Payment Security 101
Learn about payment fraud and how to prevent it
In the digitally transformed new normal, cyber awareness is as important to the Chief Financial Officer (CFO) as money.
Suppose you had any residual doubt about the importance of cyber security awareness for CFOs before the COVID-19 pandemic hit. In that case, the past year of rapid organisational change and digital transformation will have disabused you of that notion.
Unprecedented challenges made 2020 a difficult year for businesses around the world…with cybercriminals ramping up their activity dramatically during the pandemic and financial processes increasingly vulnerable as newly remote workforces proved harder to manage, observe, and control from a distance.
And while the ‘F’ in CFO still stands for ‘finance’, contemporary practice has made it clear that counting and managing the money are only a small part of the modern CFO’s job description.
Financial governance lies at the core of these responsibilities – and, given the inextricable links between data and finance, it’s hardly controversial to observe that this governance requires CFOs to at least understand the cybersecurity threats their organisations face.
That is the purpose of this, the fourth annual Cyber Security Guide for CFOs – which updates our long-running cybersecurity guide to incorporate the learnings of the most operationally disruptive year businesses have known in decades.
Designed as a resource for CFOs in particular – but relevant for any executive wanting to better understand the nature of the threat today’s businesses face – it explores the changing role of the CFO within corporate cybersecurity operations; outlines the imperatives companies face as the financial stakes get higher; weighs the consequences of greater digital transformation and adoption of cloud technologies; and offers some tips to avoid facing the sack the next time cybercriminals set their sights on your organisation.
Among its many effects, the COVID-19 pandemic proved to be an unprecedented opportunity for cybercriminals. An INTERPOL evaluation tracking changes in attack patterns during the pandemic identified the volume of attacks growing at what INTERPOL secretary general Jürgen Stock called “an alarming pace”.
Just one of the organisation’s private-sector partners observing 907,000 spam messages, 737 incidents related to malware and 48,000 malicious URLs…between January and April 2020 – and all were related to COVID-19 as cybercriminals “exploited to the fear and uncertainty caused by the unstable social and economic situation created by COVID-19.
“The increased online dependency for people around the world is also creating new opportunities,” he added, “with many businesses and individuals not ensuring their cyber defences are up to date.”
INTERPOL also observed a macro trends in which cybercriminals were shifting their focus away from individuals and small businesses, towards larger enterprises and critical infrastructure operators. For CFOs, the operational financial challenges of 2020 were compounded by a growing recognition that cybercriminals’ focus on financial returns had put finance executives as much in the line of fire as IT staff.
It wasn’t a sentiment that many CFOs would have expressed before the pandemic, with a March 2020 Association of Chartered Certified Accountants (ACCA) report finding that 57% of CFOs rated cybersecurity as one of their five biggest business risk – but that 54% believed their organisation had never been hit by a cyber attack.
This figure suggests one of two things: either cybercrime isn’t affecting most organisations, or CFOs simply aren’t paying as much attention to it as they should be.
Given that the Australia Cyber Security Centre (ACSC) noted in September that its ReportCyber services receives a new cybercrime report every 10 minutes – 59,806 incidents during fiscal 2020 alone, with 40 per cent related to fraud – chances are that many CFOs simply don’t realise the extent of cybercriminal activity their security specialists are dealing with on a daily basis.
Fully 40% of surveyed CFOs said their organisation doesn’t have a remediation plan to deal with a cybersecurity attack, or weren’t sure if they did – which, in a practical sense, are the same thing. And 60% said their companies don’t bother to audit the cybersecurity risks in their supply chain partners – leaving them exposed to security shortcomings within business partners.
“A successful cyber-attack has many implications for organisations, the majority of which have financial impacts”
the report says, noting that fines from regulators, reputational loss, and the costs of remediation and recovery
can be quite significant…it is no longer just a technical IT issue.
