Proliferation and mitigation of Shadow IT

Shadow IT is the use of unsanctioned systems and technology:

  • Individual employees or departments typically adopt it to meet a specific need.
  • It is introduced to enhance productivity or to resolve immediate problems and challenges but gradually becomes embedded into the business.
  • The deployment bypasses a formal IT procurement and approval process.
  • Often, it becomes part of a business-critical process without awareness within the IT or Information Security departments.
  • Documentation is not always readily available, if it exists at all.

The proliferation of Shadow IT introduces many risks:

  • Information security is a significant concern with Shadow IT as unapproved software and services may not adhere to the implemented security standards and leave data vulnerable to cyber-attacks.
  • Shadow IT can result in non-compliance with industry regulations and legal requirements, leading to fines and reputational damage. Uncontrolled IT systems could, for example, bypass data retention policies.
  • The IT and Information Security departments lose visibility and control over technology, and that can disrupt troubleshooting, security monitoring, and ongoing maintenance.
  • Unsanctioned IT solutions can lead to unexpected expenses such as:
    • Needing to find specialised skills because of staff turnover
    • Replacing the system with an approved alternative
    • Integrating processes into existing solutions
  • When employees use unapproved software tools, it can lead to:
    • Information stored in multiple locations without managed data backups
    • Data fragmentation or data loss, and consequently, the use of incorrect versions of data or incomplete data sets to make decisions.

Countermeasures for addressing Shadow IT include:

  • Raise awareness throughout the business about the risks to ensure employees understand the importance of IT policies and procedures.
  • Develop and communicate clear IT policies and guidelines for requesting new software solutions.
  • Implement IT governance that involves key stakeholders in the decision-making process for IT purchases.
  • Maintain an inventory and assess the IT environment to identify unauthorised software or services.
  • Work closely with business units to understand their needs and make it easier for employees to use approved alternatives that fulfil their requirements.
  • Encourage open communication between IT and other departments to understand their needs and challenges.
  • Implement robust security measures to mitigate Shadow IT risks.
  • Provide training and support for employees in using approved IT solutions to reduce the motivation to seek or develop unauthorised alternatives.

QR Code Threats: Quick Response or Quick Risk

QR codes (Quick Response) are not new but have become extremely popular over the last several years. Sadly, as technologies and human behaviours evolve, so do the risks as fraudsters often adapt faster. QR code creators convert this information into binary and display it as a pattern of squares and spaces; a square barcode. QR code readers do the reverse, converting the binary into usable information. Businesses use this technique and technology for many legitimate purposes, but unfortunately, scammers can also misuse it for fraudulent activities. This article explores the risks and countermeasures.

  • Phishing – Scammers can create QR codes linking to fake websites that mimic legitimate businesses in much the same way phishing emails include links to fraudulent sites. Scanning the QR code may unknowingly provide fraudsters with sensitive information. E.g., login credentials and credit card numbers.
  • Malware – QR codes can link to websites with malicious content, such as viruses and spyware. Again, this is similar to what happens with phishing emails, but with a difference: you are looking at a square barcode rather than at a link. The link information will not be available until your scanner reads the code.

There are many legitimate uses of QR codes, and it would be a shame if the fraud discourages businesses from using the technology and realising its benefits. Protecting yourself from becoming a QR code fraud victim requires examining the context and situation in which you use them.

Here are some detailed examples and scenarios to illustrate how the technology is in use, how fraudsters target their unsuspecting victims, and countermeasures, which primarily involve being more mindful and taking extra precautions when scanning:

  • Business cards, product packaging, and printed advertisements – linking directly to websites to allow quick access to product and service information
  • Utility bill payments
  • Airline tickets
  • Cinema or theatre tickets, concerts, conferences, or other venues that facilitate paperless entry
  • Contactless payments through Google Pay, Apple Pay, or any number of mobile banking applications
  • QR codes at tourist attractions to link through to historical information or provide current map locations
  • Labelling equipment, spare parts, and other warehouse items makes it practical for supplier chain, inventory management and tracking products from production to distribution – the QR code originates from labelling car parts in Japan.
    • The Universal Product Code (UPC) Barcode consists of 12 digits and often needs multiple barcodes to capture the required information.
    • QR codes provide the capacity to store significantly more data – 3 kilobytes.
    • The quantity of useable information differs depending on the data type – numeric, alphanumeric, binary, or Japanese.
  • Patient wristbands to provide quick access to critical health information in hospitals
  • Emergency contact information
  • Restaurant menus, ordering and bill payment

