New Security Reports: Beware Of Your Partners

A pair of unrelated reports out this week are challenging several fundamental IT security assumptions, including that data breach laws will reduce consumer losses and that insiders account for more thefts than external evil-doers.

A Verizon Business security report analyzed more than 500 data breach incidents over four years and found that 73 percent started from the outside and only 18 percent were inside jobs.

That said, the report found that the dollars involved still favored the internal thief. "The median size as measured in the number of compromised records for an insider breach exceeded that of an outsider by more than 10 to one," the report said.

That's good information to share with your business partners who, according to this report, are quite possibly ripping you off. Some 39 percent of the incidents "implicated partners," a "number that rose five-fold over the time period of the study," the report said.

The Verizon report also pointed fingers at lame IT management, finding that 66 percent of incidents "involved data the victim did not know was on the system." In a blow to self-audits, 75 percent of the breaches were not discovered by the victims.

It's only fair to point out that, statistically, these numbers may have limited value because the 500 incidents analyzed were all Verizon clients. Does that mean that Verizon's clients were more likely than most to have partners with sticky fingers? Not necessarily, but the kinds of breach situations where someone would reach out to a security consultant might be of a different nature than the norm.

Another report—this one out of Carnegie Mellon University—looked closely at whether data breach laws reduce consumer fraud losses. It found no evidence that support that commonly-held belief.

"We find no statistically significant effect that laws reduce identity theft, even after considering income, urbanization, strictness of law and interstate commerce," the CMU report said. "If the probability of becoming a victim conditional on a data breach is very small, then the law's maximum effectiveness is inherently limited."

The report tries to quantify the impact on retailers and consumers. "If, indeed, the probability of a consumer suffering identity theft is low enough, then both firms and consumers could incur unnecessary costs by overreacting. Firms would incur the unnecessary costs of notifying consumers and consumers would incur the unnecessary costs from constantly freezing and thawing their credit reports," the report said. "These policies impede e-commerce and stifle technological development by discouraging firms to innovate using consumers' personal information or stop collecting it altogether."