We are in a golden age of data breaches - just this week, the United States Post Office was the latest casualty - and consumer attitudes about data security and privacy are evolving accordingly. If your data security and privacy programs exist just to ensure you meet compliance, you’re going to be in trouble. Data (and the resulting insights) is power. Data can also be the downfall for an organization when improperly handled or lost.
In 2015, Forrester predicts that privacy will be a competitive differentiator. There is a maze of conflicting global privacy laws to address and business partner requirements to meet in today’s data economy. There’s also a fine line between cool and creepy, and often it’s blurred. Companies, such as Apple, are sensitive to this and adjusting their strategies and messaging accordingly. Meanwhile, customers — both consumers and businesses — vote with their wallets.
When news about the Heartbleed bug captured worldwide attention last month, consumers learned that their personal information, initially thought to be secure, had in fact been vulnerable to hackers for years. Arguably the worst Internet breach of all time, the revelation left many questioning what to do next.
To understand how consumer reaction to Heartbleed unfolded, we tuned into online chatter and engaged Forrester’s ConsumerVoices market research online community immediately after the news broke. While Forrester’s social listening data reveals that sentiment of consumer conversation about Heartbleed was consistently negative, online community response tells us that the negativity doesn’t stem purely from shock – rather, from a sense of helplessness and jadedness.
On May 5, 2014, Target announced the resignation of its CEO, Gregg Steinhafel, in large part because of the massive and embarrassing customer data breach that occurred just before the 2013 U.S. holiday season kicked into high gear. After a security breach or incident, the CISO (or whoever is in charge of security) or the CIO, or both, are usually axed. Someone’s head has to roll. But the resignation of the CEO is unusual, and I believe this marks an important turning point in the visibility, prioritization, importance, and funding of information security. It’s an indication of just how much:
Security directly affects the top and bottom line. Early estimates of the cost of Target's 2013 holiday security breach indicate a potential customer churn of 1% to 5%, representing anywhere from $30 million to $150 million in lost net income. Target's stock fell 11% after it disclosed the breach in mid-December, but investors pushed shares up nearly 7% on the news of recovering sales. In February 2014, the company reported a 46% decline in profits due to the security breach.
Poor security will tank your reputation. The last thing Target needed was to be a permanent fixture of the 24-hour news cycle during the holiday season. Sure, like other breached companies, Target’s reputation will likely bounce back but it will take a lot of communication, investment, and other efforts to regain customer trust. The company announced last week that it will spend $100 million to adopt chip-and-PIN technology.
Some of the highlights in case you haven't read it yet:
Six months before the incident, Target invested $1.6 million in FireEye technology.
Target had a team of security specialists in Bangalore monitoring the environment.
On Saturday November 30, FireEye identified and alerted on the exfiltration malware. By all accounts this wasn't sophisticated malware; the article states that even Symantec Endpoint Protection detected it.
I was very excited to finally get a copy of the much-anticipated 2013 Verizon Data Breach Investigations Report (DBIR.) I have found the report to be valuable year after year. This is the 6th iteration and this year’s report includes 621 confirmed data breaches, as well as over 47,000 reported security incidents. 18 organizations from across the globe contributed to the report this year. The full report is 63 pages, and I have to say that Wade Baker and company did a great job making it an enjoyable read. I enjoyed the tone, and I found myself laughing several times as I read through it (Laughing and infosec aren't commonly said in the same breath.) There are tons of great references as well, ranging from NASCAR, to Biggie Smalls, the Violent Femmes and more. The mantra of this year’s report is “Understand Your Adversary’ is Critical to Effective Defense and Response.” Here are a few observations:
The focus on the adversary answers customer questions. Who is the adversary? This is a frequent question from Forrester clients. The Mandiant APT1 report stirred up much debate on state sponsored actors and Verizon's data and analysis gives us more perspective on this class of threat actor. The first table in the report profiles the threat actors that are targeting organizations. It provides a high level view that I suggest you include in any type of executive engagement activity you participate in. This 3rd party snapshot of the threat actors should resonate with a wide degree of audiences.
