption service to your email security arsenal increases your protection in this area. Encryption and authentication, however, do not safeguard you against human errors and misdeliveries.
  2. Policies and training: Security guidelines and rules regarding the circulation and storage of sensitive financial information are essential, as well as clear steps to follow when a security incident happens. Employees must undergo cyber security awareness training when they join the organisation and then be enrolled in an ongoing programme with quarterly or monthly short, informative sessions. This training should also incorporate ongoing phishing simulations, as well as simulated phishing attacks to demonstrate to users how these incidents can appear, and educate them on how to spot and flag them accordingly. Moreover, automated phishing simulations can also provide key metrics and reports on how users are improving in their training. This reinforcement of the security messaging, working in tandem with simulated phishing attacks ensures that everyone is capable of spotting a phishing scam or knows how to handle sensitive information as they are aware and reminded regularly of the risks involved.
  3. Data loss prevention (DLP): DLP solutions enable the firm to implement security measures for the detection, control and prevention of risky email sending behaviours. Fully technical solutions such as machine learning can go so far to prevent breaches, but it is only the human element that can truly decipher between what is safe to send, and what is not. In practice, machine learning will either stop everything from being sent – becoming more of a nuisance than support to users – or it will stop nothing. Rather than disabling time saving features such as autocomplete to prevent employees from becoming complacent when it comes to selecting the right email recipient, DLP solutions do not impede the working practices of users but instead give them a critical second chance to double check.

It is this double check that can be the critical factor in an organisation’s cybersecurity efforts. Users can be prompted based on several parameters that can be specified. For example, colleagues in different departments exchanging confidential documents with each other and external suppliers means that the TO and CC fields are likely to have multiple recipients in them. A simple incorrect email address, or a cleverly disguised spoofed email cropping up with emails going back and forth is likely to be missed without a tool in place to highlight this to the user, to give them a chance to double check the accuracy of email recipients and the contents of attachments.

Finance

CAN THE CLOUD REVOLUTIONISE FINANCE?

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By Walter Heck, CTO, HeleCloud 

 

The scale of the Cloud revolution that businesses have gone through over the last few years can’t be overstated. Across almost every industry, businesses that have migrated to the Cloud have seen increased revenues, higher productivity and were more prepared to face the challenges of the pandemic than those relying on legacy infrastructure.

However, one industry that has been slow to realise the potential of the Cloud has been finance. PwC found that 81% of banking CEOs were ‘concerned’ about adopting digital tools too quickly however,  even though 91% of hedge fund executives who adopted Cloud solutions stated that their chosen cloud solutions performed ‘better than expected’. Those sitting on the fence when it comes to the cloud can afford to do so no longer. The speed, security and efficiency offered by the cloud is already changing the face of finance, as it has so many industries before it.

 

How Cloud can help Finance?

Compliance continues to be an area that financial institutions of all shapes and sizes are spending an increasing amount of time and money on. The majority (71%) of large firms are cutting the size of their compliance departments while GDPR, Brexit and increased global economic sanctions make even simple tasks regulatory headaches. Compliance is also costing the finance sector more every year. Since the financial crash, Deloitte estimates Deloitte that compliance costs have increased by as much as 60% for retail and consumer banks.

Migrating to the Cloud can solve many of these compliance issues for financial service institutions. For instance, by leveraging modern technologies on the Cloud, such as Artificial Intelligence (AI) and Machine Learning (ML), organisations can ensure financial activities remain compliant with local regulations, no matter where the data is stored. AI can also process this data far quicker and more effectively than humans, ensuring compliance matters are solved quickly and with little room for error.

With companies downsizing their expensive compliance departments, while at the same time regulation increase, the role of Cloud-based automation in compliance is set to become even more important to the financial sector.

Financial institutions that utilise Cloud-based automation allow themselves the peace of mind that they are less likely to be faced with sanctions from regulators for unforeseen or unknown infractions when carrying out day to day activities. With the cost of non-compliance running into the billions every year, neutralising this threat has the potential to save significant amounts of money for the financial institutions who make the move to the Cloud.

 

Security

Data security is vital to the survival of financial institutions. With strict rules in place, and punishments for breaches from regulators and governments increasingly common. As the number of cyber-attacks continues to increase, and costly ransomware continues to put companies out of business, it is imperative that financial institutions take the necessary steps to secure their data.

Traditional on-premises storage and data management solutions of the type utilised by many financial institutions are frequent victims of various types of cyber-attack. Gartner research has shown that up to 60% fewer attacks occur on Cloud structures when compared to on-premises alternatives.

There are many reasons for this but one of the simplest is remote access. An IBM study highlighted that 95% of security failures at companies are due to human error. This can be anything from employees using unapproved third-party applications to being the victim of ‘spill over’ malware for an attack on a different company that bleeds onto another’s on-premises infrastructure. With data being stored and managed remotely, the Cloud offers fewer direct contact points between employees and valuable company data.

However, not all Cloud solutions are created equal and when going alone companies can often find themselves under-utilising the security benefits of the Cloud and leaving themselves vulnerable to threats. Selecting the right Cloud service provider is vital. Storing sensitive data on a Cloud service enabled and managed by an experienced, trustworthy partner, ensures that client and customer data remains safe and accessible without the litany of security issues that come with on-premises infrastructure.

 

Partnering with a Cloud enabler

The Cloud is already revolutionising finance in the way it has so many other industries. Big players such as JP Morgan and Goldman Sachs have started migrating core applications to the Cloud and setting up Cloud hubs in major American cities. Almost half (43%) of financial services decision makers have stated their intent to increase their reliance on the Cloud over the coming year as more and more finance professionals see the benefits that larger competitors are reaping from Cloud migration.

