Moody’s has cut its rating outlook for Equifax in consideration of a disastrous security breach which led to the theft of over 146 million user records.
The capital markets and investment firm decided to reduce its Equifax outlook from stable to negative this week, as first reported by CNBC.
A 2017 data breach is the cause of the financial fallout. Individuals from the US, Canada, and the United Kingdom were informed that their information had been exposed, potentially including the theft of names, social security numbers, birthdates, home addresses, and partial driving license details.
A well-known vulnerability in Apache Struts, CVE-2017-5638, was blamed for the intrusion.
See also: Equifax, FICO launch Data Decision Cloud as credit scores meld with marketing, compliance, customer experience
The Apache Struts Project Management Committee said at the time the attackers behind the breach “either used an earlier announced vulnerability on an unpatched Equifax server or exploited a vulnerability not known at this point in time.” Equifax revealed an unpatched system was at fault, despite the bug’s disclosure and a patch being made available two months before the data breach occurred.
In other words, the data breach was preventable, a fact that haunts Equifax to this day.
The failure to patch the problem has been an expensive lesson for the company, not just in terms of its battered reputation, but in cold, hard cash and results on the balance sheet.
Moody’s cited a legal expenditure charge of $690 million in the first quarter as a reason for the downgrade. However, the cost to Equifax is far more substantial, with Q1 2019 earnings also revealing $786.8 million in general costs due to the data breach, $82.8 million in data security costs, $12.5 million in legal fees, and $1.5 million in product liability charges, as noted by IT Pro.
CNET: Instagram website leaked phone numbers and emails for months, researcher says
“We are treating this with more significance because it is the first time that cyber has been a named factor in an outlook change,” Joe Mielenhausen, a Moody’s spokesperson told CNBC. “This is the first time the fallout from a breach has moved the needle enough to contribute to the change.”
The financial ramifications of lax patch processes are now proving to be an ongoing strain and burden on Equifax. The company is also facing class-action lawsuits and regulatory scrutiny — which may, in turn, lead to additional fines and penalties in the future.
These problems have a knock-on impact which has now entered investor territory, as traders and shareholders will often examine rating outlooks and creditworthiness reports provided by companies such as Moody’s to ascertain the long-term prospects of an organization.
Cyber risk and cyber insurance are relatively new entrants to investor considerations but ones that cannot be ignored.
TechRepublic: Arm suspends cooperation with Huawei, endangering mobile and server business
The consequences of a major security incident or data breach can now have a long-term financial impact for a victim company and so the responsibility now lies on corporations to strengthen their security practices as much as possible to mitigate the risk of attack — as well as reduce the risk to investors.
Equifax serves as a lesson in why boards should sign up to proactive security defense rather than consider security as a budgetary afterthought. However, despite the credit rating company’s efforts to improve its security and prevent such a data breach from ever happening again, the millions of dollars now spent on shoring up security is also a financial burden and one that Moody’s cannot ignore.
“Beyond 2020, infrastructure investments are likely to remain higher than they had been before the 2017 breach,” the company added.
ZDNet has reached out to Equifax and will update if we hear back.
Previous and related coverage
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Adventist Risk Management Data Protection Infrastructure
Companies always want to enhance their ability to quickly address pressing business needs. Toward that end, they look for new ways to make their IT infrastructures more efficient—and more cost effective. Today, those pressing needs often center around data protection and regulatory compliance, which was certainly the case for Adventist Risk Management. What they wanted was an end-to-end, best-in-class solution to meet their needs. After trying several others, they found the perfect combination with HYCU and Nutanix, which provided:
- Ease of deployment
- Outstanding ROI
- Overall TCO improvement
Nutanix Cloud Platform provides a software-defined hyperconverged infrastructure, while HYCU offers purpose-built backup and recovery for Nutanix. Compared to the previous traditional infrastructure and data protection solutions in use at Adventist Risk Management, Nutanix and HYCU simplified processes, speeding day-to-day operations up to 75%. Now, migration and update activities typically scheduled for weekends can be performed during working hours and help to increase IT staff and management quality of life. HYCU further increased savings by providing faster and more frequent points of recovery as well as better DR Recovery Point Objective (RPO) and Recovery Time Objective (RTO) by increasing the ability to do daily backups from one to four per day.
Furthermore, the recent adoption of Nutanix Objects, which provides secure and performant S3 storage capabilities, enhanced the infrastructure by:
- Improving overall performance for backups
- Adding security against potential ransomware attacks
- Replacing components difficult to manage and support
In the end, Nutanix and HYCU enabled their customer to save money, improve the existing environment, and, above all, meet regulatory compliance requirements without any struggle.
Secure Insight: GigaOm Partners with the CISO Series
Don’t look now, but GigaOm, the analyst firm that enables smart businesses to future-proof their decisions, is forging new partnerships to extend its reach and better inform busy IT decision makers. On Thursday, the company announced it was teaming with the CISO Series to share content and better support the community of chief information security officers, security practitioners, and security vendors.
