What do you do if your HR benefits and payroll vendor suffers a cyber-attack and payroll can’t be run? Do you have a backup plan for running payroll? How will you communicate with your employees? And if your benefits and payroll vendor has a cyber-incident and your employees’ highly sensitive data is exfiltrated, what will be your response and your liability?

Here is a perfect tabletop exercise that is real.

This week, it is being reported that PrismHR (which provides online payroll, benefits and human resources services to professional employer organizations offering those services to small businesses) suffered a cyber-attack over the weekend that caused outages to its systems. Although there is speculation that PrismHR was the victim of a ransomware attack, it has not confirmed that is the case, only that it suffered a cyber incident.

PrismHR stated that it is looking into the incident and that payroll will not be affected this week, and that it is waiving administrative fees for the current payroll period. Obviously, depending on the results of the investigation and whether any employee data were accessed or exfiltrated, PrismHR might have reporting obligations, including to its customers and their employees.

Whatever the outcome, the scenario is a perfect tabletop exercise to plan for and determine the risk and consequences for your organization. HR, payroll, and benefits vendors collect, maintain, use, and disclose highly sensitive data of employees, so managing the risk through security due diligence and strong contractual provisions is crucial for your risk management plan.

The statistic that cybercriminals have been unleashing 18 million phishing emails laced with malware on a daily basis into cyberspace during the pandemic is mind boggling and one that executives should pay attention to when prioritizing resources for user education. Math was never my strongest subject, but the math of 18 million malicious emails targeted at all of us on a daily basis is a LOT.

A new study rolled out by Google, in collaboration with researchers at Stanford University, studied over a billion malicious emails and targets that Google had identified and blocked over a period of five months, to get more intelligence about who was being targeted and how the campaigns were targeting users. The study found that users in the U.S. were targeted more than any others in the world, followed by the United Kingdom and Japan.

The study found that the most effective phishing scams were fast and short lived, lasting one to three days. They found that over 100 million malicious emails were launched in these short time frames. In addition, they found that if a user’s email address or personal information had been previously compromised, they were five times more likely to be targeted by a phishing scheme. The study also concluded that users aged 55 to 64 were 1.64 times more likely to be targeted by cybercriminals than 18-24 year olds.

The statistic is astounding, but the results of the analysis are very informative for businesses. The take away is that the number of phishing schemes continue to rise, user education continues to be essential in protecting company data against these schemes, and education is particularly important depending on users’ age.

In what the New York Department of Financial Services (NYDFS) is touting as the first guidance by a U.S. regulator on cyber insurance, NYDFS announced on February 4, 2021, in Insurance Circular Letter No. 2 (2021), that it has issued a new Cyber Insurance Risk Framework (Framework) addressed to authorized property/casualty insurers that write cyber insurance. Nonetheless, NYDFS states “property/casualty insurers that do not write cyber insurance should still evaluate their exposure to ‘silent risk’ and take appropriate steps to reduce that exposure.”

The Framework consists of seven practices that “all authorized property/casualty insurers that write cyber insurance should employ,” while stating that “[E]ach insurer should take an approach that is proportionate to its risk.” The seven practices include:

  • Establish a Formal Cyber Insurance Risk Strategy
  • Manage and Eliminate Exposure to Silent Cyber Insurance Risk
  • Evaluate Systemic Risk
  • Rigorously Measure Insured Risk
  • Educate Insureds and Insurance Producers
  • Obtain Cybersecurity Expertise
  • Require Notice to Law Enforcement

The background of the issuance of the Framework follows the growth of the cyber insurance market, the increase in cyber risks and payouts, and that “it is clear that cybersecurity is now critically important to almost every aspect of modern life—from consumer protection to national security.” NYDFS recognizes that “as cyber risk has increased, so too has risk in underwriting cyber insurance.” Statistics cited in the Framework include the fact that based upon a survey it developed, from early 2018 to late 2019, “the number of insurance claims arising from ransomware increased by 180%, and the average cost of a ransomware claim rose by 150%. Moreover, the number of ransomware attacks reported to DFS almost doubled in 2020 from the previous year…[T]he global cost of ransomware was approximately $20 billion in 2020.”

NYDFS cautions that insurers “are not yet able to accurately measure cyber risk” and before offering that line of product to certain organizations, insurers should assess the risk of the insured.

NYDFS calls the growing cyber risk “an urgent challenge for insurers.” The NYDFS Letter can be accessed here: https://www.dfs.ny.gov/industry_guidance/circular_letters/cl2021_02

The National Institutes of Science and Technology (NIST) continues to offer timely and relevant information for companies to consider when addressing cyber-risks in an ever-changing landscape.

