Regular readers may remember that back in November 2016 we blogged about a cyber attack on Tesco Bank in which money was taken from 20 000 customers and all on-line banking was suspended. At the time, Tesco Bank were seen to have managed some aspects of the incident very well: the fraud was detected promptly and an automated text system was used to alert customers. However, inbound communications were not handled so well with complaints of long delays at call centres and inadequate responses when customer finally got through.
Yesterday the Financial Conduct Authority (FCA) announced that Tesco was being fined £16.4m, stating that “the attack had been largely avoidable and that Tesco had not responded to it with sufficient rigour, skill nor urgency.” Specifically, the FCA highlights that Tesco Bank had been warned about the vulnerability but did not take action until the attack occurred. The size of the fine is much greater than the £500 000 maximum that could be imposed by the Information Commissioner’s Office (ICO) under the legislation that applied at the time but, under GDPR, we can expect to see the ICO also issuing fines of this magnitude.
You can find out more about how to protect your data in the information security section of our website.
The International Standards Organisation (ISO) has recently released its latest annual survey, covering the period up to 31st December 2017. Whilst there has been continued rapid growth in a number of standards; the increase in certifications to the business continuity management standard, ISO 22301, has been a relatively modest 11%. This brings the total number of organisations certified globally to 4281.
The picture is slightly better in the UK with a rise of 22% to 700 certifications by the end of last year. This puts the UK in second place behind India with 1678 organisations certified.
We have assisted a number of organisations to achieve certification to ISO 22301, this case study provides an illustrative example.
Millions of users of on-line banking services have been hit this week by disruptions at three different banks. Cashplus was the first bank to experience difficulties, the impact on customers was particularly severe as it is an on-line bank so people were unable to access their accounts, make cash withdrawals, or make or receive payments. Then, over the last two days there have been disruptions to on-line banking at two traditional banks, Barclays and RBS.
All the problems appear to have been resolved now but clearly this is a growing problem as more and more people rely on on-line banking. Moreover, it seems to be only part of a wider issue with IT resilience in the financial services sector. Already this year we have seen two separate disruptions to HSBC on-line banking in January; massive IT problems at TSB from April onwards; disruption to the Lloyds Bank website in May and disruption to the UK Faster Payments System in July.
Building on her previous studies over the last twenty years, Deborah Pretty of Pentland Analytics has recently published new research looking at “Reputational Risk in the Cyber Age”. The study analyses a sample of 125 reputational risk events over the last ten years including:
- The Samsung Galaxy Note7 recall;
- The Volkswagen emissions scandal; and
- Cyber-attacks on TalkTalk and Home Depot.
The overall findings are consistent with Pretty’s previous studies:
- The share prices of all firms fall immediately after an event becomes public;
- Within days, investors make a judgement about how well the company is responding and this determines the trajectory of share price thereafter; and
- After a year, there are two distinct groups – “winners” and “losers”.
In addition the 2018 study finds that:
- The gap between “winner” and “loser” firms has increased with the average winner experiencing a 20% increase in share price whilst the average loser’s share price falls by nearly 30% in the year after the event; and
- Contrary to some claims that cyber-attacks have no long-term effect on share price, analysis of the 23 cyber-attacks in this sample shows almost exactly the same pattern of winners and losers as the sample as a whole.
Once again, Pretty highlights the importance of prior planning; responding promptly and transparently; and communicating effectively across all regions as keys to success.
The Information Commissioner’s Office (ICO) published its report for the year 2017/18 last month, containing a useful update on the prevalence of information security issues.
Firstly, the ICO reported that the number of data protection concerns raised had risen to 21019 (up 15% from last year). In a similar pattern to last year, 32% of the investigations conducted into these concerns resulted in no action being taken and 35% were resolved purely through issuing advice on good practice to the organisation concerned. The concerns appear to have been broadly distributed across all industry sectors.
Secondly, the ICO announced that self-reported data breaches by organisations had also risen to 3165 (up 29% from last year). Of course it is not clear how much of this increase may be driven by better awareness of the need to report data breaches stemming from the publicity surrounding GDPR. As before, the top sectors for self-reported breaches are:
- Healthcare – 37%
- Education – 11%
- Local Government – 9%
Once again though, it is impossible to day if this is due to a greater frequency of breaches in these sectors or better awareness of the need to report.
Finally the ICO stated that they had issued fines totalling nearly £1.3m for breaches of the Data Protection Act, including the £400 000 fine issued to Carphone Warehouse in January.