Indeed, for CFOs that don’t fully appreciate the implications of such issues, one very salient point is worth noting: cybercriminals long ago shed the image of being hoodie-wearing hackers eating pizza in the basement.
Now that anybody can direct a full-blown cybersecurity attack on a competitor for the price of a day’s entry to the company carpark, hackers may be aggrieved loners– or seasoned criminals who are building extensive hacking operations specifically designed to take your company’s money.
Indeed, organised cybercrime groups were implicated in 55% of the thousands of confirmed data breaches analysed within Verizon’s Data Breach Investigations Report (DBIR) 2020 – up from 39% of breaches in 2019. Furthermore, 86% of breaches are financially motivated, with 72% of breaches involving large business victims; to quote storied bank robber Willie Sutton,
“I rob banks because that’s where the money is. “
Surging volumes of financially focused cybercrime reflect growing recognition amongst cybercriminals that the right cyber attack, successfully executed, can be worth millions.
All they have to do is outsmart the CFO, finance team, and the cybersecurity defences protecting them – and to make this happen, well-resourced cybercriminal enterprises are building corporate structures much like your own. They have employees, benefits, and eye-watering salaries for experts that are developing and marketing cybercrime toolkits, artificial intelligence (AI) technology to fine-tune their distribution of malicious software (malware), and social engineering scams to manipulate your employees into giving away company secrets or money.
These risks were all present before the COVID -19 pandemic began, but they were all exacerbated by a series of changes…– including the fragmentation of finance and project teams sent home to work; C-level teams distracted by the myriad complexities of preserving the business during extremely difficult circumstances; and the doubling-down on digital transformation strategies to give companies the ability to respond to the pandemic.
Fully 54% of Australian and New Zealand companies accelerated their digital transformation during the pandemic, according to Gartner, with two-thirds of companies expecting additional investment in digital transformation during 2021.
This year “will be a race to digital,” Gartner said, “with the spoils going to those organisations that can maintain the momentum built up during their response to the pandemic.”
Interestingly, ANZ organisations are 44% of regional CIOs told Gartner their organisation is already implementing their ‘new normal’ strategy, compared with 33% globally – suggesting both that organisations are changing rapidly, and that CFOs, CIOs and CEOs must be aware of cybersecurity risk profiles that will also be changing extremely rapidly.
Two -thirds of CIOs said their companies would increase their expenditure on cybersecurity protections during 2021, second only to business intelligence and analytics.
Cybersecurity spend varies widely by industry, with financial- services organisations spending the most on cybersecurity – 8.6% of their IT budget – according to AustCyber’s 2020 CISO Lens Benchmark report. By comparison, government organisations spend just 5.7% of their IT budgets on security-related expenditure.
Given the importance of protecting the financial processes and resources that cybercriminals want – and the continuing pressure on board members for whom APRA CPS234 has made cybersecurity shortcomings a potential criminal offence – it has never been more imperative for CFOs to work in lockstep with CIOs and chief security officers (CSOs) to ensure that ongoing digital-transformation is implemented securely.
Indeed, a June 2020 PwC survey found that 16% of CFOs were concerned about the cybersecurity risks of the changed business environment – on par with concerns about supply chain disruptions (17%), the increased costs of doing business (16%), and the ability to effectively manage hybrid remote and on-site work models (16%).
Significantly, planned cybersecurity and privacy investments were the least likely out of nine areas to be targeted for capex reductions by budget-crunched CFOs, with just 3% saying they would consider cutting cybersecurity spending while general capex (82%), operations (47%), IT (31%), R&D (14%) and even the workforce (40%) were all more likely to be cut first.
CSOs play a critical role in managing this cybersecurity this risk and in recognition of this, many companies are not only hiring CSOs – but escalating them to the executive table in recognition of cybersecurity’s critical role in the new normal.
As a CFO, ensure you build and maintain a relationship with that CSO: whether today, next week or next year, the day will come when their vigilance and quick thinking are the only things keeping your finance operation from catastrophe.
