Truth be told, while I’ve spent somewhere near seventy-five percent of my time over the past ten years working for financial institutions I’ve also done a fair amount of work for insurance companies, mostly centered on SOX with occasional diversions into general risk assessment work.  The drivers in the insurance industry are different in terms of oversight and requirements and so the volume of work isn’t nearly the same.  But that by itself begs a question: Why isn’t the insurance industry as regulated as financial institutions?

I’ve now done major audit and assurance work for financial institutions, insurance companies and health care providers and for most of them the risk profile is almost identical in terms of non-public personal information.  So why isn’t the level of scrutiny equal across all three of them?  While some might start spouting about how it is, about how states routinely audit insurance companies and how the health care industry has to comply with HIPAA the truth is that banks and credit unions are held to a much higher degree of accountability than any other vertical.  Why is that?

I’m fond of routinely, almost incessantly beating the drum about how it’s all about the risk.  I get my initial client opportunities because I have a deep resume with relevant experience but I generate repeat business because I tend to whittle things down to what matters most both to my clients and to their oversight providers (auditors and examiners alike).  Compliance exists because risks need to be addressed – if the risks aren’t credible or likely the work should be adjusted to reflect that.  But where the risks are real they’re really real.  The type  of data shared with an insurance company is in many ways even more sensitive than anything shared with a bank and most of what’s shared with insurance companies is also shared with health care providers.  Yet there’s no true Federal oversight for the insurance industry and HIPAA is about as much of a toothless tiger as anything I’ve ever encountered.

I recently completed a boatload of documentation to get my family on a new health insurance plan.  I turned over every piece of sensitive information I have for every member of my family minus my bank account information because that’s what was required.  I had to provide all of this online and follow that up by sending them an impressive array of hard-copy documents with even more sensitive information that should never be kicking around in the public domain.   In the past I’ve also been required to provide my bank account information because one plan in particular would only provide coverage if they could automatically deduct monthly premiums via ACH drafts.  So now the insurance industry has access to it all; name, address, social security number, date-of-birth, maiden name, medical history and banking information.  And yet there’s no true oversight agency that’s responsible for making sure they’re protecting all of MY information.

To compound my frustration, of the four insurance companies I’ve conducted work for since 2006 (two of which are Fortune 5oo’s) exactly none of them have something akin to a Chief Information Security Officer.  They all have risk people focused on the business side of things (because that’s necessary to protect profitability) but that’s it.  There’s typically an information security manager who’s part of the infrastructure team but who almost never reports right into the senior-most technology person (e.g. CIO, CTO).  Any audit work that occurs is coordinated across multiple IT managers and on rare occasions there will be an audit/assurance manager.  However in the one example I personally know of where that position exists the person in the role was really just a converted IT manager who obtained a CISA designation – no fundamental audit or assessment experience.

The question has to be asked:  Why is it that banks and credit unions are heavily regulated regarding protection of non-public personal information but other industries with similar risk profiles are  not?  Why aren’t insurance companies required to comply with FFIEC-type guidance?  Why isn’t there a Federal regulatory agency that is responsible for keeping an eye on the insurance industry the way the FDIC, OCC, FRB and NCUA do so for their financial institutions?  And trust me, whatever oversight exists for the insurance and health care industry is largely ineffective.   Why is my sensitive information considered more at risk within a banking infrastructure than it is within an insurance infrastructure?  Having been on site for both and examined their internal controls  I can’t answer that question, that’s for certain.

Our family has had a PayPal account almost since PayPal has offered them.  It’s remarkably convenient, it provides us great flexibility to shop online using a single payment source and I love that we’ve been able to change funding sources several times over the years.  It’s always conveyed a certain sense of security; I’ve just always felt safe using PayPal.  I’ve even gone so far as to suggest that at some point, if PayPal management grows things just right I could see a future state where paper currency and maybe even actual physical credit cards go away and are replaced by some version of their services.  When I discovered this past year that Home Depot already allows you to use PayPal to make in-store purchases I was convinced I was right.  Now I’m not so sure.