 On February 2, 2021, NIST published an alert outlining tools it has developed to assist companies “to help defend against state-sponsored hackers.” According to its press release, nation-state actors, also known as “advanced persistent threat” (APT), are targeting both governmental agencies and private industry and academia in order to steal “sensitive but unclassified information,” known as ‘controlled unclassified information’ (CUI), that the government relies on “to carry out a wide range of missions using information systems” and, therefore, the “protection of sensitive federal information that resides in nonfederal systems…is of paramount importance, as it can directly impact the federal government’s ability to carry out its operations.”

Following the Chinese government’s 2018 hack of a third-party contractor of the United States Navy in which, according to the Washington Post, the Chinese government “stole a large amount of highly sensitive data on undersea warfare,” NIST developed and published its draft Special Publication SP 800-172 to assist in protecting CUI against APT.

After public comment, the final publication of SP 800-172 Enhanced Security Requirements for Protecting Controlled Unclassified Information: A Supplement to NIST SP 800-171 was released this week for private companies, industry and academia to adopt NIST-developed tools that provide “additional recommendations for handling CUI in situations where that information runs a higher than usual risk of exposure. CUI includes a wide variety of information types, from individuals’ names or Social Security numbers to critical defense information.”

According to NIST, “implementing the cyber safeguards in SP 800-172 will help system owners protect what state-level hackers have considered to be particularly high-value targets: sensitive information about people, technologies, innovation and intellectual property the revelation of which could compromise our economy and national security.”

NIST provides help to all of us in defending against cyber-attacks. NIST says, “The adversaries are bringing their ‘A-game” in these cyberattacks 24 hours a day, 7 days a week…You can start making sure the damage is minimized if you use SP 800-172’s cyber safeguards.”

Take a look at the tools and consider using them to enhance the security of your high-risk data.

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Cybersecurity firm SonicWall Inc. is investigating an attack on its internal systems that it describes as “highly sophisticated.” According to SonicWall, the investigation is centered around its Secure Mobile Access 100 series, which assists with end-to-end secure remote access.

The company said that a few thousand devices have been impacted and that it is trying to determine whether the attackers exploited a zero-day vulnerability in the SMA 100 series product.

Although it sounds very similar to the recent SolarWinds cyber-attack, it is presently unknown whether this incident is related to that attack or if it was caused by the Russian-based attackers behind the SolarWinds incident.

It is clear that cybersecurity firms are being heavily targeted by cyber-attackers and are not immune from the onslaught of cyber-attacks we are seeing across the board in every industry. It also emphasizes the fact that there is no ability to completely transfer cyber risk. Data security is a team sport. Reasonable cyber-hygiene inside your organization, while using outside tools to augment your security posture, are both ways to minimize risk, but hackers are using more and more sophistication in their attacks, which present risk internally and externally. What is crystal clear from these attacks on cybersecurity firms is that cybersecurity and vendor management must continue to be a high priority for organizations in order to manage cyber risk.

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The fallout from the SolarWinds hacking incident linked to Russian threat actors has not only wreaked havoc on governmental agencies and private companies whose data are at risk following the incident, but this week, Bitsight and Kovrr released an analysis outlining the effect of the event on insurance losses that estimates the incident could cost more than $90 million when all is said and done.

The $90 million includes costs related to forensic analyses, incident response, potential regulatory fines and public relations costs. Although it has been reported that 18,000 customers of SolarWinds may have been affected by the incident, the analysis indicates that 40 specific firms were targeted in the incident, 80 percent of which are located in the U.S. It further notes that those firms were primarily federal agencies or in the information technology sector.

The analysis highlights the importance of assessing supply-chain cyber risk and how supply chain and vendor security incidents can cause direct losses that may not be easily recoverable from downstream companies. As part of the assessment, companies also may wish to determine whether insurance coverage may be available if it experiences a vendor or supply chain incident like the SolarWinds example.

The U.S. Attorney’s Office for the District of Massachusetts is warning small businesses that received loans through the Paycheck Protection Program (PPP) of a dramatic increase in reports of business email-compromise schemes related to the program. Scammers are using information about PPP recipients posted by the Small Business Administration (SBA) to impersonate PPP lenders requesting additional information about PPP loan applications or loan forgiveness.

