Our Chapter’s thanks to all our attendees and to our partners, the Virginia State Police and national ACFE for the unqualified success of our May training event, Cyberfraud and Data Breaches! Our speaker, Cary Moore, CFE, CISSP, conducted a fully interactive, two-day session on one of the most challenging and relevant topics confronting practicing fraud examiners and forensic accountants today.
The event examined the potential avenues of data loss and guided attendees through the crucial strategies needed to mitigate the threat of malicious data theft and the risk of inadvertent data loss, recognizing that information is a valuable asset, and that management must take proactive steps to protect the organization’s intellectual property. As Cary forcefully pointed out, the worth of businesses is no longer based solely on tangible assets and revenue-making potential; the information the organization develops, stores, and collects accounts for a large share of its value.
A data breach occurs when there is a loss or theft of, or unauthorized access to, proprietary information that could result in compromising the data. It is essential that management understand the crisis its organization might face if its information is lost or stolen. Data breaches incur not only high financial costs but can also have a lasting negative effect on an organization’s brand and reputation.
Protecting information assets is especially important because the threats to such assets are on the rise, and the cost of a data breach increases with the number of compromised records. According to a 2017 study by the Ponemon Institute, data breaches involving fewer than 10,000 records caused an average loss of $1.9 million, while beaches with more than 50,000 compromised records caused an average loss of $6.3 million. However, before determining how to protect information assets, it is important to understand the nature of these assets and the many methods by which they can be breached.
Intellectual property is a catchall phrase for knowledge-based assets and capital, but it’s helpful to think of it as intangible proprietary information. Intellectual property (IP) is protected by law. IP law grants certain exclusive rights to owners of a variety of intangible assets. These rights incentivize individuals, company leaders, and investors to allocate the requisite resources to research, develop, and market original technology and creative works.
A trade secret is any idea or information that gives its owner an advantage over its competitors. Trade secrets are particularly susceptible to theft because they provide a competitive advantage. What constitutes a trade secret, however, depends on the organization, industry, and jurisdiction, but generally, to be classified as a trade secret, information must:
• Be secret: The information is not generally known to the relevant portion of the public.
• Confer some sort of economic benefit on its holder: The idea or information must give its owner an advantage over its competitors. The benefit conferred from the information, however, must stem from not being generally known, not just from the value of the information itself. The best test for determining what is confidential information is to determine whether the information would provide an advantage to the competition.
• Be the subject of reasonable efforts to maintain its secrecy: The owner must take reasonable steps to protect its trade secrets from disclosure. That is, a piece of information will not receive protection as a trade secret if the owner does not take adequate steps to protect it from disclosure.
Cary presented in-depth information on the various types of threats to data security including:
–Organized criminal groups
Protecting proprietary information is a timely issue, but it is difficult. The event presented a list of common challenges faced when protecting information assets:
–Proprietary information is among the most valuable commodities, and attackers are doing everything in their power to steal as much of this information as possible.
–The risk of data breaches for organizations is high.
–New and emerging technologies create new risks and vulnerabilities.
— IT environments are becoming increasingly complex, making the management of them more expensive, difficult, and time consuming.
–There is a wider range of devices and access points, so businesses must proactively seek ways to combat the effects of this complexity.
–The rise in portable devices is creating more opportunities for data to “leak” from the business.
–The rise in Bring Your Own Device (BYOD) initiatives is generating new operational challenges and security problems.
–The rapidly expanding Internet of Things (IoT) has significantly increased the number of network connected things (e.g., HVAC systems, MRI machines, coffeemakers) that pose data security threats, many of which were inconceivable only a short time ago.
–The number of threats to corporate IT systems is on the rise.
–Malware is becoming more sophisticated.
–There is an increasing number of laws in this area, making information security an urgent priority.
Cary covered the entire gamut of challenges related to cyber fraud and data breaches ranging from legal issues, corporate espionage, social engineering, the use of social media, the bring-your-own-devices phenomenon, and the impact of cloud computing. The remaining portion of the event was devoted to addressing how enterprises can effectively respond when confronted by the challenges posed by these issues including breach response team building and breach prevention techniques like conducting security risk assessments, staff awareness training and the incident response plan.
When an organization experiences a data breach, management must respond in an appropriate and timely manner. During the initial response, time is critical. To help ensure that an organization responds to data breaches timely and efficiently, management should have an incident response plan in place that outlines how to respond to such issues. Timely responses can help prevent further data loss, fines, and customer backlash. An incident response plan outlines the actions an organization will take when data breaches occur. More specifically, a response plan should guide the necessary action when a data breach is reported or identified. Because every breach is different, a response plan should not outline how an organization should respond in every instance. Instead, a response plan should help the organization manage its response and create an environment to minimize risk and maximize the potential for success. In short, a response plan should describe the plan fundamentals that the organization can deploy on short notice.
Again, our sincere thanks go out to all involved in the success of this most worthwhile training event!