Over the past year or so I’ve been getting the occasional email ping from PayPal regarding our reaching a spending limit.  It’s a fairly high limit for most but considering that we’ve been using PayPal to make purchases going back nearly a decade maybe not as much.  But the message has been quite clear; if we didn’t verify our account before reaching this limit it would be “ the maximum amount of money you can send or use for purchases before you need to become Verified”.   So how you become verified is quite simple – either give up your bank account information or apply for a privately owned credit card.  No, seriously, those are the only two options.

My first thought was that although I liked having the protective layer of a credit card product buffering my PayPal account from my actual money I was okay with providing bank account information.  It’s not like I don’t use that in other places to make payments and so there wouldn’t be any enhanced risk by doing so again.  I wasn’t going to apply for a PayPal-based credit card because I don’t want one or need one and I wasn’t looking for a new credit source anyway, I just wanted to continue using PayPal.  I clicked on the option to provide my bank account information and after the initial screen where they ask for the routing and account details and clicking on “Submit” I was presented with a screen that I still can’t believe exists.  Right there before my eyes was a screen from PayPal in which they ask me to provide my online banking user-id and password so they can verify a series of PayPal generated payments thus confirming my banking details.  Let me repeat that one more time; PayPal asked me to provide them with my online banking user-id and password.

Has PayPal lost its collective mind?  Seriously, have they?

I was stunned, almost to the point where I couldn’t get coherent words to flow.  I immediately fired off an email to PayPal customer support asking them how they could do something so outrageous.  Within minutes I received an automatically generated reply which I always find insulting, as if though I’m not worth an actual intelligent and personal response.  It was a complete regurgitation of everything stated on their website and completely ignored the gist of my email.  I fired off a second email missive, this time way more specific.  Here’s what I wrote:

Things are looking up a bit because I have a new favorite regulatory agency to follow, the Consumer Financial Protection Bureau (CFPB).  And here’s why:  They focus on things that impact my day-to-day life (and yours as well).

I started tracking what the CFPB was doing about five months ago by accident.  Someone I know who used to be an examiner for the FRB switched over to the newer agency right at its infancy and I noticed this courtesy of a LinkedIn update.  Because I consider the Fed to be the Big Kahuna of the regulatory agencies I was surprised (you don’t leave the Yankees to sign with an expansion team unless you have to, or so I thought).  Compelled a bit by the update I started poking around the CFPB website.  For the first few months of this year it seemed to have potential but was little more than brochure-ware.  But last month that all changed.

The first CFPB update that caught my attention was labeled 12 CFR Part 1070 and it was all about the protection of consumer data, only with a slight twist.  Basically it was all about how any information they received as part of their field work would be protected exactly the same way that any third party vendor would be required to.  Despite their being a Federal agency they weren’t going to hide behind that as a means to simplify their lives.  They spearheaded an update to the underlying regulation that frames their charter so that consumers and their institutions can be assured that all PII and NPPI would be protected.  For me it was a rare win-win topic; protection of PII and NPPI combined with a reference to vendor management (these are a few of my favorite things).  And really for me it was that much more significant because I’ve known of a few situations where representatives of Federal and State regulatory agencies were responsible for the outright loss of confidential and/or restricted data.  Beyond a slap on the wrist there wasn’t much else done to the offending examiner or their agency.  And the affected institution couldn’t really complain too loudly because it’s always a bad idea to challenge your regulators, even when you’re in the right.  So I thought this was all at once a compelling and remarkably sensible update by a regulator, not something I’d expect to see.  That was the first points on the board for the CFPB.

The second set of points were scored almost on the same day.  I wanted to check one of the details related to the aforementioned update and noticed this one “Consumer Financial Protection Bureau report finds confusion in reverse mortgage market“.  Because I have a parent who is a senior citizen and who I think might one day soon be open to at least exploring a reverse mortgage I read with great interest.  The report was in plain English, was oriented in such a way that I could share it with my family and have them understand the issues and concerns detailed within and most importantly it made sense.  Reverse mortgages are growing in popularity and its main audience is the senior citizens segment of society.  Seniors tend to be  more easily misled, they’re under greater pressures to find new money sources (courtesy of our recession) at a time in their lives where going back to work is often not an option.  And because a parent would do almost anything rather than turn to their children for financial assistance they see a reverse mortgage as a way out of their predicament.  So for me having this content available was quite the relief.  I can caution and advise all day and night but the risks presented by a reverse mortgage are much more credible coming from an authorized source.  And so I celebrated July 4th this year by declaring the CFPB my new FDIC (the Sheila Bair inspired version, not the current blah one).