Ultimately, cybersecurity is a game of cat and mouse – and you, unfortunately, are usually the mouse.
Compromise by cybercriminals can not only be quick, but can be hard to detect. The 2020 IBM-Ponemon Institute Cost of a Data Breach 2020 report, for example, found that the average Australian data breach takes 211 days to detect, and 85 days to contain.
That was shorter than the global average of 280 days, but still more than long enough for cybercriminals to find and steal your important data from under your nose.
Indeed, 15% of hackers responding to the Nuix Black Report, which surveyed both active malicious and white-hat hackers about their habits, said they…can get into your network, identify valuable data, and steal it within an hour.
And 40% said that, no matter how long it took to get into your network, they could take your critical data within an hour. That means problems for any company, with the average breach costing compromised companies $163 per lost or stolen record and $3.35m overall – up 9.8% from 2019.
Such losses are becoming increasingly common, with the Ponemon analysis finding 57% of Australian data breaches were due to malicious attacks – corroborating figures from the Office of the Australian Information Commissioner (OAIC) that attributed 58% of the 539 data breaches reported during the second half of 2020 were due to malicious or criminal attack.
Clearly, the cybercriminals are out there – and CFOs are in the firing line. Thankfully, evolving security tools are helping well-prepared organisations mount effective defences to ever more-creative frauds and cyber criminal attacks.
Email filtering tools are tapping artificial intelligence to help them identify the language conventions that characterise BEC attacks, while efforts such as Telstra’s Clean Pipes initiative are seeking to detect and block sources of malicious traffic before it even gets to your company.
The following pages help you understand the threats you face, and what you can do about them. Learn to work with your IT specialists rather than delegating to them, and become an active advocate for cybersecurity when dealing with your C-level peers – and you will all sleep better at night knowing you are cyber resilient enough to persist through the challenges of the new normal.
“Australian organisations reported 1051 data breaches to the OAIC during 2020 – up from 997 in 2019.”
Cybercriminals are literally working overtime to breach your network. 26% of the Black Report participants, for example, said they spend 31-50 hours per week figuring out how to circumvent network security protections.
A third spend up to 10 hours weekly, and 8% spend more than 50 hours per week figuring out how to break into corporate networks.
Here’s the worrying part: it’s not just to improve their skills. While 86% of respondents said they hack for the challenge, fully 21% said they hack for financial gain.
Statistics suggest they are doing extremely well: the Verizon Data Breach Investigations Report (DBIR) 2020, which analysed nearly 4000 reported data breaches, found that 86% of breaches were financially motivated – up from 71% the year before – and 70% of breaches were perpetrated by external actors.
Those groups are looking for any sort of data that may have value – whether intellectual property, customer lists, confidential financial or other documents, executive emails, or anything else that can be leveraged into money.
Records with customers’ identity details, in particular, are highly prized because they contain information that can be sold to people who join it with other data to build profiles for identity theft. To give you an idea of just how big a business identity theft has become, the recent COMB (Compilation of Many Breaches) data leak contained nearly3.3b username-password pairs stolen from previous data breaches.
Australian breaches are getting bigger, too, with the latest OAIC figures confirming that Australian organisations suffered 11 data breaches involving the data of at least 100k people during the second half of 2020 – up from just 5 during the second half of 2019.
Worse still, four of the breaches involved the compromise of 1 million records or more – each representing a significant percentage of Australia’s population.
If these sorts of figures don’t worry you, here’s another one that will: the OAIC recently put a number on the compensation organisations may be forced to pay for a data breach – and it’s a little scary.
The federal Department of Home Affairs was ordered to pay from $500 to over $20,000 to each of 1297 asylum seekers participating in a class action about a 2014 data breach in which the department inadvertently published details of their identities in a publicly-available online repository. Using those figures as a guideline, a simple breach of up to 100 records – the most commonly reported size of incidents reported to the OAIC – could cost your company anywhere from $50k–$2m in penalties, not to mention the financial costs of finding and fixing the breach.
