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TIME TO TAKE A SECURITY-FIRST APPROACH TO APIS IN INSURTECH

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By Olaf van Gorp, Perforce Software

 

Insurance is one of the latest sectors to start to benefit from advancements in digitalization. A big part of insurance’s digital transformation is the increasing use of APIs, bits of software that connect different services and apps — whether internally or externally — to connect in a friction-free way. Part of the whole open finance movement, APIs remove the need for complex and costly integrations between disparate systems and networks.
Insurers and associated third parties benefit from being able to share data more easily, processes happen faster, workload and unnecessary costs are reduced, and customers get faster response. It’s an all-round win.
However, while one of the reasons for using APIs is that they provide a controlled route to share confidential and sensitive data, APIs can also potentially introduce risk. If an API contains a vulnerability, then that can lead to problems, including cyberattacks and data breaches. Furthermore, once an API is published, there is usually little or no time to remedy the situation.
To understand how easily these weaknesses can be introduced, let’s look at how APIs are created. First, development has always been the point at which vulnerabilities are inadvertently introduced, potentially leading to issues further down the line, including performance and security problems. Second, development teams have traditionally worked siloed from the rest of the business (even from their colleagues in the IT operations team), with little visibility into their work. Plus, traditionally, security has not been their focus: that was something for the QA or test manager to worry about later.

Olaf van Gorp

That culture is changing, particularly with the DevOps movement, whereby the barriers between development and operations teams is broken down, and they work in a more collaborative way. However, with the understandable emphasis on getting an API published as soon as possible, security often still takes a backseat.
Finally, APIs are being created by a much wider group of people (including external agencies), not just software developers. That is good and bad: it makes it easier to keep up with the demand for APIs, but the new breed of API creators may not be trained software engineers, and arguably even more likely to introduce vulnerabilities.
So, what is the solution to this dilemma? APIs are an integral part of the entire financial sector’s future, but they have to be secure. Fortunately, there are some ways in which their security can be improved.

Four ways to improve API security

ONE – create a security-first mindset – get everyone on board on putting security in the spotlight, rather than an afterthought. Bake security into development processes and throughout the API’s entire lifecycle. Make sure everyone understands their roles around risk mitigation, including external contributors. Consider investing in security training for anyone responsible for API development.

TWO – go the extra mile – some compliance and standards already address API security. For instance, in Europe, the banking sector’s PSD2 requires security measures at the API level. In insurance, the NAIC Registry in the USA is putting more emphasis on API security and overall management, with automated filing of standard reporting documentation from insurance providers to meet state-level compliance. We are likely to see more API security requirements worldwide and within all aspects of finance, including insurance. However, open finance standards have a specific scope, and there are other security measures that can be adopted to further reduce risk. A good source is the OWASP API Security Top 10, which covers the most common API vulnerabilities and ways to prevent them.

THREE – put the brakes in place – comprehensive security processes need to cover all deployment and approval processes, people and teams. They should cover: authentication, authorisation, malicious pattern detection, message content security, and rate limiting. An API should also not be published without time-stamped approval from an authorised person, and this is typically a combined manual and automated process, involving the software development’s Continuous Delivery/Continuous Integration pipeline. Finally, make sure that there is a clear audit trail, so that if a problem occurs in the future, it can be traced back to root cause.

FOUR – reduce human intervention – automate security policies as much as possible, because this will not only reduce the risk of manual error, it will also help prevent security becoming a bottleneck. Introducing an API gateway will help achieve this, as well as making it harder for people to switch off security policies at will. Make sure that the chosen API gateway can operate with external contributors, as well as support all the main types of API, and deal with high volume. People still make the final decisions, but automation is the workhorse.

Take away security from developers
This may sound counter-intuitive to what is happening in other parts of software development (especially the Shift Left movement whereby software developers are taken on more responsibility for testing), but take away security from developers. Instead, leave API product managers, security specialists and other people to keep watch on API security. Use software tools to continually inspect code so that any issues are found early. Again, this can be a largely automated process, with humans then taking action depending on the results.
APIs are transforming financial services of all kinds, opening up faster and more efficient ways to communicate. By making security a priority across an API’s lifecycle, this will make it easier to reap the rewards of APIs, to reduce costs, speed up processes, and keep customers satisfied.