Here’s my really bizarro advice to any of you with even the slightest interest in regulatory oversight; if you haven’t already done so visit www.cfpb.gov and take a look around.  It’s oriented towards lay people, not just lawyers and regulators (and practitioners like me) and addresses topics and concerns that affect the majority of our population.  Basically it’s what I would expect from a regulator that still has that new agency smell but nothing like I’ve come to know from those that preceded it.  To those who have had a hand in defining its charter and organizing its content, great job!   Now repay my kind words by going out and getting me some juicy enforcement stories to write about.

This was someone who for all intents and purposes had nothing to gain from doing something so blatantly stupid.  As an auditor he was likely aware of the logging capabilities available on the host (mainframe system).  He also had direct knowledge of the audit culture and the degree of scrutiny they placed on certain internal artifacts and/or repositories.  But in the end his basic human nature created an override allowing him to indulge his curiosity.  For me that meant that you could never assume that any manner of stored information was ever truly safe and secure

Thus began my basic mistrust of storing sensitive information in electronic repositories.

With that in mind imagine my horror as technology began a rapid progression away from centralized storage and started spreading out first within the infrastructure to distributed applications and eventually breaching the walls of the data center and finding new homes elsewhere in other companies  so-called data centers.   Beyond the fact that you don’t truly know how secure your data ever truly is (notwithstanding reports and attestations to the contrary), it now also has to traverse communication lines that despite what you may want to believe are vulnerable in a number of very real ways.  And we’re not just talking business data, we’re talking social security numbers, bank account numbers, credit card numbers and, and, and……

I simply don’t trust that any sensitive data is ever truly protected anymore.  I operate under the assumption that there are two common states with regards to data security, known breaches and those yet to be discovered.  When I’m challenged with the logic that we’re always told about confirmed breaches eventually and so we know exactly how much has been exposed I laugh.  All that means is that the hackers and criminal element slipped up along the way; a confirmed breach indicates someone made a mistake.  I truly believe that a successful breach is never detected, that the perpetrators behind it figure out the proper balance between skimming data and moving it around for illicit gains so that it never hits the radar.

And I think the threat comes from all over the map.  I think it’s often internal, someone on the inside behind the firewall and locked doors or someone with legitimate access to databases.  I think it’s sometimes along the way between a transmissions point of origin and its destination.  And I think it’s often at points of exposure along the way.  I just don’t believe that there aren’t rogue employees at offsite storage facilities that know how to rig the system and grab media with all manner of PII and NPPI with no one ever the wiser.  I reject the notion that it’s impossible for employees of the popular SaaS companies to gain undetected access to a wide variety of information typically considered private and secured.  I think this happens regularly (if not often) and that as long as we remain blissfully ignorant this will continue to happen indefinitely.

I use only one rule when it comes to how best to protect sensitive data: if the human element is involved in any way your data is at risk.

And if you’re not truly yet at risk, if there’s been no concerning or inappropriate attempts to access your choice data that’s either because they haven’t gotten to you yet on their to-do list or your choice data isn’t as choice as you might think.

If I had it my way everything would be moved back to Big Iron in an internal data center and I’d go hog-wild slapping every conceivable monitoring tool and detection devices wherever possible.  Short of that I’d select solutions that could only be run behind my firewall and on telecom pipes that I directly controlled to further minimize my exposure.  Oh and I’d probably fire anyone who ever even mentioned migrating to the cloud just to set an example.

I read an article in which Reid Hoffman, LinkedIn’s founder was quoted this past summer as saying that privacy was for old people.   To be at least a little fair he was making a point about transparency of data and how it’s shared is an important component of social networks.  Young people are more interested in enhancing the experience and less concerned about revealing too much information in exchange for making that happen.  But really, isn’t it both a bit self-serving and irresponsible for someone atop the world’s largest professional social network to be thinking along those lines?

