True Cost of Cybersecurity Breaches in Today’s Shadow Economy

Ten years ago, malware attacks were on the rise, with organized crime profiting from them. In today’s shadow economy, thieves now run cybercrime as a business, offering low barrier-to-entry options to potential customers. Today perpetrators can be anyone, anywhere; they don’t require a security background and can easily purchase “off-the-shelf” exploit kits.

According to the Cisco 2017 Annual Cybersecurity Report (ACR), over one-third of organizations that experienced a breach in 2016 reported substantial customer, opportunity and revenue loss of more than 20 percent. Ninety percent of these organizations are improving threat defense technologies and processes after attacks by separating IT and security functions (38 percent), increasing security awareness training for employees (38 percent), and implementing risk mitigation techniques (37 percent). The report surveyed nearly 3,000 chief security officers (CSOs) and security operations leaders from 13 countries in the Security Capabilities Benchmark Study, part of the Cisco ACR.

According to John N. Stewart, Senior Vice President and Chief Security and Trust Officer, Cisco, “In 2017, cyber is business, and business is cyber –that requires a different conversation, and very different outcomes. Relentless improvement is required and that should be measured via efficacy, cost, and well managed risk. The 2017 Annual Cybersecurity Report demonstrates, and I hope justifies, answers to our struggles on budget, personnel, innovation and architecture.”

The global report highlights challenges and opportunities for security teams to defend against the relentless evolution of cybercrime and shifting attack modes. CSOs cite budget constraints, poor compatibility of systems, and a lack of trained talent as the biggest barriers to advancing their security postures. Leaders also reveal that their security departments are increasingly complex environments with 65 percent of organizations using from six to more than 50 security products, increasing the potential for security effectiveness gaps.

To exploit these gaps, ACR data shows criminals leading a resurgence of “classic” attack vectors, such as adware and email spam, the latter at levels not seen since 2010. Spam accounts for nearly two-thirds (65 percent) of email with eight to 10 percent cited as malicious. Global spam volume is rising, often spread by large and thriving botnets.

“One of our key metrics highlighted in the 2017 Annual Cybersecurity Report is the ‘time to detection’ – the time it takes to find and mitigate against malicious activity. We have brought that number down to as low as six hours. A new metric – the ‘time to evolve’ – looked at how quickly threat actors changed their attacks to mask their identity. With these and other measures gleaned from report findings, and working with organizations to automate and integrate their threat defense, we can better help them minimize financial and operational risk and grow their business,” said David Ulevitch, Vice President/General Manager, Security Business, Cisco

Measuring effectiveness of security practices in the face of these attacks is critical. Cisco tracks progress in reducing “time to detection” (TTD), the window of time between a compromise and the detection of a threat. Faster time to detection is critical to constrain attackers’ operational space and minimize damage from intrusions. Cisco has successfully lowered the TTD from a median of 14 hours in early 2016 to as low as six hours in the last half of the year. This figure is based on opt-in telemetry gathered from Cisco security products deployed worldwide.

The Business Cost of Cyber Threats: Lost Customers, Lost Revenue

The 2017 ACR revealed the potential financial impact of attacks on businesses, from enterprises to SMBs. More than 50 percent of organizations faced public scrutiny after a security breach. Operations and finance systems were the most affected, followed by brand reputation and customer retention. For organizations that experienced an attack, the effect was substantial:

• Twenty-two percent of breached organizations lost customers — 40 percent of them lost more than 20 percent of their customer base.
• Twenty-nine percent lost revenue, with 38 percent of that group losing more than 20 percent of revenue.
• Twenty-three percent of breached organizations lost business opportunities, with 42 percent of them losing more than 20 percent.

 Hacker Operations and New “Business” Models

In 2016, hacking became more “corporate.” Dynamic changes in the technology landscape, led by digitization, are creating opportunities for cybercriminals. While attackers continue to leverage time-tested techniques, they also employ new approaches that mirror the “middle management” structure of their corporate targets.

Hackers are deploying new attack methods model targeting corporate hierarchies. Certain malvertising campaigns employed brokers (or “gates”) that act as middle managers, masking malicious activity. Adversaries can then move with greater speed, maintain their operational space, and evade detection.

Twenty-seven percent of employee-introduced, third-party cloud applications, intended to open up new business opportunities and increase efficiencies, were categorized as high risk and created significant security concerns.