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Category Archives: Cyber Liability

What is the Internet of Things?

Dongles, Fitbits, Alexa, smart watches and more – we are all familiar with these handy pieces of tech. With ever-increasing functionality and user hype, the Internet of Things (IoT) is no doubt a growth market. But what defines IoT? How did we get here? What are the risks? And how much further can this tech go?

What is IoT?

It is estimated that there is a staggering 31 billion IoT devices online, but what exactly are they? The IoT refers to devices with embedded technologies that allow them to exchange data with other devices and systems over the Internet.  An example of this is a smart home equipped with various interconnected devices (e.g., smart lighting, smart thermostats etc.) that can be controlled from a single app or device. Being able to turn on the heating and launch your favourite playlist before you have even stepped foot in your home, all from your phone, is surely not a bad thing.

IoT devices are also being deployed increasingly for commercial application. A study in the US estimates that 35% of manufacturers utilize IoT sensors within their manufacturing processes. Sensors can track parts as they move through the assembly line, giving process engineers improved oversight compared to traditional methods. This increased transparency can drive down costs for manufacturers and improve their bottom line.

How did we get here?

Technology companies have been trying to connect devices to the Internet for well over 40 years, with one of the first examples being a vending machine in the 1980s. This allowed the vending machine to report on its inventory and whether or not drinks were cold. For many reasons early attempts to develop this technology were largely unsuccessful. This quickly changed with the advent of smaller, cheaper to produce chips that could efficiently connect devices to the Internet. By 1999, technology pioneer Kevin Ashton had coined the phrase “Internet of Things”.

What are the key exposures for IoT devices?

Cyber vulnerabilities: Given their size, it is often hard to integrate robust cyber defences into IoT devices to fend off hackers. Once a hacker gains access, they can infiltrate the network the smart device is connected to. In what sounds like a Hollywood blockbuster movie, hackers managed to gain access to a casino’s network via a smart thermometer located in the fish tank, walking away with 10 gigabytes of the casino’s data – not quite suitcases of cash but just as valuable!

Intellectual property exposure: IoT is a competitive market with many large companies fighting for market share, but with this comes the very real potential for IP litigation. In particular, the complex nature of IoT can mean that companies can unknowingly infringe patented inventions and risk IP infringement allegations from competitors.

Bodily injury and property damage: Given the fact that IoT involves physical devices, there is an inherent exposure to bodily injury/property damage when compared to a non-hardware-based technology. For instance, the FDA had to recall 500,000 pacemakers in 2017 after concerns around cyber vulnerabilities which could be exploited to drain the battery or alter the heartbeat. The recall did not involve replacement of the pacemakers. Instead, medical staff were able to patch the security holes. Nonetheless, this highlights our reliance on IoT for critical functions and the potential for catastrophic loss.

What does the future look like for this growth area?

It is safe to say that the number of IOT devices will only increase and their functionality will also become more sophisticated. For better or worse, IoT is here to stay. Here are a couple of ways IoT may change the world in the coming years:

The idea of a “smart home” is something we are familiar with, but the idea of a “smart city” is still being developed. IoT has the potential to change the way we interact with the cities we inhabit. Smart cities will use a host of IoT devices to collect data using sensors, which can then be analyzed to improve health services, transport infrastructure and other services.

Farming is one of the oldest industries in the world, and while it has grown leaps and bounds from the days of horse-drawn farming, IoT has the ability to further modernize the sector. For example, sensors can be used to monitor weather conditions, livestock, agricultural drones and assist with crop management. Smart farms can drive efficiencies and bring down costs, making farming more profitable and environmentally friendly.

Global research firm Gartner estimates that by 2025 there will be 75 billion IoT devices connected to the Internet. The rapid rise of the number of units in circulation and the ever-increasing functionality of IoT brings with it increased exposures and risks.

Companies developing, manufacturing, or selling these devices need a comprehensive insurance policy to cover their exposures. CFC has a dedicated technology policy and an inhouse team of claims experts to deal with any issues that may arise. For more information, please contact ABEX or CFC.

