If 2014 was the “year of the breach,” then what future cybersecurity threats await us? What’s the next mode of attack, and how much worse will it be? That’s the question on the minds of financial services companies as they invest in cyber protection measures, manage growing customer concerns and try to predict what’s next.
Today, cyber security is a priority issue for every stakeholder in the financial services industry – investor, consumer, regulatory, employees – all the way up to boards of directors. That makes the “tomorrow” question – how will the threat evolve? – all the more important.
“When it comes to cyber, clients are wary that they are studying to fight the last war,” said Bill Stewart, a Senior Vice President with Booz Allen who leads the firm’s work in the financial services sector. “They’re looking for a fundamentally different way to deal with the cyber threats of the future, based on a clear understanding of those emerging threats. Yet, we must remember that people are launching these attacks and people are making business decisions that create vulnerabilities. To get ahead of and manage these threats we need the right balance of technology and highly skilled analysts with intelligence tradecraft and data analytics skills.”
To help financial services companies better anticipate future threats and identify new approaches to cyber security, Booz Allen has assembled its list of Cyber Trends for 2015 and beyond. The list is based on conversations with CISOs, CIOs, CPOs chief risk officers, and other leaders in the financial services sector, as well as Booz Allen’s own extensive analysis of cutting-edge cyber issues and threats.
“Even as cyberattacks are a daily occurrence, we are seeing some major changes on the horizon,” observed Booz Allen Principal Albert Belman. “We know the nature of attacks will evolve, yet how? Booz Allen takes a lifecycle approach – Anticipate, Protect, Detect, Respond and Recover – that can address critical questions such as this. When you link together all of these segments, they become very powerful tools that can help our clients thrive in this time of increasing peril.”
The top financial services cyber security trends for 2015:
1. Third-party risk moves to the top of the list. Like other sectors, the financial services industry is a huge mesh of intertwined capabilities. Companies are already aware of the potential cyber risks associated with partners, vendors and other third parties and are feeling more pressure from U.S. and European regulators to better manage this risk. As illustrated by numerous breaches this year, the security posture of critical third parties, such as the retail industry, can have a profound impact on financial services firms. In 2015, there will be a shift towards active cyber risk mitigation and monitoring with third parties, versus the current “self-certification” process that is proving less reliable. Third-party relationships will no longer be an afterthought and security will be built in by design into any product, service, solution or software capability provided by a third party – and subject to frequent testing and updates.
2. The rise of the “fusion center.” Financial services institutions have increasingly sought a holistic, integrated approach to cyber security, yet it has often proven elusive. Now, firms are building cyber “fusion centers” that better integrate the many different teams – fraud, cyber, IT, physical security, product development – to boost intelligence, speed response, reduce costs and leverage scarce talent. The result: more efficient and faster threat awareness and mitigation.
3. Information protected at the database and data element level. It is the most important question: how does a firm protect its most valuable, sensitive and regulated data and where is it located? In 2015, the discussion will move away from “building bigger walls” to a “defense in depth” risk-based approach around high-risk and high-value repositories that limits the value of raw data (for example, debit card PINs). The use of tokenization, chip cards and other solutions will increasingly render stolen data useless to hackers.
4. Rise in alternative payment systems creates exposure. As companies continue to roll out – and consumers embrace – new electronic, wireless payment systems, hackers are presented with more targets. In particular, use of underlying technologies like Bluetooth or NFC (near-field communications) creates opportunities for cyber attacks and breaches. Simple “bench testing” of new systems will not suffice: companies must adopt a holistic approach that assumes a breach will happen and protects the data.
5. Cyber crime analysis evolves away from brute force to big data. Traditionally a labor intensive, second-by-second process, cyber crime analysis will increasingly move towards more of a big data approach. The use of powerful, real-time analytics across multiple data sets – both structured and unstructured – will vastly improve the quality and speed of real-time cyber threat analysis while greatly reducing overall cost.
6. Hacktivism spreads to the Middle East. Long directed at U.S. and European-based multinationals, hacktivism will become a major threat to financial services institutions in the Middle East. Regional threat actors have adopted local grievances and formed around hacktivist collectives similar to or associated with Anonymous. The proliferation of cyber tools and hacking knowledge is giving independent hacker and loosely connected groups an opportunity to participate in cyber attacks against the region’s financial sector. Some popular targets are already emerging, like the Saudi Stock Exchange (Tadawul) that was targeted in early August 2014 by regional hacktivists, Izzah Hackers and AnonArabOps.
7. “Western” cyber problems are coming to a developing nation near you. Economic prosperity and light-speed growth in mobile banking in some countries have bypassed regional and local financial organizations’ ability to manage threats. As a result, phishing, ATM skimming and banking malware are no longer the sole concern of “Western” or multi-national financial firms. Industry research shows that the Gulf Cooperation Council (GCC) region experiences ongoing threats, including widespread banking malware in the UAE and a significant amount of phishing attacks in Saudi Arabia.
8. Wargaming drives incident response preparation. Looking ahead, financial services firms will borrow from the military to adopt better approaches to preparation and simulation training. In particular, the use of wargaming – as opposed to more rudimentary testing – will help firms better understand – and prepare for – those seeking to attack their cyber defenses.
9. Everything firms know about privacy has changed. The next generation of privacy is focused on the halo of information around individuals – the transactional, behavioral and navigation information generated as individuals move and interact through the online and physical world. This information is not currently regulated, yet consumers expect a high level of protection. Companies that manage this well will create a competitive advantage through customer loyalty and insight.
10. Cyber insurance usage grows while coverage and ability to successfully make claims shrinks. The NIST Cyber Security Framework, financial statement reporting requirements and D&O insurance risk have created a new perfect storm of potential liability. The insurance industry, where premiums are projected to grow to more than $2 billion, is in a race to actuarially quantify new cyber risks and to carve out coverage of large, uncertain future risks. Insurance companies – increasingly litigating with policy holders over coverage – are insuring not only future financial loss, but also brand, reputation and goodwill.