General countermeasures to help protect you against QR code fraud include:

  • Don’t scan QR codes from sources you don’t trust
    • Verify the origin and legitimacy of QR codes
    • Use official websites and apps from reputable companies.
    • Avoid scanning QR codes if you have never heard of the company
    • Avoid scanning QR codes from unsolicited sources
  • Be suspicious of unsolicited QR codes received via email, text messages, or social media, as these are unnecessary:
    • Scammers use these channels to distribute malicious QR codes
    • Businesses would never need to send the information through a QR code; they would send readable text and links through these channels.
    • The exceptions include, for example, QR codes for train tickets, theatre tickets, airline tickets, or other events in the future where the QR code allows paperless entry but would be in response to making a purchase and not unsolicited.
  • Examine QR codes closely before scanning. Look for any signs of tampering; if anything looks suspicious, don’t scan the code. Consider:
    • Anything that looks like an alteration or anything added
    • If someone has placed a new QR code sticker over an original
  • Check the web address before entering personal information or making payments, and make sure it matches the business’s official website.
  • Keep operating system and application software up to date as developers frequently release new updates to address security vulnerabilities.
  • Install reputable antivirus or anti-malware software to help detect and prevent malicious software.

The above list is not exhaustive, and it is necessary to change your mindset when using this kind of technology and develop a healthy level of suspicion. As with all types of fraudulent activity, QR code fraud is evolving; therefore, staying informed and being cautious to protect yourself and your personal information is essential.

Here are some scenarios and consequences:

  • Restaurant bill payments
    • A scammer adds a QR code sticker over the original on a restaurant menu
    • The customer scans the code and visits a fake restaurant website
    • The customer pays the restaurant bill to a fraudster
    • The restaurant may challenge the customer when they get up to leave, or it may involve authorities at a later date
  • Fake event tickets
    • Fraudsters use a fake website to sell tickets to a popular event and deliver the tickets with QR codes to unsuspecting victims.
    • The ticket website and the tickets look convincing and official
    • The customer is unaware of any problems until they are unable to gain entry to the event
  • Restaurant orders with upfront payments
    • A scammer covertly swaps official menus with a reproduction containing a different QR code that directs the customer to a convincing website copy.
    • The customer places an order for food and makes a payment
    • The food never arrives
    • The customer complains and provides evidence of payment
    • The restaurant apologises and delivers the food, and suffers a loss in reputation through negative word of mouth
  • Parking tickets
    • A scammer places a QR code sticker over the top of the original code
    • An unsuspecting  driver scans the QR code to buy their parking ticket
    • Scanning the code directs the driver through to a fake car park payment website, enters payment details along with the car registration number
    • The site sends a text message confirming receipt of payment and the valid duration of their parking
    • The car parking attendant, traffic warden, or Automatic Number Place Recognition (ANPR) identifies the vehicle as parked without payment
    • The driver receives a fine in the post, and the process to challenge such fines is complex, time-consuming, and, in some cases, more expensive than paying the fine and moving on
  • Free parking – a variation on the previous parking ticket example
    • A scammer prints posters and places them in free-parking areas
    • The parking tariff and payment instructions look official and well-presented, but they are fake
    • Drivers park up, pay for parking, and receive a confirmation email or text message
    • The scammer takes the money, and the driver is unaware of what has happened
  • Train travel – 20 days for the price of 2 days – this example illustrates where passengers avoid paying their fares, which takes advantage of poor staffing levels on some routes and the absence of ticket gates at many stations. In this example, the traveller needs to commute every day. In this case, the unexpected victim is the train company.
    • For day one, the traveller purchases two return tickets using an official ticket website such as Train Line. The 1st is an open-return ticket from Station A to Station B, and the 2nd is an open-return ticket return from Station B to Station A
    • On day one, the traveller uses the outbound portions of both tickets for the outbound and return journey. On this day, it doesn’t matter if there is an unexpected ticket inspection as they are only valid for one day.
    • On day two and subsequent days, the traveller uses the return portion of the 2nd ticket for their outbound journey and the return portion of the 1st ticket for their return journey. Both return portions are valid for 30 days.
    • If a ticket inspector scans the QR code, it will no longer be valid for subsequent travel on the journey. The traveller can buy a replacement open return ticket and continue.
    • Accepting the losses is likely cheaper than increasing the workforce and ticket gates for the train operators and stations.

