Our thoughts on the year ahead

At elevenM, we love shooting the breeze about all things work and play. We recently got together as a team to kick off the new year, share what we’d been up to and the thoughts inspiring us as we kick off 2019. Here’s a summary…

Early in the new year, under a beating sun at the Sydney Cricket Ground, our principal Arjun Ramachandran found himself thinking about cyber risk.

“Indian batsman Cheteshwar Pujara was piling on the runs and I realised – ‘I’m watching a masterclass in managing risk’. He’s not the fanciest or most talented batsman going around, but what Pujara has is total command over his own strengths and weaknesses. He knows when to be aggressive and when to let the ball go. In the face of complex external threats, I was struck by how much confidence comes from knowing your own capabilities and posture.”

A geeky thought to have at the cricket? No doubt. But professional parallels emerge when you least expect them. Particularly after a frantic year in which threats intensified, breaches got bigger, and major new privacy regulations came into force.

Is there privacy in the Home?

Far away from the cricket, our principal Melanie Marks was also having what she describes as a “summer quandary”. Like many people, Melanie this summer had her first extended experience of a virtual assistant (Google Home) over the break.

“These AI assistants are a lot of fun to engage with and offer endless trivia, convenience and integrated home entertainment without having to leave the comfort of the couch,” Melanie says. “However, it’s easy to forget they’re there and it’s hard to understand their collection practices, retention policies and deletion procedures (not to mention how they de-identify data, or the third parties they rely upon).”

Melanie has a challenge for Google in 2019: empower your virtual assistant to answer the question: “Hey Google – how long do you keep my data?” as quickly and clearly as it answers “How do you make an Old Fashioned?”.

Another of our principals and privacy stars Sheila Fitzpatrick has also been pondering the growing tension between new technologies and privacy. Sheila expects emerging technologies like AI and machine learning to keep pushing the boundaries of privacy rights in 2019.

“Many of these technologies have the ‘cool’ factor but do not embrace the fundamental right to privacy,” Sheila says. “They believe the more data they have to work with, the more they can expand the capabilities of their products without considering the negative impact on privacy rights.”

The consumer issue of our time

We expect to see the continued elevation of privacy as a public issue in 2019.  Watch for Australia’s consumer watchdog, the Australian Competition and Consumer Commission, to get more involved in privacy, Melanie says. The ACCC foreshadowed in December via its preliminary report into digital platforms.

Business will also latch onto the idea of privacy as a core consumer issue, says our Head of Product Development Alistair Macleod. Some are already using it as a competitive differentiator, Alistair notes, pointing to manufacturers promoting privacy-enhancing features in new products and Apple’s hard-to-miss pro-privacy billboard at the CES conference just this week.

We’ll also see further international expansion of privacy laws in 2019, Sheila says. Particularly in Asia Pacific and Canada, where some requirements (such as around data localisation) will even exceed provisions under GDPR, widely considered a high watermark for privacy when introduced last May.

Cyber security regulations have their turn

But don’t forget cyber security regulation. Our principal Alan Ligertwood expects the introduction of the Australian Prudential Regulation Authority’s new information security standard CPS 234 in July 2019 to have a significant impact.

CPS 234 applies to financial services companies and their suppliers and Alan predicts the standard’s shift to a “trust but verify” approach, in which policy and control frameworks are actually tested, could herald a broader shift to more substantive approach by regulators to oversight of regulatory and policy compliance.

There’s also a federal election in 2019. We’d be naïve not to expect jobs and national security to dominate the campaign, but the policy focus given to critical “new economy” issues like cyber security and privacy In the lead-up to the polls will be worth watching. In recent years cyber security as a portfolio has been shuffled around and dropped like a hot potato at ministerial level.

Will the Government that forms after the election – of whichever colour – show it more love and attention?

New age digital risks

At the very least, let’s hope cyber security agencies and services keep running. Ever dedicated, over the break Alan paid a visit to the National Institute of Standards and Technology’s website – the US standards body that creates the respected Cybersecurity Framework – only to find it unavailable due the US government shutdown.

“It didn’t quite ruin my holiday, but it did get me thinking about unintended consequences and third party risk. A squabble over border wall funding has resulted in a global cyber security resource being taken offline indefinitely.”

It points to a bigger issue. Third parties and supply chains, and poor governance over them, will again be a major contributor to security and privacy risk this year, reckons Principal Matt Smith.