 

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Finance

HOW FINANCIAL ORGANIZATIONS CAN PROTECT THEIR DATA

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Yuval Wollman, President, CyberProof and Chief Cyber Officer, UST

 

Top executives from Wall Street’s largest banks pinpointed cybersecurity as the greatest threat to America’s financial system, at a Congressional hearing that took place in May.

The concern of financial industry leaders with cyber-attacks is neither surprising, nor new. The attraction of cybercriminals to banks and other financial institutions makes sense, given the fact that the financial sector functions as gatekeepers – not just of financial assets, but also of valuable Personally identifiable information (PII).

Threat actors are attracted to attack financial institutions to earn a profit through increasingly sophisticated attacks that range from ransomware attacks to identity theft. But while the threat continues to grow, there is much that can be done to mitigate the risks.

 

The Downsides of Digital Banking

The number of attacks on financial institutions increased sharply in the last two years due to the upheavals wrought by COVID-19, which prompted a dramatic rise in the number of online transactions.

With so much of today’s financial transactions done on both web and mobile devices, threat actors have more opportunities than ever before. Take, for example, the growing importance of Man in the Middle (MITM) Attacks, which impersonate another party online and give criminals access to personal data, passwords, and banking details.

With the widespread adoption of digital banking, consumers have become increasingly worried about cyber-attack. As a result, there’s growing demand to create better consumer protection laws that respond to the rapidly evolving technology. The U.S. Federal Trade Commission (FTC), for example, recently strengthened security safeguards for consumer financial information.

 

It’s Not “Just” About the Money

Financial organizations are at risk not just from threat actors looking for profit, but also from nation-states and hacktivists acting out of idealistic motives or as a means of achieving specific political ends.

The most famous examples of this type of attack include Russia’s 2016 attack on Ukraine’s electric grid and North Korea’s 2017 attack on Britain’s National Health Service.

Because of the extent of the damage that this type of attack could cause, NATO established cyberspace as the “fifth domain of warfare” in 2016. It developed a definition of when foreign factions are banned from attacking financial institutions, due to the fear that this type of attack could directly lead to a country’s destabilization.

 

Recognizing Risk Factors

The digital transformation of financial services helps banks and other financial institutions provide more a more convenient customer experience.

And while significant customer demand has led many banks to implement changes such as the transition from legacy to cloud-based solutions, these shifts also have the potential to create additional security risks.

For example, if we’re talking specifically about cloud migration, there’s need for additional security layers to protect organizations working with public cloud providers from the range of attacks targeting the financial sector: ransomware, account takeover, data theft and manipulation, phishing attacks, identity theft, and more.

Another example is the extensive use of third-party vendors, which has increased the risk of attack for organizations in the financial sector. Because third-party vendors enlarge the attack surface, they create more entry points to the system and make it harder to protect customer data.

 

Accelerating Detection & Response

By adopting an agile approach that supports continuous improvement, financial organizations can facilitate proactive identification of evolving threats and vulnerabilities in the wild. More specifically, by placing an emphasis on use case optimization – which starts by mapping out an organization’s threat detection gaps to a framework such as MITRE ATT&CK – enterprises can prioritize threats and invest their time and resources in mitigating risk more effectively.

For organizations transitioning to the cloud, what’s key is managing the migration process in a way that provides optimal visibility in the cloud and supports ongoing optimization at the enterprise level. Digital playbooks are a crucial tool in providing improved detection and response, creating automated or guided responses that allow faster, more effective, collaborative action.

The development and regular review of incident response plans similarly allows for efficient response in emergency situations and helps reduce the business impact of cyber-attacks.

 

Targeted Threat Intelligence

Threat intelligence that’s tailored to the financial services sector is another key component of timely detection and response. By working with expert Cyber Threat Intelligence (CTI) services, organizations can obtain up-to-date information about industry-specific threats in real time – information that is a highly valuable tool in strengthening the defense of an enterprise.

 

Cyber Hygiene

Employees make mistakes; after all, it’s only human. But these errors can lead to massive data breaches. For example, when someone clicks on a phishing email or leaves passwords for a company computer on a slip of paper that’s easily seen by the wrong person, the damage can be astronomical.

