Why Enterprise, Automated Governance is Critical for Growing Retailers

August 25, 2016 | Michael Janeiro

How many retail locations and how stretched is your geographic footprint? A half dozen locations in a metropolitan area? Thirty stores in a specific region of the U.S.? Hundreds of outlets across the country?

Do you also, like most retail companies, enable customers to shop online? Do you have mobile apps that enhance the customer experience?

Consider the totality of your physical and digital presence. With each location, website, computer terminal, server, data center, cash register, etc., you have increased your company’s exposure to:

•    City, county, and state regulations on building codes, employment laws, and consumer protection.

•    Multiple entry points for hackers and potential data thieves.

•    A more complex supply chain that at any point can be the catalyst for business disruption, product liability, and non-compliance with standards and guidelines such as conflict mineral sourcing.

•    An employee base that causes any number of incidents, disruptions, and legal issues.

•    A network of third parties that extend your infrastructure beyond much of your control and increases the chances of disruption, IT security risks and non-compliance with increasing regulations.

The role of corporate governance

Creating, administering and enforcing policies throughout your company, as well as managing the relationships among your various stakeholders, is the role of corporate governance.

Whether you realize it or not, you have a corporate governance program. How effective and how visible it is across your expanding retail organization may be an entirely different matter.

One of the challenges faced in most retail organizations is the need to expand geographically and/or digitally to increase sales in an ever-competitive environment.

At the same time, any expansion increases the aforementioned risks and regulations, necessitating greater governance. Without it, your retail enterprise, regardless of its size, lacks consistent processes, policies, procedures, and technology requirements.

Consider the common governance challenges facing expanding retailers:

•    Increasing compliance with regulations and standards ranging from Payment Card Industry Data Security Standards to conflict minerals reporting.

•    Collecting and correlating data for regulatory compliance.

•    Developing policies in timely response to changes in laws or to specific incidents that occur.

•    Timely review and update of policies, communicating new and changing policies across the organization and ensuring all stakeholders understand and acknowledge governance policies.

•    Maintaining visibility into corporate governance objectives and results, especially to key stakeholders such as shareholders, directors, and executives.

•    Identifying, prioritizing, and addressing multiple risks throughout the enterprise, including compliance risk, IT security risk, operational risk, vendor risk, business continuity risk, and audit risk.

•    Maintaining an IT asset list to know how they are potentially impacted when certain threats and vulnerabilities arise.

•    Communicating incidents that occur at a single location up to the corporate parent and then across the enterprise. If not, smaller issues can become much larger ones over time.

•    Prioritizing incidents among billions of data points received. How do you know which ones to address and which ones are irrelevant to your organization before spending the resources to investigate?

•    The onslaught of data breaches that have hit retailers large and small. Although many consumers have accepted the risk of security breaches as a trade-off for convenience, one recent survey found that 39 percent of shoppers spend less at retailers that have experienced a security breach than they did before the breach occurred. Another 34 percent of shoppers don’t shop online due to fear of security breaches.

An enterprise, automated approach

The increasing risk and governance challenges posed by physical and digital expansion necessitate an enterprise approach to corporate governance. Introducing other types of activities into their business model can create new complexities and risks, which call for a broader approach to governance.

Managing corporate governance on an enterprise level, however, can be an arduous task, often requiring multiple employees dedicating long hours at extensive cost.

Therefore, retailers need an efficient, effective and automated solution to help their business processes and their security requirements work together to deliver improved efficiencies while strengthening their overall governance program.

The right automated solution can enable retailers to enforce policies and procedures, establish best practices, mitigate and manage risks, and comply with regulatory standards and requirements.


BEING MINDFUL OF CYBER SECURITY AWARENESS

Here we are in the middle of 2016 and the cybercrime wave that has been the hot topic for more than two years continues to rumble on. We are in fact in a bizarre situation where we, as well as commercial competitors, have cybercriminals competing with us. The competition in this case is for data, an item that straddles all industry sectors. Cybercriminals make a lot of money from the data they compromise. It is estimated that currently, cybercrime is costing the global economy around $450 billion annually. Some, like Juniper Research, are predicting those costs will spiral to around $2 trillion by 2019. Once you start describing losses in the trillions, rather than billions, you know you really do need to take stock. Analysts, HPS, have shown that cybercrime is truly a globally competitive business, comparing it to the likes of Apple and Microsoft in terms of revenue generation. Cybercrime is a formidable and successful competitor in today’s data stakes.

Source: HPS

Source: HPS

With a business model this effective, cybercrime is set to continue as a major threat to normal business operations. Changes in the threat landscape, such as models enabling cybercrime, like ‘Malware as a Service (MaaS)’, make this onslaught of attacks even more likely. We are left with no option but to take this all very seriously. It’s too bad though that the old methods of defense, like anti-virus software, are showing cracks in their armor. With anti-virus vendors like Symantec stating that anti-virus software is only effective against 45% of viruses. We need to move to a new paradigm in our approach to mitigation of cyber threats – the war against cybercrime is now about a simple concept…awareness.

The Biggest Threat is You

Any type of crime, be it real world or digital, has an element of human behavior about it. One of the world’s most famous scams, the Ponzi Scheme, carried out back in 1920 was based on the basic human behavior to accumulate resources – in this case, lots of money. Today, cybercriminal scams also focus on human behavior to elicit knee-jerk reactions. Phishing, a technique based on social engineering, which encourages its target to perform an action that benefits the cybercriminal, is the most successful vector for cybercrime according to a report by Phishlabs. And in 2016 this continues to be the case with the first quarter of 2016 seeing an increase of 250% in phishing attacks. Phishing is a perfect example of the use of human behavior to exact an outcome. Phishing comes in a myriad of forms, morphing into new ones as older ones become recognizable and less effective. The reason why this method is so successful, with SANS Institute, estimating that phishing is behind 95% of all security breaches, is because the successful cybercriminal uses their knowledge of how we tick as much as they use software code. What this means for us, as business owners, IT staff and company employees, is that we need to be much more aware when it comes to security, especially cyber. With the type of cyber-threat climate we face today, we cannot rely solely on technology to get us out of sticky cyber-situations.

Being Security Aware

Being security aware is about creating a culture of security within an organization. In practice this will require everyone, from the board, to the IT department, to the sales team, out into your extended third party vendor system, to understand the implications of the modern cyber security threat.

Security awareness includes understanding the security requirements and impact of common standards and compliance, such as HIPPA and PCI-DSS. However, security awareness is much more than just complying with laws. Security awareness is about knowledge and understanding of what the threat landscape has in store for us, and the techniques used against our organization and ourselves. To be security aware you need to:

1.     Know the types of attacks being targeted at your specific industry area (check out our industry series covering six industry sectors, and the types and levels of cybercrime they experience)

2.     Use this knowledge to setup the best type of security awareness program to put in place in your company

3.     Use special programs, like phishing awareness to train your staff and extended vendor ecosystem in what a phishing campaign will look like. This can include creating mock phishing attacks. Metrics from these mock attacks can also help you to understand where in the organization to concentrate security awareness training on.

4.     Recognize that security awareness is an ongoing activity. Cybercrime is not a static practice; it morphs and changes to optimize better outcomes. The fact that cybercrime revenue is up there with the most successful companies in the world is a testament to the cyber criminal’s continuous improvement of their business models.

Being mindful of the benefits of security awareness is a modern way of tackling cyber crime. It allows us to form a concentrated defense system, utilizing the very thing that cybercriminals rely on to bring about a breach – ourselves.


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