The ransomware industry is flourishing in South Africa, while business are largely unprepared for the business interruption and financial fall-out of a breach.
In a recent Carte Blanche episode, the investigative news programme revealed that South Africa had been ht by numerous major cyberattacks during 2019. State agencies were key targets: the Civil Aviation Authority was hit in July 2019; City Power was hit with ransomware twice in a matter of months. Both incidents occurred at the end of the month when most South Africans receive their salaries and do payments, highlighting the fact that ransomware attackers will exploit flaws in IT infrastructure at critical times to gain optimum leverage.
In July 2019, South Africa also experienced the longest running cyber-attack campaign among all the regions monitored by email and data security company Mimecast, according to its quarterly Threat Intelligence Report. Four major cyber-attack campaigns were detected in South Africa between July and September and several local financial services companies bore the brunt. According to Mimecast, it detected more than 116 000 attacks in SA over an eight-day period in July by an unknown actor or group, using various malware types.
The increasing frequency and voracity of cyber concerns are mirrored in Aon’s 2019 Global Risk Management Survey where participants ranked cyberattacks and data breaches as #6 in the top 10 risks facing organisations today. Startling figures are changing business and public perceptions of cyberattacks:
- Malware attacks in SA increased by 22% in the first quarter of 2019 compared to the first quarter of 2018, translating to around 13 842 attempted cyberattacks per day – Kaspersky Lab.
- A data breach in South Africa costs an average of R36.5 million, and the long tail costs of a data breach can be felt for years after the incident. SA ranked 7 out of 16 countries polled for the highest cost of a cyber breach. – IBM security study conducted by the Ponemon Institute.
- Alarmingly, in terms of the cost per record breached, SA ranks much higher at 11 on a scale of 16 polled countries, costing US$155 per record – the same as for the UK and not that far behind the US ($242 per record), which is alarming when you consider the size of the US economy compared to South Africa. – IBM security study conducted by the Ponemon Institute.
- In 2019 in South Africa, the average time to identity a breach was 175 days and 56 days to contain it. IBM security study conducted by the Ponemon Institute.
- Large businesses are not the only targets and hackers are indiscriminate. In fact 43% of cyber-attacks target small businesses according to the Verizon 2019 Data Breach Investigations Report (DBIR).
- Small businesses face disproportionately larger costs relative to larger organisations, which can hamper their ability to recover financially from the incident. IBM security study conducted by the Ponemon Institute.
- Lost business was the biggest contributor to data breach costs. The loss of customer trust had serious financial consequences for the companies studied, and lost business was the largest of four major cost categories that contributed to the total cost of a data breach. IBM security study conducted by the Ponemon Institute.
Visit the next page to read about why cybercrime has become so rampant, and how you can protect yourself.
Why have cyberattacks and data breaches become so rampant?
Aon’s 2019 Cyber Security Risk Report highlights some of the vulnerabilities:
- The rapid expansion of operational data from mobile and edge devices, along with growing reliance on third-party—and sometimes even fourth-party—vendors and service providers, are heightening cyber risks.
- The combination of faster networks and vulnerable devices – Internet of Things (IoT) and the forthcoming transition to 5G – opens more doors to destructive threats.
- Employees remain one of the most common causes of breaches. In a 2018 Aon survey, 53% of respondents said their companies experienced an insider-related attack within the previous year. When an employee of a large healthcare company inadvertently opened a phishing email, nearly 80 million patient records on his system ended up in the hands of a foreign government.
- Organised crime is now using former intelligence members for more sophisticated attacks, while state actors are both broadening the nature of their attacks and increasing their frequency.
- Lastly, an ever-changing set of regulations from governments around the world compounds the difficulties of managing cyber risks.
According to Zamani Ngidi, client manager for cyber solutions at Aon South Africa, “South Africa will continue to see large-scale ransomware attacks that target admin credentials to gain access to, and infect, wider networks. The bottom line is that any organisation, regardless of size, ownership or sector, that is reliant on technology and a network to conduct any aspect of its business is at risk.”
Despite the fact that the breadth and scope of cyber coverage has increased substantially since 2017, only 27% of participants in Aon’s 2019 Global Risk Management Survey from the Middle East and Africa region have purchased cyber insurance.
“The risk that cybercrime poses is here, and it is very real. A lack of reporting on the matter is leaving many in the dark as to the resultant costs that a business could suffer as a result of a cyber breach, not only from an incident response perspective but also the subsequent business costs associated with a breach of this nature that can include aspects such as business interruption, loss of business and client trust, liability of directors and officers through to reputational damage,” explains Zamani.
“Many companies simply do not have the luxury of a big balance sheet to absorb the risk and this is where the insurance and response programme become crucial. It necessitates a major shift in business thinking to view cyber risk as both a strategic and critical risk that holds a very real threat to business and its operations. Proactive steps need to be put in place in order to prevent a business from becoming a statistic as far as possible in addition to having a solid incident response plan and cyber insurance in place to manage a worst-case scenario,” he adds.
Visit the next page to read about how you can protect yourself.
How do you protect yourself?
According to Aon’s 2019 Global Risk Management Survey , the use of cyber risk assessments has risen 16% since 2015. However, only 59% apply any formal process to identify and evaluate their cyber risks.
The majority are also not using any financial metrics to communicate the materiality of cyber exposure. The general trend globally, specifically to cyber risks, is that organisations do not understand their biggest cyber risks and the implications they have for operations and the balance sheet.
“Whether you are a big or small operator, your company’s ability to protect against and recover from ransomware attacks rely on implementing proactive technical measures, business continuity plans and insurance to mitigate the financial and liability fallout. With a qualified risk advisor versed in the cyber risks facing South African businesses of all sizes, your organisation will be able to take the business through a comprehensive cyber risk assessment that will help quantify the risks your organisation is exposed to, as well as the potential fallout or financial quantum of such an incident. Having a built-for-purpose cyber insurance regime in place that is supported by an airtight incident response process will go a long way in achieving a cyber resilient operation,” concludes Zamani.
Aon highlights four crucial steps to building a cyber resilient organisation:
- Take it from the top. Cyber risk management must be an enterprise-wide effort, but accountability needs to sit at the very top of the organisation, with the board understanding the costs and consequences of a cyberattack.
- Unite your business. Cyber risk is not just an IT security issue; it is a threat to the whole enterprise. It calls for a multi-discipline, multi-level response that involves every relevant stakeholder within the business.
- Get ahead of the game. Businesses can no longer rely on bringing in a response team after an attack. Incident-response training is critical in preparing organisations for a cyber-attack and scenario-planning helps to understand operational vulnerabilities and threats.
- Protect your balance sheet. Firms should look at how they are leveraging available risk transfer opportunities. Cyber insurance can help protect an organisation’s balance sheet by providing a financial pay-out after things have gone wrong and providing pre-loss prevention and post-loss services.