First of all it sort of makes him seem like a visionary rather than irresponsible for allowing LinkedIn to take certain liberties with regards to protecting my personally identifiable information (PII) in exchange for furthering the platform – he’s not irresponsible, he’s forward thinking.  Second he marginalizes the concerns of experienced people by making such a statement as if to say “you’re too old to understand that it’s more important to be out there too much rather than not enough” – it conveys a message that I’m not cautious, I’m slow to adapt and that’s primarily because I’m not young.  Third it makes it so much easier and cheaper for LinkedIn to continue building out their platform if security isn’t their top priority – wouldn’t we rather have them introduce cool new features rather than enhance their controls?

Well Mr. Hoffman here’s what I have to say about all of this.  What you call old, I call experienced.  I’m not concerned about my privacy because I have a dated way of thinking, I’m concerned because I know too much about identity theft and the damage it can cause.  I know that sites such as LinkedIn and Facebook have made it sooo much easier for the criminal element to develop profiles on people and figure out how to crack passwords, hijack email accounts and obtain information that allows them to assume someone’s identity.   I know that features such as TripIt and Foursquare allows criminals to figure out when people are going to be away from home and plan break-ins accordingly.  I know that it’s much easier to obtain inside information by trending activities on LinkedIn (e.g. I always know when someone works for a company facing downsizing or layoffs based on the type of profile updates they’re making).

And you’re right that privacy is for old people.  So are life insurance, money management and parenting.  We’ve worked long and hard to get what we have and we understand the value of losing it.  Anyone much under the age of twenty-five likely hasn’t a clue as to why privacy is such a big deal because their exposure is so much less.  If someone stole my identify when I first started my career they would have had access to a few hundred dollars, maybe one or two credit cards with ridiculously low limits and have discovered that my house was sparsely furnished with hardly anything worth stealing.   I could have repaired most of the damage from a stolen identity within a couple of paychecks.  At that point I would have totally thrown caution to the wind and have leveraged the full offerings of today’s social networks in order to market myself both professionally and socially.  At this point I simply want to protect myself from unnecessary risks and exposures.

Last night I watched a story on the news about how insurance companies are using Facebook as a way to investigate disability fraud as well as profile policyholders who engage in high-risk activities in order to decide who’s too risky to insure.  Do you think those people think their privacy is an issue for the old?  And doesn’t LinkedIn process credit cards for its paying customers?  Is PCI for old people too (now that would be a newsworthy quote)?

I’m sure at some point Reid Hoffman has backtracked on his statement in some measure because whether you hear it in or out of context it still sounds awful.  And I can only imagine that officially LinkedIn will point out that he’s no longer running the company (officially anyway).  And I also realize that his statement didn’t convey in any way that LinkedIn didn’t value privacy just like I know from firsthand experience that LinkedIn as designed allows me to throttle what I share with the rest of the community in a way that I’m comfortable with.  But still, comments like that make my blood run a little cold and make me jump online right away to make sure that I’ve kept my information sharing to a minimum.  Because in the end while “I’m older and I have more insurance” I don’t want to have to use it.

Why do organizations struggle so mightily to manage the most simple and straight-forward of all controls; their own interior physical space?  They’ll spend seemingly limitless dollars on implementing state-of-the-art security software and related devices.  They’ll build out robust vulnerability and scanning schedules to root out issues and loopholes.  They’ll implement all manner of physical security controls from key-card access locks to bio-metric devices to video monitoring cameras at every conceivable point of entry.  But walk through the interior office space and check out what’s sitting unclaimed in the output bins of the various copiers, printers and fax machines or sift through the papers scattered about in wide-open cubicle spaces and you’re likely going to find a treasure trove of sensitive information that’s there for the taking, all without the slightest chance of detection.  How is it possible that in this, the era of security enlightenment when security awareness is a recognized corporate initiative being hailed from the upper echelons of the org chart, that all anyone needs to do to steal choice non-public personal information is to simply pick up a stack of papers from any one of the many output devices spread around the office?