To conclude, you should be careful when using QR codes and exercise the same level of caution, scepticism, and suspicion as when you receive social media messages, text messages, or unsolicited emails containing website links.

Implementing an Environmental Management System

ISO 14001 is a global standard that sets out Environmental Management Systems (EMS) requirements. Although this standard is relatively new (1996), discussions on environmental issues date back hundreds of years, including laws passed by parliament to reduce the smell from the River Thames in the 14th century, responses to public anger about smoke from coal-burning factories, and the introduction and rapid expansion of public transport. In the last 50 years, we have seen significant changes in practices at all levels of society and increased public awareness of the damages and consequences of our collective actions.

  • Rising public concern about environmental impact
  • Expensive legal cases
  • Negative publicity on industries
  • Voluntary codes of environmental conduct
  • Protest movements
  • New environmental management regulations
  • The strive towards Net Zero

ISO 14001 provides a framework that allows businesses to implement and continually improve their environmental practices. In addition to reducing the impact on the environment, increases in profitability through cost reduction is a significant opportunity. An excellent example is the forced transition to home working in response to the coronavirus and what became hybrid working as society didn’t revert to a pre-COVID state. Reduced or eliminated travel requirements alone benefit the environment and significantly reduce cost and time for a vast portion of the workforce. Reducing the need for office spaces has increased profitability, not to mention all the consequential cost reductions, such as electricity consumption. For ISO 14001, businesses must:

  • Establish an environmental policy to outline:
    • Commitment to environmental protection
    • Compliance with relevant laws and regulations
  • Communicate the environmental policy to all relevant stakeholders. Establish clear communication on all environmental matters.
  • Identify and assess business activities that could significantly impact the environment, including:
    • Products manufactured and sold
    • Services developed and delivered
    • Other business activities
  • Identify and understand environmental regulations, legislation, and other applicable requirements. Ensure compliance with these obligations.
  • Set specific objectives based on the environmental impact assessment and legal requirements that are:
    • Measurable
    • Achievable
    • In alignment with the established environmental policy
  • Develop and implement an environmental management program with specific actions, timescales, and responsibilities to achieve the defined objectives. Businesses must also ensure that they have the necessary resources and personnel with the required competence to implement the EMS effectively.
  • Maintain EMS documentation, including:
    • Policies and procedures
    • Environmental performance records and metrics
    • Any other documentation to demonstrate compliance and track progress.
  • Implement procedures and controls to manage environmental commitments effectively, including:
    • Reduce or prevent pollution
    • Conserve resources
    • Minimize environmental impacts
    • Reducing waste or effective recycling
    • Responding to environmental emergencies
  • Monitor and measure environmental performance to assess progress toward defined objectives and identify areas for improvement. Conduct audits to evaluate the effectiveness of the EMS and compliance with legal and regulatory requirements, and take corrective actions in response to identified non-conformities
  • Conduct management-level reviews of the EMS regularly to ensure it is adequate and effective to meet environmental objectives. Management commitment is essential.

Environmental management is a journey and not a destination, and businesses must demonstrate commitment to continuous improvement and movement towards preventing pollution and more efficient use of natural resources.

Reducing the cost of cyber insurance

Cyber insurance protects against risks that come with storing and handling data. It covers business liability for data breaches involving customer or employee information, including credit card details, passwords, and personally identifiable information (PII). Cyber insurance claims could arise from either:

  • An accidental privacy breach by an employee
  • A situation involving hacking, extortion or ransomware

Cyber insurance can cover many financial costs, varying with each provider. Here are some examples of cover:

  • Crime investigation
  • Loss of income
  • Legal costs
  • Recovering lost data
  • Restoring computer and security systems
  • Locating and removing viruses
  • Reputation management activities
  • Extortion payments
  • Third-party claims for damages
  • Hiring IT specialists

Insurance companies conduct risk assessments and set premiums accordingly through a combination of factors, including:

  • Actuarial analysis – consideration of historical data, industry trends, statistics, and various other factors to determine the likelihood of events occurring and associated costs
  • Underwriting – evaluating individual insurance applications to accept, reject, or modify cover. Underwriting involves assessing the applicant’s risk profile considering many factors.
  • Historical Losses – analysis of historical claims data to identify which types of claims are more likely and use the frequency and severity to influence the premium

Consequently, reducing insurance premiums is about mitigating risks and demonstrating to insurance providers that effective countermeasures exist. For motor insurance, this could include:

  • Using a steering lock – a car is less likely to be stolen with a steering lock while parked and unattended. A car thief will likely move on to the next car without a steering lock.
  • Advanced driving test – a certificate holder is less likely to cause an accident. The advanced driving test demonstrates a higher standard of driving than the standard DVLA test. Some insurance providers offer significantly reduced premiums.