In July 2020, the SBA published information about PPP loan recipients, which included business names and addresses for loans greater than $150,000. In December 2020, the SBA released the exact loan amounts for more than 600,000 small businesses and nonprofit organizations that received at least $150,000 in loans. The published data also included the names of entities receiving less than $150,000, which represent about 87 percent of the total number of loans in the program, as well as the name of the lender and distribution date for each loan.

Scammers are using this publicly-available information to send phishing emails to PPP loan recipients, impersonating the recipients’ PPP lenders to request sensitive information, such as email addresses and passwords, Social Security numbers, and financial information. This information could be used to gain access to a business’s computer network to compromise confidential information or for identity theft.

Recipients of PPP loans should carefully review the headers of emails that appear to come from their PPP lenders to ensure that the domain of the sender’s email address matches the domain of other emails received from the lender. They also should use common sense to question whether the lender is likely to be contacting the recipient at that particular time (e.g., in response to an application or loan forgiveness), or whether the timing appears to be unconnected to other communications with the lender. Recipients should not respond to, or click any links, in any suspicious emails; recipients may want to call their lenders if they believe the content or timing of an email is suspicious.

Suspected criminal activity may be reported to the Department of Justice’s National Center for Disaster Fraud at https://www.justice.gov/disaster-fraud.

The Federal Trade Commission (FTC) is warning small businesses that they are being targeted by scammers through a new coronavirus-related scam. The scam “starts with an email that claims to come from the ‘Small Business Administration Office of Disaster Assistance.’ It says you’re eligible for a loan of up to $250,000 and asks for personal information like birth date and Social Security number.”

Unfortunately, many small businesses have been dramatically affected by the coronavirus and are seeking assistance to help retain their employees employed and keep their doors open for business. However, governmental agencies will never send an email advising you that you are eligible for a loan and will never ask for your Social Security number over email. Such material is sent through the mail and on official applications and letterhead.

In addition, governmental agencies will not call to advise you that you have been accepted for relief or ask you for your personal information over the phone. These are scams intended to get you to tell them your Social Security number so the caller can open up credit card or other accounts in your name without your knowledge.

The same is true for scam websites offering assistance with small business loans. If you need to apply for a loan, go to a trusted entity that you have done business with before. Scammers are using the coronavirus, the need for relief, and the government’s Disaster Loan program to fraudulently obtain funds from unwary small business owners. Be wary of these scams and websites and report any fraud to the FTC.

Development and Operations (DevOps) teams are often pressured by executives and sales teams to get software products completed and out the door and into the market as quickly as possible so the products can generate income. Often, security is not the highest priority for DevOps, as adding security features may affect the performance of the software or add time to the deployment schedule.

The SolarWinds hack is a crucial reminder to DevOps teams to build security into software products, and to complete due diligence on the security protocols regarding the DevOps teams of vendors that make components used by software manufacturers, such as JetBrains.

JetBrains is a Czech-based company that developed a product called TeamCity, which Reuters reports is “used by tens of thousands of customers to construct other software.” According to other news reports, the FBI is investigating whether the Russians hacked into JetBrains’ TeamCity DevOps tool in order to infect SolarWinds’ Orion software [see related post].  If your DevOps team is using TeamCity, it may present another risk associated with the SolarWinds incident that has much broader impact on other software development.

Check with your DevOps team to see what kind of security due diligence they are completing on the vendors that are providing the component parts of the software they are developing, including JetBrains. If no due diligence is being done, this is a perfect time to start.

2020 will go down as one of the most stressful in my career as a cybersecurity professional. I have been working in this area of law full time since 2003. So that says a lot.

On top of the stress of the spread of the coronavirus, this has been a particularly stressful year assisting clients with security incidents, ransomware extortions, data security in migrating from on premises to work from home, and keeping employees educated and vigilant. Indeed, it has been difficult and exhausting. And I’m just the lawyer.

Your IT professionals have been through HELL this year. They are working beyond capacity, with limited resources, trying to keep organizations safe from highly sophisticated hackers and nation states, including Russia and China. They are doing their very best to find the right tools to keep the bad guys out of networks and systems, at the same time trying to get their users not to click on links, attachments or phishing emails. They are getting attacked from within and without. It is a war for them every day.

Give them some love. A thank you goes a long way. Our IT professionals are losing sleep every night, working long hours, keeping our data safe, and dealing with attacks that you can’t even begin to fathom.

They battle for us in the background, on the front line, and never get any credit for how important their job is to our ability to do our job.

So this holiday season, take a little time and reach out to your IT professionals and say “Thank you.” They deserve a ton of credit and LOVE from all of us.