Source: www.cfcunderwriting.com


Recruitment Firm Falls for a Phishing Scam

Social engineering involves the use of deception to manipulate individuals into carrying out an act such as transferring money, handing over confidential information, or clicking on a malicious link, and it’s causing serious financial harm to organizations around the world.

Any organization that transfers funds electronically can be susceptible to social engineering attacks, which can result in the company mistakenly transferring funds to fraudulent third parties. However, it’s not always businesses themselves that are tricked into transferring funds, but their customers. In some cases, fraudsters will impersonate a business, intercept communications between the business and a customer, and fraudulently redirect funds that were due to be paid to the business for the goods or services it provided. This can potentially result not only in strained relations with customers but also, in many cases, with the business being left out of pocket for the money that was owed.

One of our policyholders affected by such a loss was a recruitment and staffing firm. The firm provides recruitment services across a range of industries, including banking, insurance, manufacturing, and technology, and the positions that the company helps to fill range from entry-level jobs to senior executive roles.

Credential phishing opens floodgates
The scam began when a member of the recruitment firm’s accounts department fell for a credential phishing email. Credential phishing emails are used by malicious actors to try and trick individuals into voluntarily handing over their login details, typically by directing them to a link that takes them through to a fake login page.

In this instance, the recruitment firm’s employee received an email purporting to be from a spam filtering service. The email explained that some of the employee’s outbound emails had been blocked by the spam filter, but it went on to explain that emails coming from the employee’s account could be unblocked if the employee clicked on a link and verified his email address by inputting his details.

Not wanting to have a situation where important invoices to external clients were blocked by this spam filtering service, the employee clicked on the link and entered his email login details to verify the account. Unfortunately for the recruitment firm’s employee, however, he had unwittingly handed his credentials to a fraudster.

To make matters worse, the recruitment firm did not have multi-factor authentication enabled for remote access to all company email accounts. This meant that the fraudster was able to gain access to the employee’s account remotely without having to go through a second verification procedure, such as inputting a verification code or number. This allowed the fraudster to peruse the employee’s email account, monitor communications to and from the account and gain valuable information about the nature of the policyholder’s business and the employee’s role within it.

What the fraudster found was that as part of his role within the recruitment firm’s accounts team, the employee was expected to send over invoices to client businesses following the successful placement of a candidate at the hiring company, with the recruitment firm charging a percentage of the newly employed candidate’s salary as commission.

Spotting an opportunity, fraudster pounces
The fraudster was clearly looking for a lucrative opening to appear, and as it happened, the employee was in correspondence with a client business operating in the technology sector, whom the recruitment firm had recently helped in the hiring of a Chief Operating Officer. Following the successful placement of the candidate for the role at this company, the recruitment firm’s employee in the accounts department had sent over an invoice for $77,000 to the technology company. Having spotted an opportunity, the fraudster chose this moment to strike.

The first step was to set up a forwarding rule in the employee’s email account. Forwarding rules are settings that can be applied to an email account which ensure that emails that fall within a certain criteria are automatically forwarded to a specific folder or to another email account. In this case, the fraudster set up a forwarding rule that meant that any emails that featured the technology company’s domain name were immediately marked as read and sent directly to the employee’s deleted items folder.

The next step was to send an email from the employee’s account to the technology company. In the email, the fraudster explained that the recruitment firm had recently changed banks and that the previous invoice had mistakenly included the details for the firm’s old account. The email went on to say that the new bank account details could be found on the new invoice attached and that the payment for the recent placement of the Chief Operating Officer should be sent to the new account instead.

In order to ensure that the request looked legitimate, the fraudster used exactly the same invoice template as before, including the same company address and logo, with the only difference being the addition of the new bank account details. The fraudster also ensured that the new email formed part of the original email chain, as well as adding some subtle touches, such as mimicking the employee’s writing style and including the employee’s email signature to sign off the email.

With the email forming part of the original email chain and coming from the recruitment firm’s employee’s genuine email address, along with the same invoice template as before, the individual responsible for processing the payment at the technology company never doubted the legitimacy of the request. Assuming that the new account details were valid, the client business paid the $77,000 owed and believed that the matter was now settled.