Follow the link for more information on how to improve your information security.
The Business Continuity Institute (BCI) recently published its 2018 Cyber Resilience Report. In many ways this year’s report confirms the findings of the previous reports in 2016 and 2017:
- 66% of organisations experienced at least one “cyber security incident” in the last 12 months (64% in 2017);
- 11% of organisations experienced more than 20 incidents in the last 12 months (10% in 2017); and
- The impact of the majority of incidents was estimated at less than €50 000, but a very small number cost over €1m.
The figures on the response time to an incident were also consistent with previous years, with 38% estimating that they responded within an hour of detection and 79% within 3 hours. Taken at face value this seems quite encouraging; however, for the first time, the 2018 survey also asked about the time taken to detect an incident. Only 28% of respondents estimated that they detected incidents within an hour and 34% estimated that it took over 4 hours. Clearly one cannot respond to an incident until it has been detected, so reducing detection times would appear to be the key challenge going forward.
The inability of BP stations to handle card payments for a period on Sunday evening has been widely reported. There have been no reports of further problems since then so it appears that the glitch has been successfully resolved. Meanwhile, the fault in the UK’s Faster Payments system, which occurred a few hours earlier, has been much less widely talked about; but, as of this morning, work is still underway to clear the backlog of payments. Then, this morning, numerous accounts appeared on social media of problems with the TSB banking app.
Taken in isolation, each of these incidents is relatively minor. However, taken together with the massive disruption to Visa payments in May/June and the IT meltdown at TSB in April; it points to a systemic problem with this vital part of our national infrastructure.
We blogged in March about the frequency of product recalls in the US; concluding that there were no particular trends (upwards or downwards) in any particular product category. However, looking at the corresponding picture for Europe (once again using data from Stericycle) , there is one product area with a distinct upwards slope: automotive.
Whilst still the smallest of the three product categories (by some way), the number of automotive recalls grew sharply from 160 in 2013 to 442 in 2017. Whilst there have been some very high-profile recalls in recent years, principally the “Diesel Dupe” scandal; it is not clear what has caused this significant rise in the total number of recalls over the period.
Hundreds of passengers faced delays and disruption on Tuesday evening when Terminal 2 at Manchester Airport lost power. Power was restored within a few hours but, whilst the power cut lasted, passengers could not check in and planes could not be unloaded. Luckily, due to the time of day, it was possible to divert some incoming flights to Terminal 1.
As usual in these sorts of situations, most of the complaints from passengers seem to focus on a lack of communication. This was partly due to the precise nature of the disruption, with the loss of display screens and other normal ways of communicating with passengers in the Terminal. However, some comments on social media make a more general point; saying that airport staff, whilst trying to be helpful, had simply not been given the information they required to answer the questions that people were asking.
Whilst not knowing how accurate this criticism is in this instance, it is certainly true that many organisations’ crisis communications plans focus on communicating with the media and external stakeholders and neglect communication with their own staff. Not only are staff an important stakeholder group in their own right, but many of them are also in direct contact with customers so are an important communications channel too. A little time taken in planning and rehearsing procedures for communicating with staff during an incident will pay big dividends.
Media reports yesterday highlighted a “perfect storm” for UK producers of beer (and soft drinks); where high demand due to the good weather and the World Cup has coincided with a significant fall in production of CO2. Whilst this is a problem across Europe, the loss of production is particularly acute in the UK where 3 of the 4 largest plants are currently shut. It is anticipated that consumers will start to feel the impact within days. Understandably, people are asking how could this happen.
“Supply Chain Continuity” has been a hot topic within business continuity management for many years now; and much good practice has emerged around getting to know and understand your supplier base, and contingency planning for failure of individual critical suppliers within it. However, the current shortage of CO2 is an example of a growing problem where there is disruption to supply of a key raw material across an entire industry. (In fact the shortage of CO2 affects multiple industries including food production and aviation). This is clearly a more difficult problem to resolve – one doesn’t simply want to resort to costly and inefficient stock-piling of raw materials just in case.
What’s the answer then? There is no simple solution if you happen to be a beer producer although, in this particular scenario, it might have been worth building a closer relationship with your CO2 suppliers to ensure that they don’t all shut down simultaneously. For retailers though, the solution lies in a flexible business model: if you cannot replenish stocks of beer for a period of time what else can you sell instead? As ever in these situations, a challenge for the beer industry represents a big opportunity for somebody else!