Get hit by a bigger breach, and you can start adding zeroes to the ends of those figures – which will quickly turn a data breach from a small annoyance into a major, financially material event. Threats, threat actors, and attack styles are changing every day as businesses’ defences are tested, reconnaissance campaigns gather information about their most valuable data, and unsuccessful attacks are refined and relaunched until successful.
Cybersecurity staff are doing their best to keep everything safe, but as CFO you have an important role to play in supporting those efforts, acting as a liaison between technical staff and the rest of the business. Financial information is one of your crown jewels – and that means you should be very, very interested in protecting it.
A recent CFO Research study suggested that many CFOs have already picked up the mantle, proactively engaging with security staff and senior executives to ensure that the business meets its obligations around information security. Some 42 percent of CFOs in that survey said they were owner or co-owner of cybersecurity responsibility within their companies, with two-thirds saying they are comfortable understanding and discussing information security issues with their board.
Yet engagement and awareness aren’t always the same thing: studies have repeatedly shown that business executives are more optimistic about the organisation’s security posture than technology executives – with 37% of CFO Research respondents saying their organisation had not had a data breach in the previous 12 months. And, perhaps more worrying, just 53% of senior finance executives said their company has a formal incident response plan in place to deal with cybersecurity incidents – and just 23 percent said they have a role in incident response.
Are you really prepared to leave protection of your company’s financial data to someone else? If it ever was OK for CFOs to be removed from cybersecurity planning, it certainly isn’t anymore. As digital transformation and customer experience mandates force companies to lean heavily on cloud services to reinvent themselves, it’s crucial that cybersecurity protections and policies reflect this new normal.
That’s because moving business systems into the cloud breaks old security models and introduces new issues.
Don’t believe the hype that cloud services don’t need to be secured; decentralisation of data creates hybrid computing environments that require a different approach to data protection, but are just as vulnerable – if not more so – to cyber compromise. It also reduces your visibility: once data is in the cloud, that data becomes more easily accessible by cyber criminals who can repeatedly try to get to it without you being any the wiser.
“As companies continue to transition to more cost-efficient cloud-based solutions, their email and other valuable data migrate along with them,”
Verizon writes in its DBIR. “Criminals simply shift their focus and adapt their tactics to locate and steal the data they find to be of most value.”
As your engagement with cybersecurity practitioners increases, it’s important that you understand the many ways that cybercriminals are targeting companies for financial, customer, or other information.
Some of the most common, and effective, attacks include:
Although some cybercriminals like to hack the old-fashioned way – by discovering and exploiting weaknesses in your software – these days most just use phishing attacks to pepper employees with carefully designed emails designed to get them to either click on a particular link, or open an attachment containing malware or a script that will force the computer to do a particular thing.
Cybercriminals use phishing as a way of getting employees to help them launch an attack on the company the work for – either by running a custom program or, more recently, using tools built into the operating system or Microsoft Office 365 to run scripts that look perfectly normal to the victim computer.
And while many employees have learned to be sceptical about emails that just seem a little bit off, phishers have become experts are creating emails that look just like real invoices from suppliers, payment remittances from customers, bills from service providers, promises of surprise inheritances, or speeding ticket notices designed to scare hapless victims into action.
By creating that sense of urgency, these types of phishing attacks lead victims to copycat web sites that prompt them for login or credit-card details – which are duly recorded and sent back to the cybercriminals who use them to access your company’s critical systems.
Whatever approach they take, phishers have become the most immediate threat to companies doing business online. These days, Verizon’s DBIR reports, 3.6% of users receiving a malicious email will click on it – and that’s more than enough, since it only takes one person to click on a phishing email for a hacker to get onto your network. “Every company has at least one supplier with one employee who will click on anything.”