I hear about desk top audits where someone is designated to walk the floor and identify when someone has left sensitive information laying about but I never see evidence of it.  I read emails provided as evidence during audits that staff is constantly being reminded to secure their work space but while conducting fieldwork I still walk past wide-open offices with loan applications laying about or even the occasional pocketbook or wallet sitting right there on top of the desk.  And quite literally every client site I have ever visited has things sitting in printer and fax machine trays that should never be left out in the public space.  Does it really make a difference to prevent an online hacker from gaining access to customer data when the cleaning staff can simply stuff dozens of documents with the same information into a garbage bag and sell it to someone on the black market without any fear of detection?

And I’m not sure why this keeps happening?

Seriously, how hard is it to enforce such blatantly simple rules?  Why can’t organizations assign an individual to walk the floor before leaving each night to at least make sure things aren’t laying around?  Well over a decade ago while working on Wall Street the team I was part of had someone designated each day to conduct a desk audit of a randomly selected floor.  If someone was caught with sensitive information sitting unsecured in their work space they received a smiley face with a note reminding them to be more diligent in the future.  If they were caught a second time their manager was contacted with a slightly sterner warning.  No one was ever caught a third time in the year plus the program was in effect.  It took about fifteen minutes for the walk through and the job was rotated amongst a group of people so it wasn’t just one sheriff or one bad guy.  It was simple and effective.  Perhaps if it cost hundreds of thousands of dollars to purchase and required a six month implementation plan it might hold greater appeal.

It’s been said that an organization is only secure as its weakest link and for most that means they have a significant vulnerability.  The only way it can be addressed sufficiently is via a true and robust security awareness program.  Sadly most organizations seem content to be security unaware which is just mind boggling in 2011.

I participated in several conversations in which a recurring theme was the challenges presented from a surge in merger and acquisition activity.  It’s the other side of the banking crisis that doesn’t get as much press as it probably should.  Think about how this plays out: An institution acquires the assets of another institution and in a remarkably short period of time, has to absorb that information into its own infrastructure so that it can properly service the accounts.  In a normal merger, this is an activity that would be planned out over several months with all forms of testing involved before the official cut-over.  But we’re in an age where on Friday your account belongs to Bank A but on Monday is being managed by Bank B.  How much time is allowed to cut things over between the two separate infrastructures?  And when you consider that it’s rare for the two institutions involved to share a common banking platform, how do you seamlessly and accurately convert the customer data?

Back in my infrastructure days, I recall all too well the various activities that were involved with figuring, configuring and reconfiguring elements from disparate systems in order to determine the best way to bring them together.  There were delimited files extracted, spreadsheets created and all manner of repositories generated to analyze the data.  Back then we didn’t have CD/DVD burners as standard equipment to easily offload full repositories (we were handcuffed by 3.5″ floppies with a max of just over one megabyte of storage) or USB storage devices attached to our key chains.  Laptops weren’t yet pervasive and it just wasn’t as easy to walk entire databases of customer data out the door without detection.  Circa 2010, it’s just so darn easy to take huge digital piles of sensitive information outside of the secured infrastructure.  Be it the result of overworked IT workers trying to meet deadlines, careless employees not realizing the sensitivity of the data on their laptops or people with actual ill intent, it’s rather simple for non-public personally identifiable (NPPI) data to find its way into the wrong hands.  And with the remarkable spike in all the merging and acquiring going on the likelihood of a breach or data theft skyrockets.

And that’s only one part of the risk equation.

Every week, the industry publications are full of stories about cloud computing: The conflagration of multiple computer resources of which you only use slices that you need.  In this new age of mass storage and processing, you don’t build out an isolated subset of your infrastructure to handle specific processes but rather plug your process into the cloud and it simply uses what it needs.  I remember back in the 90′s working for Metlife when they launched their first true e-commerce sites and how the company struggled to find ways to monitor all of the components necessary to deliver secure content to its customers.  There were typically a half-dozen handshakes required to process a request in either direction and they all existed on different platforms running different software.  It was impossible to accurately measure each transaction, estimate load and response time, and calculate capacity needs.  At that time, I wasn’t yet concerned with security so much but that would’ve been equally impossible to manage.  But at least you could isolate each tier in the infrastructure and identify where the transaction was flowing.  Now with the cloud, you don’t even have that degree of control.  And when you consider that almost everyone I talk to about technology within the banking sector wants everything to run on the Web, even if it’s an application that requires only internal users, the risk factors increase exponentially.