In periods of great change and uncertainty, it can be tempting to bury your head in the sand and stick to the way things are already being done. However, those who ignore the Cloud revolution leave themselves vulnerable in a rapidly changing and unforgiving business climate. An experienced Cloud services partner can help guide a business on its Cloud journey and ensure they receive all the security and productivity benefits the Cloud offers. With more and more major players moving processes and workflows onto the Cloud, it is up to each finance decision maker to change now, or be overtaken by their forward looking and savvy competitors.

 

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Finance

PREPARING YOUR HEDGE FUND FOR THE MODERN CYBERCRIMINAL

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By: Simon Eyre, Head of Europe, Drawbridge

 

The familiar adage that “every organization is a target” when it comes to cyber-attacks, solidifies its place as an undeniable truth for companies in all industries each year. Spring has barely begun and we have already seen what could be one of the biggest cyberattacks of 2021. When thousands of companies were compromised due to the exploitation of flaws in the Microsoft Exchange Server email software, organisations across the globe were once again faced with the reality that the modern cybercriminal will use any opportunity to gain leverage in the cyberspace and get a monetary advantage.

Today’s criminal is capable, skilled, and always following the money. This is what makes the financial industry a tempting target, with alternative investment firms being increasingly being targeted by criminals. Very recently, Sequoia Capital, one of the largest venture capital firms in the world, was successfully phished with sensitive data being exposed to criminal eyes.

So, what can hedge funds do to prepare the organization for an impending cyberattack?

 

One size fits all?

It is tempting to bolt-on the latest technology on the market, and trust that the product will do ‘what it says on the box’. When constructing a robust cybersecurity program, to avoid investing in cybersecurity plans that are seemingly “one size fits all”, hedge funds should firstly focus on evaluating the cybersecurity landscape and understanding the most common threats and potential attack vectors. The firm’s leadership and cybersecurity team should identify what factors would make your business a target and why would you be at risk, as well as consider the types of cyberattacks your peers have experienced. Ask questions such as: “What kind of breaches and attacks are happening in the industry to firms of our size and strategy?”, “How are other firms mitigating these risks and how can our fund do the same?” and “Where are the cracks in the technical armor?”

During this process, you should consider what data is most important to your business. What are the crown jewels of the hedge fund? Consider where this data is stored, who has access to it, how it is transmitted and whether vendors process it. Never underestimate what might be of value to a cybercriminal. Your most important data can include corporate data, communication records, or personal data of staff and investors.

Prioritize protecting your data and protecting against the most likely attacks that would disrupt the business.

 

Plenty of phish in the sea

Phishing remains a weapon of choice for the modern cybercriminal. In 2020, we saw as number of attacks occur via social engineering, voice/email phishing and impersonation. One notable example is the unfortunate set of events that set in motion the eventual closure of Levitas, an Australian hedge fund. After sending a fake Zoom invite and it being accepted, hackers planted malware and gained control over an executive’s email, leading to the approval of $8.7M in fraudulent invoices. Shortly after, the firm’s largest investor pulled their planned investment, resulting in the fund being scheduled to wind down.

What can we learn from this? Any employee in the hedge fund could fall victim to a phishing attack, as these emails, calls and invites are carefully crafted and virtually indistinguishable from the real deal. An important mitigation strategy is to invest in high quality staff awareness training that goes beyond ticking boxes on a generic on-demand course and tests. Hedge funds should establish a training program that is relevant to the business, the work environment, and its risks, as well as the systems in use. Standard template training is insufficient in preparing staff for the delicately created and convincing attacks of cybercriminals.

 

A balanced blend of staff training and technology

Most cybersecurity experts would agree that defense in depth is critical. This means that the hedge fund’s technology and staff should work in harmony to achieve the highest degree of protection for the firm. Many cyberattacks, especially phishing, have time on their side. Once an employee has been convinced to click on a link, criminals will lurk in the background and look for vulnerabilities within the business. To address this issue, in addition to employee training, hedge funds should invest in a vulnerability management solution that helps discover weaknesses within the system. Hedge funds should continually perform vulnerability management with recurring penetration testing of their environment to ensure the safety of their data and uninterrupted service.

 

The importance of vendor management

Hedge funds today work with a network of independent partners or vendors that support the running of their operations. From law firms, to auditors, brokers, marketers, researchers and administrators, the hedge fund’s network expands into a complex spider’s web, increasing the likelihood of a successful cyberattack with each new silk thread. Why? Criminals will not always go for the bullseye, but rather compromise a target that might have weaker defenses and use their network as a steppingstone to the hedge fund’s valuable data. This is one of the reasons why regulators and hedge fund investors are hyper focused on vendor due diligence. To minimize risk, hedge fund managers should hold vendors to the same cybersecurity standards as the business itself. Remember, your firm’s network is only as secure as the weakest vendor with access to your data. Extensive due diligence of third parties should not be optional – it is required.

Criminals continue to be attracted to valuable data, and hedge funds can expect to be increasingly targeted due to the nature of their business and large transactions being processed every day. To avoid financial and reputational damage due to a cyber-attack, as well as ensure regulatory compliance while navigating a complex regulatory environment, hedge funds must invest in and develop a robust cybersecurity program that is tailored to the alternative investment industry. By focusing on the most important data, most likely attacks and equally investing in people and technology, hedge fund managers can protect their business, while building a reputation as a reliable partner in the alternative investment industry.

 

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