Before we get too far along into 2013, I’d like to take a moment to reflect back on the events of 2012. Thanks to our friends at CyberFactors*, this is what we saw:
1,468 (publicly reported) incidents. This includes everything from stolen laptops to external hacks to third party partners mishandling data to employees accidentally disclosing data via email.
274,129,444 (known) records compromised. In the 608 cases where there was a record count reported, this was the total count.
Types of data lost/compromised
Personally identifiable information (PII) was compromised in 53% of cases. This also includes credit card or bank account information, as well as medical or health insurance information.
Company confidential information (CCI) was compromised in 4% of cases. This includes things like proprietary intellectual property (IP), compensation data, business plans, corporate financial data, and information subject to a non-disclosure agreement with a third party. These types of incidents may not always be publicly reported, assuming that organizations are even aware that it has occurred or is happening. IP is a valuable asset, and must be protected.
Governmental information was compromised in 42% of cases. This includes things like address, voting data, driver’s license numbers, state or Federal tax IDs, Social Security numbers, and passport information.
Yesterday, WikiLeaksreleased emails taken in the highly-publicized Stratfordata breach. While many of the emails are innocuous, such as accusations regarding a stolen lunch from the company refrigerator; others are potentially highly embarrassing to both Stratfor and their corporate clients. The emails reveal some messy corporate spycraft that is usually seen in the movies and rarely is illumined in real life. For example, one email suggests that Stratfor is working on behalf of Coca-Cola to uncover information to determine if PETA was planning on disrupting the 2010 Vancouver Olympic Games.
This week I did a webcast, Planning for Failure, which makes the assumption that if you haven't been breached, it is inevitable, and you must be able to quickly detect and respond to incidents. An effective response can be the difference between your organization's recovery and future success or irreparable damage. While I was working on the slides for the webcast, I started to reflect back on the 2011 security breaches that personally impacted me. Three breaches immediately came to mind:
It has been a few years since Forrester delved deeply into the issues surrounding consumer privacy, and in that time, an awful lot has changed:
Facebook Connect, Google ID, Yahoo Identity, and Sign In With Twitter have emerged as a wholenew way of being recognized across a myriad of websites across the Net. As little as a decade ago, most adults online couldn’t have imagined the convenience of single sign-on.
At the same time, data capture methods have not only proliferated, they’ve become exceptionally sophisticated. Tactics like Flash-based cookies and deep packet sniffing surreptitiously collect behavioral data about online consumers, while loyalty and membership cards provide more insight into consumers’ purchasing habits at the line item level than ever before.
All that extra data is hard to protect without big changes to governance policies and technology stacks, and when data breaches happen, they're public and ugly.
Finally, legislators have forged ahead with regulations to protect consumer data. Europe's answer is the Data Protection Directive – a regulatory framework that governs the capture, management and use of consumer data, while in the US, congressional leaders, egged on by consumer advocacy groups, are introducing bills designed to limit data capture and to provide remediation in cases of data and security breach.
By now, you've all heard about Epsilon's April 1 data breach — an unauthorized party accessed a subset of Epsilon's email clients' data. My colleague Dave Frankland outlines the circumstances of the incident and its implications on Customer Intelligence and data security in his blog post immediately following the incident.
I attended Epsilon's Customer Symposium in Naples, Fla., last week, and I wanted to pipe in with some commentary based on what was addressed directly by Epsilon at the event.
Marketers: The way I would look at this is "if a data breach can happen to Epsilon — a firm which specializes in data and data management — it can definitely happen to me." We learned from Bryan Sartin, director of investigative services, Verizon Business Security Solutions, and Mick Walsh, supervisor, Miami Electronic Crime Task Force, US Secret Service, that electronic crime is a huge and growing business, due in part to the ease of access to consumer information online and the ease of access to the data black market through online search engines. Three-quarters of cases of electronic crimes executed through malware come from data disclosed through Facebook.