So now I’m wondering how secure is all this NPPI with the constant rush to merge account information combined with corporate America pushing to move things onto the Web and into the cloud.

When I first started out in corporate IT well over 20 years ago, one of the managers had a sign hanging in his office that read “If you don’t have time to do it right, when will you have time to do it over?”  Fast forward to 2010 and the same logic applies.  The only difference is that this isn’t about application programming but rather loss of data and once that cat’s out of the bag you can’t simply put it back in.

So imagine my surprise that when I added my latest little bit of genius to the list a pattern presented itself to me that hadn’t been there even a week ago.

For those of you plying your skills as Information Security professionals, I need to warn you what follows is potentially inflammatory, insulting or validating; it all depends on how you look at your career.

I was stunned a few months back when I noticed on LinkedIn a new application called “TripIt.” The main idea of the application is to enter and track your trips, be they business or personal, including locations, dates and a general description and then post it on your LinkedIn page. The end result is that everyone who can view your LinkedIn profile can also see where and when you’re traveling. My first thought was that it was just a bad idea within the professional domain. It’s a common rule within the infosec space that you should never send email auto-replies to anyone outside your company indicating that you’re out of the office lest it provide hackers with an opportunity to try and hijack your account while you’re away. That rule also applies to voice-mail greetings for the very same reasons; it’s just too much information. The first five people who I noticed using it were, gulp, infosec pros.

Then two weeks ago, I was conducting fieldwork during which a tremendous amount of pomp and circumstance was placed around physical access controls that were designed and implemented by a group of security folks; they had followed a tried-and-true recipe in designing the related controls. From the outside looking in, everything looked great. From the inside looking out, there were more holes than on a golf course. While at a fundamental level their critical data was exposed to very little risk as a result, the amount of peripheral damage that could’ve been done elsewhere was substantial. I’ve been known to complain in the past about controls that look great but don’t work, but in this instance I was disturbed by how obviously smart people had simply followed a canned recipe without truly thinking things through and validating the effectiveness of what they’d done.

This week I’ve had the opportunity to review two resumes from people who are likely way smarter than I, both are information security consultants. Both individuals listed accomplishments and capabilities within the security domain that pretty much touched on just about every segment of the infrastructure. I believe I have a good nose for legitimate resources and both of these people presented themselves quite well at the bits and bytes level. But neither of them tied their experience back to solving business issues. With all of the well publicized work around mandates and regulations (e.g. PCI, data privacy, NERC, SOX, etc.) you’d think there would be some attempt to connect their experiences back to something someone in the executive suite would appreciate or recognize.

Maybe I’m over thinking things but shouldn’t people who advertise themselves as information security professionals be a little less binary and a bit more aware? While it’s important to have devices and software configured properly, isn’t it that much more important to be contextually aware and understand what’s needed to protect the business and its information assets?

This has become something of an issue for me lately as I’m working with multiple clients who are dealing with a broad range of challenges. I’ve become increasingly aware that there’s more than just a fine line between a security engineer and a security expert. One can tell you all about firewall rules while the other can tell you where to install them and why. One can work their way down a checklist ticking off to-do’s (think PCI self-assessment) while the other considers the applicability and risk of each item before so much as touching the keyboard. And yet both tend to present themselves similarly and they’re not.

If you’re truly an infosec professional you need to display that in how you make choices (restrict the personal information you share with the digital world), in how you conduct your work (design controls, try and break them and then close the gaps) and in how you decide what’s necessary and sensible (encrypt credit card data but also make sure sales people aren’t writing down non-public personal information on scratch pads). Don’t become an expert on tokenization and think that qualifies you to design a complete PCI security plan. Don’t advise your clients/users on proper security practices and then go out and fail to follow your own advice. And don’t ever think that because you’ve satisfied some regulation or framework that you’ve gone far enough to mitigate or manage risk.

In this day and age, with the threats to our digital assets greater than ever and with increasing pressure being brought to bear by government and industry regulations, it’s more important than ever that the right people be put in the right positions to help address these myriad challenges. And it’s more important than ever to understand that not all information security professionals are alike; decide who shall lead and who shall follow and be sure to chose carefully.

Next time out I have some interesting insights to share regarding NERC, so be sure to check back next week.

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