Finance staff are particularly vulnerable, since they are likely to have user accounts with access to key financial applications and the ability to raise purchase orders, organise bank transfers, and so on. Indeed, a recent Proofpoint analysis of Australian email attacks found that very attacked persons (VAPs) in lower-management roles are targeted in nearly 8% more email-based malware and phishing attacks than workers at other levels.
The report also noted that attack rates were consistent across different levels of the organisation – suggesting that email attacks affect everyone in the organisation almost equally. For this reason, it’s imperative that you ensure all staff with finance related functions are regularly tested with phishing simulators that measure their susceptibility to potentially malicious phishing attacks.
Reinforce this testing with regular training and user education to ensure you help maintain a culture of awareness – and run regular ‘red team’ testing as a sort of pop quiz to make sure they are changing their security habits for the better.
Whereas phishing has traditionally used a ‘spray-and-pray’ approach, many cybercriminals are using more complex social-engineering techniques to target specific individuals. This is a digital form of classic confidence games, by which fraudsters would pretend to be a work colleague or assume a false persona to gain the victim’s trust.
Social-media sites are a bonanza for cybercriminals, since employees and executives often share far too much about themselves online. By scouring Facebook, Instagram, LinkedIn and other social media repositories, it’s easy to draw up an accurate profile of a particular target’s expertise, interests, work history, personal life, hobbies, colleagues, direct reports, and more.
This information is then used to personalise phishing campaigns so they are more effective – a variant of phishing known as ‘spearphishing’ because it is customised for a particular target. If you like heavy metal music, for example, you might delete a phishing email about an upcoming Wagner concert sight unseen. But if that email is offering a discount on a new guitar amplifier or tickets to an upcoming concert, you’re more likely to click on it to check it out.
Cybercriminals frequently pick a friend’s name from a Facebook profile, then send the victim a fraudulent email spoofing that friend’s name and inviting them to click on a malicious link disguised as a shared photo album or birthday party invitation. Another common but fatal slip is when staff post holiday photos while they are still on holidays. For their friends and family, it’s an invitation to share the excitement of a trip to somewhere exotic. But for a cybercriminal, it’s a window of opportunity to launch a fraud attack using that person’s identity – while they are distracted by other things half a world away.
As a finance executive, you and your staff are particularly vulnerable to social-engineering attacks because your accounts are set up to access financial information and transfers. Make staff learn to be circumspect in the information they share, particularly about work-related travel and other giveaways that could create opportunities for fraud.
Rather than trying to hack their way into an unyielding system, many cybercriminals have taken an easier way by working to guess or capture an individual user’s password. This might happen outside of work – using social engineering, for example, to target a person’s online gaming account and then loading a RAT (Remote Access Trojan) that records passwords as they’re typed.
Because most employees tend to have poor password hygiene – one Google survey found that 52% of respondents reuse the same password for multiple work and personal accounts, while 13% use the same password for all of their accounts – cybercriminals know that even a personal password may end up being used to protect that employee’s account on the company’s payroll, or to access their email system or accounting system.
By using the same password or easily extrapolating from one combination to another, in all sorts of other common accounts, cybercriminals can both access sensitive systems, and access a user’s other social media and business accounts to build a full profile of that person. Even if it doesn’t yield the password for a critical business system, this approach can provide enough information to enable a highly effective social-engineering campaign and targeted phishing attack.
Credential stuffing has become particularly problematic because many companies are embracing cloud-based software that is accessible from anywhere – meaning that they are open to abuse by cybercriminals anywhere in the world.
By carefully testing passwords against a cloud-based platform like Xero or MYOB until they gain access, a savvy cybercriminal can modify an organisation’s vendor master file (VMF) so that otherwise legitimate transfers are routed into their own bank accounts.
Many cloud platforms now protect against this using two-factor authentication that either SMSes the user a number when they are logging in, or requires them to use a specific application to which they are authenticated.
It’s also worth talking with the IT team about potentially rolling out password managers, which allow users to create extremely strong, unique passwords for every system they access. Used properly, password managers can eliminate the possibility of a successful credential-stuffing attack because no two passwords are the same.