“The problem is proving too hard for people to manage correctly. Even companies with budgets which extend to managing supplier risk are often not able to get it right – too many suppliers and not enough money or capacity to perform adequate assurance.”

If the growing use of third parties demands that businesses re-think security, our Senior Project Manager Mike Wood sees the same trend in cloud adoption.

“Cloud is the de-facto way of running technology for most businesses.  Many are still transitioning but have traditional security thinking still in place.  A cloud transition must come with a fully thought through security mindset.”

Mike’s expecting to see even stronger uptake of controls like Cloud Access Security Brokers in 2019.

But is this the silver bullet?

We wonder if growing interest in cyber risk insurance in 2019 could be the catalyst for uplifted controls and governance across the economy. After all, organisations will need to have the right controls and processes in place in order to qualify for insurance in line with underwriting requirements.

But questions linger over the maturity of these underwriting methodologies, Alan notes.

“Organisations themselves find it extremely difficult to quantify and adequately mitigate cyber threats, yet insurance companies sell policies to hedge against such an incident.”

The likely lesson here is for organisations not to treat cyber insurance as a silver bullet. Instead, do the hard yards and prioritise a risk-based approach built on strong executive sponsorship, effective governance, and actively engaging your people in the journey.

It’s all about trust

If there was a common theme in our team’s readings and reflections after the break, it was probably over the intricacies of trust in the digital age.

When the waves stopped breaking on Manly beach, Principal Peter Quigley spent time following the work of Renee DiResta, who has published insightful research into the use of disinformation and malign narratives in social media. There’s growing awareness of how digital platforms are being used to sow distrust in society. In a similar vein, Arjun has been studying the work of Peter Singer, whose research into how social media is being weaponised could have insights for organisations wanting to use social media to enhance trust, particularly in the wake of a breach.

Alistair notes how some technology companies have begun to prioritise digital wellbeing. For example, new features in Android and iOS that help users manage their screen time – and thus minimise harm – reflect the potential for a more trusting, collaborative digital ecosystem.

At the end of the day, much of our work as a team goes towards helping organisations mitigate digital risk in order to increase digital trust – among customers, staff and partners. The challenges are aplenty but exciting, and we look forward to working on them with many of you in 2019.

End of year wrap

The year started with a meltdown. Literally.

New Year’s Eve hangovers had barely cleared when security researchers announced they had discovered security flaws that would impact “virtually every user of a personal computer”. “Happy new year” to you too. Dubbed “Meltdown” and “Spectre”, the flaws in popular computer processors would allow hackers to access sensitive information from memory – certainly no small thing. Chipmakers urgently released updates. Users were urged to patch. Fortunately, the sky didn’t fall in.

If all this was meant to jolt us into taking notice of data security and privacy in 2018 … well, that seemed unnecessary. With formidable new data protection regulations coming into force, many organisations were already stepping into this year with a much sharper focus on digital risk.

The first of these new regulatory regimes took effect in February, when Australia finally introduced mandatory data breach reporting. Under the Notifiable Data Breaches (NDB) scheme, overseen by the Office of the Australian Information Commissioner, applicable organisations must now disclose any breaches of personal information likely to result in serious harm.

In May, the world also welcomed the EU’s General Data Protection Regulation (GDPR). Kind of hard to miss, with an onslaught of updated privacy policies flooding user inboxes from companies keen to show compliance.

The promise of GDPR is to increase consumers’ consent and control over their data and place a greater emphasis on transparency.  Its extra-territorial nature (GDPR applies to any organisation servicing customers based in Europe) meant companies all around the world worked fast to comply, updating privacy policies, implementing privacy by design and creating data breach response plans. A nice reward for these proactive companies was evidence that GDPR is emerging as a template for new privacy regulations around the world. GDPR-compliance gets you ahead of the game.

With these regimes in place, anticipation built around who would be first to test them out. For the local NDB scheme, the honour fell to PageUp. In May, the Australian HR service company detected an unknown attacker had gained access to job applicants’ personal details and usernames and passwords of PageUp employees.

It wasn’t the first breach reported under NDB but was arguably the first big one – not least because of who else it dragged into the fray. It was a veritable who’s who of big Aussie brands – Commonwealth Bank, Australia Post, Coles, Telstra and Jetstar, to name a few. For these PageUp clients, their own data had been caught up in a breach of a service provider, shining a bright light on what could be the security lesson of 2018: manage your supplier risks.

