EU Pushes U.S.-Style Cyber-War Games For Retailers

It's always tough to figure out whether a government recommendation on security will actually improve the lot of retailers. "We're from the government, and we're here to help you" is a joke on both sides of the Atlantic. But now a European Union agency is proposing that EU financial organizations develop "information exchanges" to swap security information—and run cyber-war games for retailers and other financial players.

The new groups would be modeled on industry-specific security groups formed in the U.S. in the wake of the 9/11 attacks. One of those groups now puts on real-time security exercises for retailers and payment-card processors, and a handful of large retailers also have participated. But exactly how useful are those war games? It's hard to say, because the participants aren't identified. And that may be one of the biggest selling points of this type of security program.

The EU report, which was prepared by RAND Corp. for the European Network and Information Security Agency (ENISA), is thin on details. Mostly it makes the case that Euro bureaucrats should actually encourage security information sharing. But the report also suggests creating something like the U.S. Financial Services Information Sharing and Analysis Center. FS-ISAC's members are banks, stock exchanges and payment-processing companies, but the organization also has begun to run cybersecurity exercises for retailers and payment-card processors.

The EU's role is a similar setup. That would be negotiating ways through the jungle of national and pan-European regulations designed to keep competitors from getting too cooperative. Getting a group of retailers to all play the same cyber-war games—and compare notes on their practices, strengths and weaknesses—will depend heavily on those negotiations.

How would such exercises work? For the U.S. version that ran in February, participating retailers were put through what-if scenarios; no actual break-ins were involved. Although 29 retailers played the FS-ISAC's cyber-war games this spring, none was identified—some aggregate results were released, along with the fact that nine of the retailers had more than $1 billion in sales.

That privacy is no doubt attractive to retailers. After all, there's no benefit to letting the world know that your IT group doesn't understand how long it takes to clean up after the Zeus Trojan malware or that a retailer isn't likely to detect a fraudulent payment-card reversal for up to a week. But it's very useful for a retailer to be reminded of those facts, especially when it comes to making security and antifraud decisions.

In some ways, it comes down to a question of how much a retailer wants to compare its security and antifraud practices to those of other retailers. The differences are not always fun to learn.

For example, among those who played the cyber-war games in February, the biggest retailers said they monitored payment-card reversals on a daily basis, so they could detect fraud on the day of settlement. The smallest retailers (under $100 million), however, tended to review that data weekly, and 28 percent said they probably wouldn't detect a fraudulent reversal at all.

The most common threshold for investigating suspicious reversals was when reversals for a day exceeded 10 percent of total charges for the same day. That may not be a "best practice," but it's the rule of thumb that 37 percent of retailers use.

And none of the 20 retailers under $1 billion realized it could take more than two weeks to clean up after a Zeus Trojan infection. In fact, 22 percent of the retailers, including one billion-dollar company, thought the cleanup could take less than 24 hours.

These results aren't exactly bombshells. Still, participation is a big step forward from retailers working on security in isolation. There's a certain amount of comfort in realizing other retailers have iffy security knowledge. Real-time security exercises also may push the competitive buttons for IT security types.

And if the EU can actually clear the regulatory and antitrust decks so European retailers can play their own cyber-war games, maybe they can get some real security help from the government after all.