IT Security: Beware the Cyber Criminals

by Melba-Jean Bernad, 11 January 2010

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topics:
Security Technology

tags:
compliance officers data breaches information security IT security PwC reputational damage

For many years, IT security tended to be an afterthought in many corporate budgets. When times are good, the CFO and CIO often allot money towards the purchase of new hardware rather than new data encryption software, whose value is harder to quantify. When times are bad, funding for security is often among the first areas to be slashed.

But perhaps not this time. Despite the worst economic downturn in 30 years, finance executives now seem to be focusing on addressing IT security as a critical business issue. Or so suggest the responses to PricewaterhouseCoopers’ 2010 Global State of Information Security survey. The 7,200 business executives surveyed worldwide say that IT security can’t now be ignored.

The study reveals that global leaders appear to be ‘protecting’ the information security function from budget cuts— nearly two out of every three respondents (63%) expect spending to either increase or stay the same—in spite of the worst economic downturn in decades.

But expectations of IT security are also much higher. The IT security function and its leaders are now tasked with helping the company address an acute set of crisis-related risks and opportunities such as those associated with new business models, M&A transactions, successive waves of layoffs, a shifting regulatory landscape, cost-cutting drives in other parts of the enterprise, and major shifts in a key competitor’s strategy.

Change of Heart

According to the survey, five factors are persuading companies that it is time to make IT security a corporate priority. Forty-one percent say business continuity and disaster recovery has elevated the importance of security among the top brass. Thirty-nine percent indicate that the economic downturn is adding to their sense of urgency. The other three important drivers are internal policy compliance (38%); regulatory compliance (37%); and company reputation (32%).

Worries over terrorism, climate change and natural disasters may be fanning the increased importance being placed on business continuity. Then there are the fears about cyber-crime. Security companies predict that social networks, cloud computing, e-mail messages, and mobile devices will become prime targets for cybercriminals in 2010, additional reasons for CFOs to give importance to IT security.

For Ted DeZaballa, national managing partner for security and privacy at international consultancy Deloitte, the biggest threat in 2010 is organised crime stealthily moving to exploit an individual’s computer in order to infiltrate the larger enterprise. Organisations “simply don't understand how exposed they are,” he says.

Cost of Complacency

There has been a frightening increase in the volume of data breaches. According to MSN, the number of personal records--data like Social Security numbers, medical records and credit card information tied to an individual--that has been exposed to hackers has skyrocketed to more than 220 million records in 2009, compared with 35 million in 2008. That represents the largest collection of lost data on record. The majority of 2009’s data loss stems from a single source: U.S. credit card processing firm Heartland Payment Systems.

Dr. Larry Ponemon, founder and chairman of the Ponemon Institute in the U.S., conducted a study of 43 companies that suffered a data breach in 2008. He estimates that the incidents cost the companies US$6.6 million per breach, up from US$6.3 million in 2007 and US$4.7 million in 2006. Ponemon says that in 2008, the per-victim cost of a data breach was US$202, up from US$197 in 2007, and from US$138 when the study was launched in 2005.

“The simple conclusion to these numbers is clear: the financial impact for a company that experiences a data breach is significant and rising,” notes Ponemon. The costs in the wake of a data breach are mounting because of lost business and legal defense, which grew in 2008, while costs of customer support, notification and free services such as credit monitoring decreased, according to the study.

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