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Info-Security Business Risks

So it's clear that the playing field has changed. Before, few small companies really had to worry about their data security; now firms of all sizes are forced to spend time and money to worry about it—or risk the consequences. What are these risks? Few companies stop to think about all the possible risks that they are exposed to from an information security standpoint. You should understand all these risks, recognize which ones apply to your organization, and know what the value or dollar cost of each one is. This will help you make a business case for better computer security and justify the expenditures you need.

Data Loss

While computer viruses have kept this threat current since the 1980s, few managers stop to think what it would really cost them to lose part or all of their data. Without proper backups, which many small firms lack, the loss of critical data can be catastrophic. Years of accounting, payroll, or customer data can be wiped out. Orders can be lost. If the data belongs to customers, the company could be liable for its loss. Certain professions, such as legal or accounting, can be subject to regulatory fines or punishment for loss of such data. And this doesn't include the loss of business and productivity while employees restore the data or have to revert to paper records. Even when they have backups, the time and hassle involved to get systems back up and running is considerable. The bottom line is that few businesses can survive long without their computerized records and systems. Does your company have a written Disaster Recovery Plan that covers data and systems? If not, you could be in for a nasty surprise in the event of an unexpected outage.

Denial of Service

Many of today's hackers are more high-tech vandals than computer geniuses. They take joy in knocking down servers or denying service for any reason, and sometimes for no reason at all. Often the denial of service is accidental or incidental to the hacker's real goal. The Code Red and Nimda worms brought many networks to their knees just from trying to respond to all the attempts at infection. With the reliance of today's business on the Internet, this can be like shutting off the electricity. E-mail communication comes to a halt. A company Web site might go down. For a company that does a considerable amount of business over the Internet, this could mean a total stoppage of work.

How many companies know the hourly or daily cost to their business of a loss of Internet access? In certain industries or companies, it is very large due to their reliance on information technology. Few companies these days are without some dependence on Internet access. Depending on how much the business relies on the Internet, a denial of service attack can either be a minor annoyance or a major blow to a company's business. Try calculating the cost for your company based on the number of employees unable to work, the number of orders processed online, and so on.

Embarrassment/Loss of Customers

Being offline can make a company look very bad. Not being able to communicate via e-mail or missing critical messages can be embarrassing at best. If their Web site is offline, customers will immediately begin asking questions. For public companies, it could mean a loss of stock value if the news gets out. Witness the drop in stock prices of Yahoo and Amazon after well-publicized denial of service attacks. Millions or even hundreds of millions of dollars of stockholder value can disappear in an instant. For businesses like financial intuitions or e-commerce companies that depend on people feeling safe about putting their financial information online, a single Web defacement can wipe out years of goodwill. CD Universe, an online CD retailer who had their credit card database stolen, never recovered from that attack. Cloud Nine Communications, an ISP in England, was down for a week due to a concerted and lengthy denial of service attack and eventually had to close its doors. There are now gangs of hackers who go on mass Web site defacement binges, sometimes hitting hundreds of sites per night. The admission to these hacker clubs is racking up a certain number of Web site defacements. Do you want your Web site to become a notch on their scorecard?


In this litigious age, making a small mistake can result in a lawsuit costing millions. Imagine the results if your entire customer database is stolen and then traded on the Internet. Class action suits have resulted from such events. With the huge rise in identity theft, laws are being passed that require companies to exercise the proper standard of care when dealing with a customer's personal or financial data. One industry that has been particularly affected by legislation is healthcare. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires any company dealing with patient information to properly secure that data from unauthorized use. The privacy provisions of the act affecting computer networks went into effect in 2003. There are civil and criminal penalties for violators, so it is no longer just a money issue. Executives and managers could go to jail if found in violation.

Also, hackers are always looking for unsecured computers to launch their distributed denial of service attacks from. If your company's computers are used in such an attack and victims can't find the original perpetrator, they might come after you, charging that you were negligent in securing your network. After all, companies tend to have deeper pockets than most hackers.