Not all insurance providers offer reduced premiums for all types of risk mitigation, so it is still necessary to shop around. Reducing cyber insurance premiums also involves mitigating risks and demonstrating to the providers that your business has adequate controls. In a nutshell:

  • Establish robust security controls to reduce the:
    • Likelihood of an incident
    • Severity of an incident
    • Overall risk
  • Have the necessary processes and resources to:
    • Recover quickly from security incidents and losses
    • Strengthen controls to prevent reoccurrence
  • Have the insurance policy as a backup

When applying for cyber insurance, you should expect to receive a detailed questionnaire from your insurance provider, like one that you may obtain from clients as part of their due diligence process or one that you might give to vendors as part of your due diligence. Also, expect a follow-up meeting with a security expert from the insurance company (or working on their behalf). This audit activity will allow the insurer to decide what cover to offer at a price that reflects the risk.

At the heart of this process is the requirement to establish credibility. A great starting point is to work within a specific framework and obtain third-party certification where available and appropriate to the business. Here is a selection:

  • Cyber Essentials and Cyber Essentials Plus
  • ISO 27001 Information Security Management Systems
  • Payment Card Industry Data Security Standard (PSI DSS)
  • National Cyber Security Centre (NCSC) Cyber Assessment Framework (CAF)
  • National Institute of Technologies (NIST) Cybersecurity Framework (CSF)
  • Control Objectives for Information Technology (COBIT) Framework

Obtaining a third-party evaluation of business maturity can add credibility to the current risk posture and provide essential information, such as the next steps in developing maturity and mitigating further risk. Not all insurance providers will recognise all the frameworks and certifications and may use a breakdown of controls when calculating premiums.

Here are some examples of controls demonstrating that your risk management, information security management, and risk posture are under control. These details provide a good starting point for building your case for reducing cyber insurance premiums.

  • Implement strong network security, firewalls, and intrusion detection systems. Use strong encryption to protect sensitive data; both in transit and at rest. Deploy end-point protection.
  • Employ multi-factor authentication (MFA)
  • Regularly update and patch software and systems to address vulnerabilities. Remove deprecated or unsupported software from the estate. Establish vulnerability management practices and remediate weaknesses.
  • Conduct regular security audits. Conduct penetration testing. Identify weaknesses, manage remediation, and continuous security improvement.
  • Create and enforce clear policies and procedures for information security. Stay up-to-date with emerging threats and update countermeasures accordingly to protect the business.
  • Have secure/air-gapped backup copies of data. Regularly test the restore process to make sure you can recover you data if needed.
  • Provide security awareness training for employees to recognise and respond to threats. Create a security aware culture within the business. Evolve to the point where the people become the greatest strength in cyber defence.
  • Define and document an incident response plan to address and contain threats. Regularly update and conduct tests to demonstrate readiness.
  • Establish a 24/7/365 security monitoring regime. If this is cost-prohibitive because of a need to operate multiple shifts, consider partnering or outsourcing the security operations centre to a third party specialising in security monitoring and offering a round-the-clock or follow-the-sun service.
  • Regularly assess your risk profile. Implement treatment plans based on the assessments. Identify and prioritise potential vulnerabilities and threats.
  • Comply with data protection regulations such as the Data Protection Act the GDPR. Implement data protection measures to safeguard customer and employee information. Maintain a data breach response plan to meet regulatory requirements.
  • Assess the security posture of third-party suppliers during the selection process and at periodic intervals to ensure they meet your contractual requirements and security standards.
  • Establish a robust risk management framework and proactive measures to prevent security incidents. Continuously improve security posture in response to evolving risks and emerging threats. Update policies and procedures as needed to align with current requirements.

Information Security is a journey, not a destination, and the same applies to reducing cyber insurance premiums. By implementing strong security measures, demonstrating risk management practices, and working with insurance providers, it is feasible to:

  • Obtain lower insurance premiums. Keep premiums to a minimum through a commitment to continuous improvement.
  • Maintain an adequate level of insurance coverage. Review and adjust the insurance coverage and policy limits as needed to meet the needs of the business.