Divided we fall

When companies hide crime, they harm themselves indirectly: burdensome regulations, popular backlash, criminal impunity, glamorization of cybercrime.

I've always believed in the importance of maintaining a well-designed emergency response capability. For many years I helped organize security operations centers (SOC), computer emergency response teams (CERT) and incident response teams (IRT). No company is ever 100 percent secure. Breaches happen and will continue to happen. "Secure" companies are the ones that are able to efficiently and effectively mitigate the damage from a security incident. Looking back, I would probably do things a bit differently now. A key difference would be the balance between company privacy and involvement of law enforcement.

The response plan has to include a policy on the involvement of law enforcement, both whether law enforcement is involved and when they are notified. Today, it seems that most companies choose to "handle things quietly" to avoid reputation damage. Thus law enforcement is most often not notified.

Numerous statistics back this assertion, but the most telling is the effect of SB1386, the "sunshine law." Ever since the passage of SB1386 required companies to notify victims of identity theft, there has been a deluge of reports of stolen laptops and lost backup tapes. It's not as if these things didn't happen before, only that the reporting rate was probably lower than 1 percent. If that's the case in identity theft, you can bet that disclosure rates on cybercrime not covered by SB1386 remain abysmally low.

Well, it's time that companies revisit the policy of nondisclosure. It's feeding a cybercrime beast that is getting larger and larger. Not only is cybercrime lucrative, but compared with any other kind of crime it is quite low risk, partly because companies don't pursue prosecutions. There are many reasons why a company would choose to keep things quiet:

  • Concern about negative publicity.
  • Fear of retaliation.
  • Low expectation of prosecution (especially with attacks from other countries).
  • Concern about intellectual property leaking in a court case.
These are all valid reasons, but they tend to emphasize short-term benefits over longer-term damage. Reputation risk is becoming less and less of an issue. In a way the deluge of publicized breaches makes it obvious to consumers that no company is immune or 100 percent secure. In most cases the damage to stock prices is only temporary. Law enforcement agencies are getting much better at protecting the victims from being revictimized through the legal process. The Department of Justice has published best practices to protect companies that report cybercrime hoping to improve reporting rates.

But the bottom line is simple: The damage caused by nonreporting is long term and devastating. Infinite tolerance (the current policy of nonreporting) leads to low risk for cybercriminals. When companies hide crime, they harm themselves indirectly: burdensome regulations, popular backlash, criminal impunity, glamorization of cybercrime. The identify theft market grew more than 60 percent last year, and that's just the tip of the iceberg that SB1386 reveals. To beat cybercrime we have to report it. Get to know your local U.S. attorneys and FBI agents and build a relationship today -- before you become a victim. Then stand united.

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