“The CISO Series is one we have admired for a while because they have a very similar aim: They help security professionals become more knowledgeable and understand how their roles are changing,” said Ben Book, GigaOm founder and CEO. “We saw a clear common interest and are delighted to be working together.”
The CISO Series brand has built a formidable reputation through its podcasts, blogs, video chats, and live events for the security community. It has added the extremely popular CyberSecurity Headlines podcast to its stable this year, which joins the CISO/Security Vendor Relationship and Defense in Depth podcasts. Every Friday at 10am Pacific Time, the CISO Series hosts its highly engaging and fun weekly live CISO Series Video Chat, which viewers can register for here.
The channel partnership connects two of the strongest, fastest-growing brands in enterprise IT content production. The agreement enables the CISO Series to share exclusive GigaOm reports with its audience ahead of publication, while GigaOm is able to share insights from the CISO Series’ various publications through its social channels and newsletters. The CISO Series joins other media firms, such as The Register and SDXCentral, as official GigaOm Channel Partners.
“We are delighted to be working with GigaOm because we’re not only both addressing the same audience, but we’re also both trying to bring education and understanding to both the security vendor and practitioner communities,” said David Spark, managing editor and executive producer at the CISO Series. “GigaOm is providing some excellent reports that we’re leaning on for our discussions and reporting across all of our shows.”
Spark continued: “We are always tweaking our programming to bring the best and most up-to-date resources and we’re really impressed with both the volume and quality GigaOm is delivering. Not only are we impressed with their editorial work, but we also appreciate their business branding. It’s something we felt comfortable about aligning with the CISO Series brand as well.”
Check out the CISO Series schedule at http://crowdcast.io/cisoseries, or visit cisoseries.com for more information about the CISO Series and its weekly Video Chats.
Key Criteria for Evaluating Vulnerability Management Tools
Vulnerability management tools scan your IT estate to help identify and mitigate security risks and weaknesses. These tools can facilitate the development of a more comprehensive vulnerability management program. Leveraging people, processes, and technologies, successful initiatives effectively identify, classify, prioritize, and remediate security threats.
A security vulnerability is a weakness that can compromise the confidentiality, integrity, and availability (CIA) of information. Attackers are constantly looking to exploit defects in software code or insecure configurations. Vulnerabilities can exist anywhere in the software stack, from web applications and databases to infrastructure components such as load balancers, firewalls, machine and container images, operating systems, and libraries. This includes code used in the CI/CD pipeline as well as the infrastructure-as-code (IAC) that defines the compute, network, and storage infrastructure.
Recent cybersecurity events have exposed widespread vulnerabilities involving the exploitation of zero-day malware and unknown weaknesses. Threat actors continually discover new exploitation tactics, techniques, and procedures (TTPs) to take advantage of weaknesses throughout integrated systems. Moreover, identifying breach paths is increasingly complicated due to the widespread adoption of ephemeral services.
Vulnerability management solutions should provide end-to-end visibility of the protect-surface by aggregating both platform and application risks in a single pane of glass, while leveraging prioritized remediation based on business risk and threat context for efficiency. Containerized workloads deployed via DevOps pipelines have unique security requirements that demand a fully integrated vulnerability assessment to be automated into cloud platform services running containerized workloads.
The path to a mature security posture starts with the ability to identify vulnerabilities in software code, third-party libraries, and at runtime. In addition, the cloud platform used to host your applications should be scanned for misconfigurations. This requires the use of policy configuration baselines, benchmarks, and compliance standards that apply to both the infrastructure and the code used to build it. As organizations implement security guardrails early in the software development lifecycle (SDLC), they can take advantage of cloud-native culture to ensure network and security tools are used throughout all phases of the SDLC.
This GigaOm report explores the key criteria and emerging technologies that IT decision makers should evaluate when choosing a vulnerability management solution. The key criteria report, together with the GigaOm radar report that evaluates relevant products, provides a framework to help organizations assess the solutions currently available on the market and how these tools fit with their requirements.
How to Read this Report
This GigaOm report is one of a series of documents that helps IT organizations assess competing solutions in the context of well-defined features and criteria. For a fuller understanding consider reviewing the following reports:
Key Criteria report: A detailed market sector analysis that assesses the impact that key product features and criteria have on top-line solution characteristics—such as scalability, performance, and TCO—that drive purchase decisions.
GigaOm Radar report: A forward-looking analysis that plots the relative value and progression of vendor solutions along multiple axes based on strategy and execution. The Radar report includes a breakdown of each vendor’s offering in the sector.
Vendor Profile: An in-depth vendor analysis that builds on the framework developed in the Key Criteria and Radar reports to assess a company’s engagement within a technology sector. This analysis includes forward-looking guidance around both strategy and product.
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