Another area to be concerned about is liability for copyright violations. Copying of pirated movies, music, and software over the Internet has reached a fever pitch. Media companies are fed up and are starting to go after violators directly by tracking down the IP addresses of the downloaders and sending lawyers after them., a Hawaii-based Web site, had their ISP service disconnected when their ISP was served with a lawsuit for alleged pirated files found on their network. Pirates who want to distribute their wares are resorting to storing them on third-party computers, often compromised servers on corporate networks. If your company is unknowingly running one of these servers or has such files stored on it, you could be disconnected from the Internet, liable for fines, or sued. Stories like these can often help you persuade reluctant executives to implement stricter personnel policies when it comes to information security, such as banning file sharing software or implementing stronger password requirements.

Disclosure of Corporate Secrets and Data

It is hard to put a dollar value on this risk because it varies from firm to firm. For example, the value of the recipe for Coca-Cola or Colonel Sander's fried chicken could reach into the billions. At a smaller company, detailed plans for a proprietary device or formula may be invaluable. In some cases, much of the value of the company may be locked up in this important data. For example, a biotech company may have their research for their latest gene patents on their corporate network.

Customer lists are always valuable to competitors, especially in very competitive markets. Hewlett-Packard was served with a shareholder lawsuit after sensitive discussions between their executives were released to the public during a contentious merger.

However, even at companies where there are no secret plans or recipes, this risk exists. For instance, think of the damage of releasing the corporate payroll file to the rank-and-file workers. This happens all the time, usually due to snoopy or vindictive employees. The discord and subsequent loss of morale and perhaps employee exodus due to being disgruntled over pay differences can be huge. Often, all this could be avoided if the system administrator had simply secured the system properly.

Tampering with Records

Sometimes an intruder is not intent on stealing or destroying data but rather just making changes to existing records, hopefully without being detected. This can be one of the most difficult kinds of computer crime to detect because the systems keep functioning just as they were before. There is no system crash or performance drain to point to an intrusion. There is no defaced Web site to raise an alarm. Obviously, for banks and government agencies, this can be a very serious problem. But every company has to worry about someone getting into the payroll system and changing pay amounts. Schools and universities have to deal with students trying to change grades. Often it is up to the accounting auditors to find evidence of foul play. However, with the right system security, these problems can be avoided up front.

Loss of Productivity

This is a much more subtle risk and often very hard to avoid. It can range from bandwidth being used by employees to download music or movies, thereby slowing down other workers, to employees surfing objectionable or nonwork Web sites. While these are employee policy issues, the system administrator is often called on to fix them with technology such as content filters and firewalls. And many of these unauthorized programs, such as Napster, Kazaa, and instant messengers, in addition to being productivity drainers, can create security holes in a company's network defenses.

Given all these risks, you would think that companies would be falling over themselves to put the proper protections in place. Yes, the largest companies have implemented significant defenses, but most small- and medium-sized companies have little in the way of network security. At best, a company will install a firewall and anti-virus software and consider that enough to protect them. Unfortunately, it is often not enough.

A whole industry has sprung up to offer solutions to these problems. There are commercial hardware and software solutions such as firewalls, intrusion detection systems, and vulnerability scanners. However, most of these products are priced so high that only larger firms can afford them. A simple firewall costs several thousands of dollars. Commercial intrusion detection systems and vulnerability testing solutions can run into the tens of thousands or more. In addition to the up-front costs, there are often yearly maintenance fees to support the software. And many of the software solutions require high-end computers to run on. They also often require pricey database software such as Oracle for reporting features. Given these costs, proper computer security is often seemingly out of reach for the small- and medium-sized firms. And as you have seen, the risk is just as great for these businesses as the Fortune 500, and perhaps even more so, since their financial resources to withstand such an attack will be much more limited than a large firm.

So what's a harried, overworked, underfunded system administrator to do? Well, there is a solution that can provide companies with quality computer security for little or no cost: open source software.

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