By July we were all bouncing off the walls. Commencement of the My Health Record (MHR) three month opt-out period heralded an almighty nationwide brouhaha. The scheme’s privacy provisions came under heavy fire, most particularly the fact the scheme was opt-out by default, loose provisions around law enforcement access to health records, and a lack of faith in how well-versed those accessing the records were in good privacy and security practices. Things unravelled so much that the Prime Minister had to step in, momentarily taking a break from more important national duties such as fighting those coming for his job.

Amendments to the MHR legislation were eventually passed (addressing some, but not all of these issues), but not before public trust in the project was severely tarnished. MHR stands as a stark lesson for any organisation delivering major projects and transformations – proactively managing the privacy and security risks is critical to success.

If not enough attention was given to data concerns in the design of MHR, security considerations thoroughly dominated the conversation about another national-level digital project – the build out of Australia’s 5G networks. After months of speculation, the Australian government in August banned Chinese telecommunications company Huawei from taking part in the 5G rollout, citing national security concerns. Despite multiple assurances from the company about its independence from the Chinese government and offers of greater oversight, Australia still said ‘no way’ to Huawei.

China responded frostily. Some now fear we’re in the early stages of a tech cold war in which retaliatory bans and invasive security provisions will be levelled at western businesses by China (where local cyber security laws should already be a concern for businesses with operations in China).

Putting aside the geopolitical ramifications, the sobering reminder for any business from the Huwaei ban is the heightened concern about supply chain risks. With supply chain attacks on the rise, managing vendor and third-party security risks requires the same energy as attending to risks in your own infrastructure.

Ask Facebook. A lax attitude towards its third-party partners brought the social media giant intense pain in 2018. The Cambridge Analytica scandal proved to be one of the most egregious misuses of data and abuses of user trust in recent memory, with the data of almost 90 million Facebook users harvested by a data mining company to influence elections. The global public reacted furiously. Many users would delete their Facebook accounts in anger. Schadenfreude enthusiasts had much to feast on when Facebook founder and CEO Mark Zuckerberg’s uncomfortably testified in front of the US Senate.

The social network would find itself under the pump on various privacy and security issues throughout 2018, including the millions of fake accounts on its platform, the high profile departure of security chief Alex Stamos and news of further data breaches.

But when it came to brands battling breaches, Facebook hardly went it alone in 2018. In the first full reporting quarter after the commencement of the NDB scheme, the OAIC received 242 data breach notifications, followed by 245 notifications for the subsequent quarter.

The scale of global data breaches has been eye-watering. Breaches involving Marriott International, Exactis, Aadhar and Quora all eclipsed 100 million affected customers.

With breaches on the rise, it becomes ever more important that businesses be well prepared to respond. The maxim that organisations will increasingly be judged not on the fact they had a breach, but on how they respond, grew strong legs this year.

But we needn’t succumb to defeatism. Passionate security and privacy communities continue to try to reduce the likelihood or impact of breaches and other cyber incidents. Technologies and solutions useful in mitigating common threats gained traction. For instance, multi-factor authentication had more moments in the sun this year, not least because we became more attuned to the flimsiness of relying on passwords alone (thanks Ye!). Security solutions supporting other key digital trends also continue to gain favour – tools like Cloud Access Security Brokers enjoyed strong momentum this year as businesses look to manage the risks of moving towards cloud.

Even finger-pointing was deployed in the fight against hackers. This year, the Australian government and its allies began to publicly attribute a number of major cyber campaigns to state-sponsored actors. A gentle step towards deterrence, the attributions signalled a more overt and more public pro-security posture from the Government. Regrettably, some of this good work may have been undone late in the year with the passage of an “encryption bill”, seen by many as weakening the security of the overall digital ecosystem and damaging to local technology companies.

In many ways, in 2018 we were given the chance to step into a more mature conversation about digital risk and the challenges of data protection, privacy and cyber security. Sensationalist FUD in earlier years about cyber-attacks or crippling GDPR compliance largely gave way to a more pragmatic acceptance of the likelihood of breaches, high public expectations and the need to be well prepared to respond and protect customers.

At a strategic level, a more mature and business-aligned approach is also evident. Both the Australian government and US governments introduced initiatives that emphasise the value of a risk-based approach to cyber security, which is also taking hold in the private sector. The discipline of cyber risk management is helping security executives better understand their security posture and have more engaging conversations with their boards.

All this progress, and we still have the grand promise that AI and blockchain will one day solve all our problems.  Maybe in 2019 ….

Till then, we wish you a happy festive season and a great new year.

From the team at elevenM.