Cybersecurity used to be about malware, but cybercriminals’ biggest success in recent years has stemmed from adapting time honoured tricks to either take over the identity of an unwitting victim, or trick that victim into assisting in the fraud without even knowing it.
Although awareness of their attack methods has increased, the sheer volume of attacks during 2020 means that throughout this year, you must be investing well in mechanisms to intercept both understood and novel attacks – as well as in automated tools, such as Know-Your-Payee systems that can pick up on fraud without your even trying.
Nearly every software package and operating system has vulnerabilities that can be exploited to take over a company’s systems – and some of them, like the EternalBlue exploit that WannaCry ransomware used to cause billions of dollars’ worth of damage, present a clear and present danger to the financial well-being of businesses around the world.
This exposure can be managed by regularly patching applications and operating systems – a core tenet of the Australian Signals Directorate’s Essential Eight cybersecurity guidelines, which all businesses should follow – yet it’s important for CFOs to be aware of all manner of new threat that might target their critical financial data.
“ As Verizon found, people are six times more likely to click on a mobile malware link without thinking than they are on a desktop.”
The tight interconnection between mobile phones and cloud services like iCloud and Google Cloud, for example, gives cybercriminals new ways of using ‘man-in-the-middle’ attacks to insert themselves into workers’ phones, intercepting 2FA codes that let them access core applications.
Many cybercriminals have been caught exploiting mobile phone porting mechanisms to intercept two-factor authentication codes sent to Finance employees during significant transactions; this could, for example, allow a fraudster to take over a CEO’s mobile account and approve a significant transfer, unseen.
Other scammers are playing on peoples’ trust of their mobiles, using SMS phishing messages that trick employees into clicking a link that takes them to a malware-laden site or phishing landing page that captures their personal information. As Verizon found, people are six times more likely to click on a mobile malware link without thinking than they are on a desktop.
It’s also important to monitor your company’s use of Internet of Things (IoT) technologies – standalone products such as cameras and sensors that connect directly to a company network. IoT devices may be useful for all sorts of things, but their vendors are known for inadequate security and many devices can’t be upgraded once they’re deployed in the field. That makes them sitting ducks for malware like Mirai, which scans networks for vulnerable devices and twists them into a zombie ‘botnet’ that is used to attack other systems.
There is almost no technology that cybercriminals won’t twist to their schemes for financial dominance. Perhaps the most far-out example is ‘deepfake’ technology, which cybercriminals are using to create authentic videos and voices.
One attacker mastered this technique so well that he was able to trick the CEO of a British energy firm into wiring $361,000 (€220,000) money to a purported Hungarian supplier, simply because the CEO thought he was on the phone with his German boss.
This, then, is the crux of the cybersecurity battlefront as we pivot away from last year’s pandemic and into the ‘new normal’ of 2021 and beyond: trust nobody, even if you think you should.
Forget past practices where a password would get you full access to a company computer: contemporary practice in cybersecurity uses the idea of a ‘zerotrust’ architecture in which every device, every user and every application is continually monitored and forced to prove that it is still allowed to be accessing the systems.
Commoditisation and commercialisation of cybercrime has removed the need for cybercriminals to be technically proficient. Insecure networks, password practices, and IoT infrastructure are providing new avenues for attack, even as employees help criminals trick them by over-sharing on social media.
And, finally: never, never put any one employee in a position where they can single-handedly compromise the company’s finances by falling for an online trickster. It has already happened too many times for there to be any more excuses.
The past year has thrown up all kinds of new challenges, and we’re not out of the woods yet. It’s a war out there – and cybercriminals are just waiting to bring the battle to you. By investing wisely in security defences, you and your colleagues will be ready when they come for you.
Eftsure provides continuous control monitoring to protect your eft payments. Our multi-factor verification approach protects your organisation from financial loss due to cybercrime, fraud and error.