Cyber Threats

Health, Higher Ed Most Vulnerable to Cyber Attacks

Unpatched software remains a top cyber vulnerability. Low-tech "phishing" attacks continue to succeed.
By: | May 12, 2016 • 4 min read

As cyber risk management comes of age, more data and better analysis are leading to new realizations. One is that health care and higher education are the most vulnerable sectors, followed closely by financial services.

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Another is that the vast majority of security breaches could be forestalled using simple measures, such as ensuring all updates and patches to software are installed and tested.

However, studies are starting to show that cheap, low-tech email attacks remain stubbornly effective despite expensive, high-tech protections.

All of those ideas were advanced and detailed at a fast-moving panel discussion May 11 in New York, sponsored by brokerage Crystal & Company.

Actuarial data is still thin in cyber, but Christopher Liu, head of cyber risk in the financial institutions group at AIG, said that “institutions in health care and higher education are the most hazardous classes of insureds. That is because they have the most sensitive information and that there is high turnover. Also, they usually do not have big budgets, so security is often not well supported.”

Christopher Liu, head of cyber risk, financial institutions group, AIG

Christopher Liu, head of cyber risk, financial institutions group, AIG

Financial institutions, especially asset managers, are the second-most hazardous class, Liu added.

“They have the same attractive information, plus they have money.”

Mitigating that, they also tend to have better funded and supported security, and they have heavy government regulation. That both keeps them on their toes, and also means greater external surveillance. Several panel members noted that firms became aware of breaches when regulators noticed unusual activity.

“We find that we deal primarily with three areas,” said Austin Berglas, senior managing director at K2 Intelligence.

“Those are: unpatched vulnerabilities in software, misconfiguration of internal systems, and misplaced trust by employees. We get called in to handle a breach, and 99 percent of the time we find the vulnerability is unpatched.”

Berglas explained that the software companies race each other to send out new versions that often are not completely functional or secure. So they send out patches. “Windows does it every week on ‘patch Tuesday.’ But users don’t have any regular schedule or system for installing and testing patches. We find unpatched vulnerabilities dating back as far as 1999.”

“I have been to meetings of the cyber response team, and everyone in the room is introducing themselves. This is the response team. Everyone in the room has to know everyone in the room.” — John F. Mullen, managing partner, Lewis Brisbois Bisgaard & Smith

The challenge of unsecured configurations between systems was dramatically demonstrated with the infamous attack on retailer Target, which came through the air-conditioning vendor. But Berglas emphasized the persistent and pernicious problem of simple phishing.

“It is estimated that 30 percent of individuals within a company will open an email, and 13 percent will click on an attachment, even if they have been warned not to,” Berglas warned.

John Mullen, Managing partner of the law firm Lewis Brisbois Bisgaard & Smith

John Mullen, Managing Partner- Lewis, Brisbois, Bisgaard & Smith

“You spent half a billion dollars on security systems and firewalls, and one click on one phishing email by someone with elevated system privileges, and the bad guys have just defeated your half-billion-dollar defense. Now they are inside, with credentials, and you can’t detect them.”

The quickest and easiest thing that any company can do, “is to look for unpatched vulnerabilities in public-facing systems,” Berglas urged.

On the same theme, John F. Mullen, managing partner of the law firm Lewis Brisbois Bisgaard & Smith, stressed that “security goes way beyond  IT.

“This is not just about the tech guys. Cyber security tends to get pushed downhill.” And that tends to mean lack of coordination on all fronts.

“I have been to meetings of the cyber response team, and everyone in the room is introducing themselves. This is the response team. Everyone in the room has to know everyone in the room.”

Similarly, “insureds have to know the coverage that they have bought. Is there a mandated forensics group? Outside counsel? If so, go meet with them. If you have options, vet them,” Mullen exhorted.

“You spent half a billion dollars on security systems and firewalls, and one click on one phishing e-mail by someone with elevated system privileges, and the bad guys have just defeated your half-billion-dollar defense.” — Austin Berglas, senior managing director, K2 Intelligence

He expects the cyber insurance business to triple or quadruple in the next five years, in terms of premium spending.

Cycling back to the theme of internal responsibility, Paul Miskovich, senior vice president and global practice leader of cyber and technology errors and omissions coverage at Axis, said that 67 percent of cyber claims presented to his firm involved insider activity of some kind: clicking on a phishing email or failing to install a patch or use a firewall. Further, 25 percent of claims involved third parties such as vendors.

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For all the focus on the breach itself, Miskovich added that “regulatory costs can be more than the costs of the breach, especially if you don’t have documentation of your security policies and protocols.” That includes documentation that the policies are in place and are rehearsed.

Noting previous comments that many losses are traced to breaches that have gone undetected for years, Miskovich said that a new area within cyber insurance is full coverage for prior acts.

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]