Providing regular cybersecurity training programs for employees can help minimize the risk of an accidental or careless action leading to cyber-attack. To be effective, training programs should not only explain how to spot cybersecurity risks like phishing emails but should also discuss how and where it’s safe to access company information.

Aside from employee training, there are fundamental cybersecurity-related decisions that should be implemented at the enterprise level such as Zero Trust, DevSecOps, and multi-factor authentication (MFA). From a policy perspective, for example, it’s crucial to enforce MFA for all applications. Moreover, technology-related vulnerabilities can be minimized through frequent patching and updates for systems. Audits, as well as vulnerability and penetration tests, must be conducted regularly.

 

For the Financial Sector, “Best Practices” are Key

With the growth in number and complexity of cybersecurity attacks on financial organizations and the increased risk of nation-state attacks, proactively approaching the question of cybersecurity and implementing “best practices” makes the difference in reducing the degree of risk to an enterprise.

By modernizing the SOC with a carefully navigated migration to the cloud, adopting continuous improvement of use cases and the development of digital playbooks that improve detection and response – as well as by leveraging targeted threat intelligence and maintaining strong cyber hygiene – enterprises can put themselves in a stronger position to minimize the potential business impact of a cyber-attack on their organizations.

 

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IF IT’S A LOSS, YOU’RE TOO LATE – WHY THE INSURANCE INDUSTRY NEEDS TO FOCUS ON FIRST NOTIFICATION OF RISK

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Simon Dicks, Insurance Channel Manager EMEA, Lytx

 

Insuring commercial fleets can be an expensive business. Average repair costs have increased by up to 40% in the past 8 years and disputes about who was responsible can drive up expenditure for both fleets and insurers.

Part of the problem is that the insurance industry hasn’t had the tools to forecast costs and premiums accurately enough in this sector. Underwriting decisions are still made in the same way they always have been, by looking back at historical data from previous years. This approach simply isn’t giving insurance companies an accurate indication of potential risk – or a proper indication of the impact of driver behaviour.

Technology is helping insurers to an extent by providing information about First Notification of Loss (FNOL) – automatically sending notifications when unusual G-force readings are captured within a black box tracking device as a result of sudden braking or impact. This is good, but far better is the ability to use proactive technology to detect when an incident is at risk of occurring and when a driver is distracted.

The only way to address this is to put a highly accurate level of camera technology both inside and outside cabs, supported by sophisticated technologies such as Machine Vision (ML) and Artificial Intelligence (AI). This way, we can see not just that an incident has happened, but why it happened. What’s more, we can assess risk before an accident happens at all and prevent it happening in the first place. We call this First Notification of Risk (FNOR) – and it’s a whole step up from FNOL.

Machine Vision scans the internal and external environment of the vehicle to identify distracted driving behaviours such as mobile phone use, eating, drinking, smoking, inattentive behaviour or failure to wear a seatbelt. AI, comparing the behaviour against a vast bank of accumulated data, is then able to determine the riskiness of that situation and whether it needs to be flagged to the fleet manager, driver, or insurer via a short video clip. The big difference in this approach is that it’s proactive, not reactive. For the first time, fleets and insurers can identify adverse driving and distracted driving in real-time for the first time.

This includes the ability to alert drivers of any momentary slip-ups or distracted behaviours. Using the same technology, drivers will receive an audio or visual alert to help keep them on track and to lessen the likelihood of a moment’s distraction becoming anything more.

When insurers have access to these insights, they can also start to see patterns from the data over time. For example, a fleet manager might start to see that there’s a peak in risky driving behaviours on a Friday afternoon when lots of drivers are rushing to finish for the weekend. As a result, they may decide to spread the shifts differently so as to avoid that pattern of behaviour.

When insurers are only looking at FNOL, it’s already too late. A driver could be unthinkingly driving whilst smoking, on their phone, and nobody would never know. Whereas with FNOR, both managers and insurers are provided with insights that remove the guesswork, and underwriters have the information they need to assess risk with far greater precision.

There’s still a long way to go in making the move towards FNOR. With so many different companies selling cameras and telematics systems and producing information in hundreds of different formats, claims data will have to be standardised before the sector can really transform. However, by starting to embrace ideas like FNOR, the industry can move towards a solution that saves them time, money and lives.

To find out more, visit  www.lytx.com/FNOR

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