It was only several weeks later, when the recruitment firm’s employee noticed that the invoice remained unpaid and contacted the technology company via phone, that the scam was revealed. The technology company contacted its bank and tried to see if the transfer could be recalled, but unfortunately it was too late and the funds had already been removed from the fraudulent account.

With the funds deemed unrecoverable, this meant that the money owed to the recruitment firm remained unpaid. However, as it was the recruitment firm’s employee who had had his email account hacked, and as the request to change the bank account details had come from his genuine email account and appeared to be legitimate, the technology company did not accept responsibility for the lost funds and was not willing to pay the invoice a second time, leaving the recruitment firm out of pocket to the tune of $77,000.

Fortunately, however, the recruitment firm was able to recoup the lost funds under the cyber crime section of its cyber insurance policy with CFC, which provides cover for social engineering style losses such as this.

Click here to download the case study.

Source: www.cfcunderwriting.com


Should Ransomware Payments Be Illegal?

By Graeme Newman, Chief Innovation Officer at CFC Underwriting

Ciaran Martin, former head of the UK’s National Cyber Security Centre, is the latest security expert to champion the cause for making it illegal for cyber insurers to reimburse ransom payments. Quoted in a recent Guardian article, Martin claims that cyber insurers are “inadvertently funding cyber crime”. Like many similar articles quoting seasoned security professionals there is an underlying allegation that this move would not be supported by the insurance industry. That somehow it would fundamentally destroy the value proposition of the product and service we provide, and that we would rather that this crime continue to develop “because it’s good for business”.

I can’t claim to speak on behalf of the insurance industry, but having been involved in cyber insurance for almost 20 years now, I can say with some certainty that this is not how the industry thinks. In fact, I’d make a fairly large wager that most (if not all) of my peers would happily support a bill to make the reimbursement of ransoms illegal, if (and only if) that would actually solve the problem. Unfortunately, I don’t think it would.

Let’s leave aside for one minute the practicality of enacting – and enforcing – such a law, it feels that targeting insurers as the source of the problem is fundamentally mis-guided. Less than 15% of global businesses purchase this kind of insurance, so to suggest that eliminating part of it would fix what is now a global issue would be to ignore the other 85% of businesses who face the same problem without insurance.

There is no evidence to suggest that businesses who purchase cyber insurance are more inclined to pay a ransom demand than those without, in fact in my experience, it is quite the opposite. Armed with insurance a company can avail itself of the appropriate experts to guide them through the issue and support them through the recovery process, in the absence of this, most small businesses assume they have no other option but to pay.

Furthermore, to suggest that there are no laws in place already to prevent payments is fundamentally wrong. The US government has rightly reminded the industry of global sanctions laws, which make it illegal to facilitate payments to entities on the OFAC SDN list (and foreign equivalents). We are steadily seeing more entities related to cyber crime being added to these lists, and with insurers being regulated entities and most having US assets, this is already a powerful incentive to seek alternatives to paying ransoms.

There is no doubt that ransomware poses a serious threat to global business. Increasingly emboldened criminals are ditching their old tactics of ID theft and social engineering and moving to the increasingly lucrative business of extortion. Furthermore, the economic damage caused by ransomware is often many multiples of the billions the criminals are stealing, making this the worst form of financial crime. It is a problem that needs to be stopped.

But there are many reasons why this crime continues to develop:

  • Cryptocurrencies make it possible to launder billions of dollars with little fear of being caught. More must be done to clamp down on the exchanges that wittingly or unwittingly facilitate this crime.
  • The media continues to demonise businesses that fall victim to this crime, making them fear the accompanying negative publicity which in turn fuels the desire to pay rather than be “outed”. We must recognise that this is a crime and the only party that ought to be shamed is the perpetrator.
  • Recent tough privacy regulations should also be questioned. Their accompanying fines and potential route for statutory damages are making it even more lucrative for criminals to steal. Businesses now fear the financial consequences of the data being leaked, making this one of the most common tactics in the evolving crime of extortion. We must stop seeking to punish the victims and instead focus on preventing the crime.
  • Cyber insurance has a critical role to play in tackling ransomware. There are already close connections between the industry and global law enforcement, with threat intelligence being shared and data being gathered. By following carefully structured paths and involving the right professionals we can ensure that payments are only made when absolutely necessary and that law enforcement are kept informed so they can use the intelligence gathered to track and ultimately catch the perpetrators.

