CFO World

Report: Data breaches on the rise, Australian businesses ill-prepared

​Data loss and the theft ​of confidential information incidents rose by 78.68 per cent in 2018

Data loss and theft continues to rise, yet two-thirds of organisations in Australia do not have a team or capability to respond to cyber security incidents.

According to the 2018/2019 BDO and AusCERT Cyber Security Survey, data loss and the theft of confidential information incidents rose by 78.68 per cent in 2018 compared to 2017, and data breaches experienced through third-party providers and suppliers also rose by 74.3 per cent.

Between 2017 and 2018 alone, professional and technical service organisations have seen a 300 per cent increase in data breaches via third-party providers and suppliers, and a 670 per cent increase in data loss and theft of confidential information. However, no professional and technical services respondents to the survey perceived an incident caused by a third party as a threat, indicating incidents were likely to have occurred, but were not detected.

Although cyber criminals are the most common sources of cyber attacks, respondents also reported a significant increase in suspected attacks from foreign governments and nation states, with 64 per cent of data breaches caused by malicious or criminal attacks, while 33 per cent could be attributed to human error.

While most organisations were confident in meeting compliance regulations as outlined by recently introduced cyber security and data privacy legislation, 66 per cent of businesses surveyed have no predefined plan or capability to contain, eradicate and recover from cyber security incidents.

On average, the cost to an Australian organisation for a data breach is almost $US2 million. The potential for huge financial implications is one reason 86.4 per cent of survey respondents indicated they expected to have a cyber security awareness plan in place within the next 12 months. By 2020, 84.8 per cent of respondents plan to implement regular cyber security risk assessments.

Respondents are anticipating data loss and theft of confidential information to be the most prevalent threat in 2019 and beyond, with respondents expecting attacks coming from activists (80%), insiders (68%), or foreign nationals (10%).

Recent high-profile cyber breaches at Dell, HealthEngine and PageUp have exposed Australia’s vulnerability to data-related breaches and prompted calls for greater investment in cyber security awareness and incident management in the professional services domain.

A recent Customer Loyalty 2018 Report by Gemalto also found Australian consumers are more likely than their global counterparts to walk away from a company (retail, financial or healthcare) that experiences a breach, with over two-thirds (70 per cent) admitting they would look elsewhere if financial and sensitive information such as card details and bank accounts were stolen. Over half (55 per cent) admitted they would also walk if passwords alone were stolen.

The report found retailers (62 per cent), social media sites (57 per cent) and banks (53 per cent) are most at risk of suffering the consequences of a breach, with Australian consumers prepared to avoid their business in future. Two-thirds of Australian consumers are worried that at some point their online personal information will be stolen.

BDO’s national cyber security leader, Leon Fouche, said all industries needed to ramp up their focus on employee education and training to empower their people to take action.

“While recent compliance regulations have boosted data breach notification numbers and industry leaders have endorsed the implementation of more comprehensive resilience measures, many Australian organisations do not have the capability to detect a breach or respond to it in a manner that contains cost and reputational damage,” Fouche said.

“Sophisticated cyber attacks and data breaches sit alongside weapons of mass destruction and natural disasters in terms of their ability to disrupt and damage; however, in many business cases, the focus on preventative measures has far outweighed response or incident management.

“Every organisation should have a pre-defined plan, which is regularly tested, to ensure that everyone in the organisation knows what to do and how to respond to cyber security incidents.”

The most common vehicle for cyber attack remained phishing, which accounted for 20.19 per cent of all cyber security incidents experienced in 2018 and has been trending upwards since the inaugural BDO and AusCERT Cyber Security Survey in 2016. Phishing was followed by malware (14.08%) and ransomware attacks (9.39%).

“That’s why education and training are so important. Employees need to be given the knowledge to detect a potential cyber attack and the tools to respond if they suspect there has been a breach or they have inadvertently disclosed sensitive information,” Fouche said.

The survey examined the cyber security risks and realities experienced by more than 500 board, business and IT executives across Australia and New Zealand.

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