Our goal is to provide the support and resources necessary to help businesses recover as quickly as possible, and to ultimately help protect our clients from this increasingly serious source of crime. As an industry we are committed to doing all we can to ultimately eradicate this vile bi-product of the digital age. And with almost $1tr in policy limits exposed I don’t think there is any other part of the economy that has a stronger motivation to make it happen!

Click here to access the original article.


7 Cybersecurity Practices Your IT Managed Service Provider Should Be Addressing

Targeted ransomware attacks against IT managed service providers (MSPs) are on the rise with potentially catastrophic implications for both the MSP and the customers who depend on them.

Both the frequency of attacks and the associated ransom demands are climbing, not to mention the reputational impact and potential litigation the MSP may face from disgruntled customers who are unable to access their network.

CFC put together the following basic best practices that MSPs should be putting front of mind to protect themselves, and by extension, their customers:

  1. MFA for MSPs, please
    It’s crucial that MSPs implement advanced multi-factor authentication (MFA) on all applications to reduce the risk of a malicious third-party intrusion. This process is used to ensure that a person is who they say they are by requiring a minimum of two pieces of unique data that corroborates their identity. This unique data comes in three forms – something you know (i.e. your password), something that you have (i.e. a one-time passcode generated by an app or hardware token), or something you are (i.e. fingerprint, retinal pattern, voice signature or facial recognition). A significant number of cyber incidents could be avoided simply by implementing advanced MFA. Find out more.
  2. Password123 really is as easy as ABC
    Simple and commonly used passwords enable intruders to easily gain access and control of a computer, whether they are taking advantage of unchanged default settings or running brute force attacks. It may sound simple, but strong, long, unique passwords that are changed regularly are a must for all MSP employees. Keeping track of passwords can be difficult – one little trick is to use sentences as passwords, but you can also use one of a number of handy and affordable password managers on the market.
  3. Whoa! Back it up!
    MSPs should not only be doing regular backups of their data, but ensuring that those backups are bulletproof. This means storing these outside the network and offsite and testing them regularly. To find out how failed backups affected one of the technology firms CFC insures, check out this cyber claims case study.
  4. Responsibility for cybersecurity
    Given the potential widespread impact of a breach emanating from an MSP, every MSP should have a written cybersecurity program with a person assigned a role as a cybersecurity officer who has relevant experience and qualifications. Cybersecurity should not be considered an afterthought or an upsell – it should be a number one priority for all MSPs, with someone internally designated to lead the charge on cyber protection and risk mitigation.
  5. Know your client
    Sales are one thing but are you aware of what your client’s expectations and needs are?  Different industry segments have vastly different requirements – including uptime requirements and backup frequency. Taking on clients and treating them all equally without understanding their specific requirements can have disastrous consequences in the event of a cyber event. Clients in the healthcare, legal and financial sectors, for example, hold and rely on a lot of sensitive information and thus should be treated differently. A  significant outage from a cyber event can be disastrous for them – and in turn for the MSP too!
  6. Know your vendor
    Even if an MSP has the most robust security program possible, their data is only as secure as the weakest vendor that has access to their data. It is therefore critical that all MSPs have a vendor due diligence program to ensure their cybersecurity practices meet minimum standards. This is crucial in mitigating and avoiding threats.
  7. Know your weaknesses
    It might sound obvious, but all MSPs should implement an effective vulnerability management program which identifies and remediates security vulnerabilities in software. Vulnerability management is not just about patching (though very important!) but about making informed decisions and properly prioritizing the most serious security vulnerabilities first.

Source: www.cfcunderwriting.com


What Makes Up a Cyber Policy

Cyber insurance policies tend to be modular in nature, meaning that they consist of a variety of different coverage areas. For many, that has led to confusion around how exactly this cover fits together to create a uniform whole.

To help explain this further, CFC has dissected their cyber policy section by section to show how each part of this body of coverage functions. Check it out below or download it to be able to adjust the document size or to share with your clients.

Source: www.cfcunderwriting.com


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