When The 2 Billionth Customer Record Is Stolen, Insiders Will Be The Most Guilty

While I was researching my next story on the danger that employees, contractors, and business partners (i.e., insiders) can place on the security of corporate data, a friend of mine sent me an interesting study that noted, among several other fascinating data points, that last year personal records were compromised at a rate of 5.8 million per month. At this rate, by the end of the year more than 2 billion records will have been lost or stolen since 1980, the study says, and the majority of those breaches will have been the result of mismanagement, which includes insider attacks. I wish I could say that was the most surprising security news I heard this week.Buried deep within TJX's SEC filing this week revealing that more than 45 million customer records had been compromised by malicious hackers was the mention that the cyberthieves may have had access to the decryption tool for the encryption software that TJX uses. I'm not one for conspiracy theories, but it strikes me that the criminals could only have gotten this decryption key through a successful hack into wherever TJX stored those keys, or the key was given to them by an insider with intimate knowledge of TJX's IT systems.

On average, personal records in 2006 were compromised at a rate of 5.8 million a month, up from 5.2 million a month in 2005, according to a report published by two University of Washington researchers earlier this month. The report, written by Philip Howard, an assistant professor in the Communication Department, and Kris Erickson, a doctoral candidate in geography at the university, extrapolates that by the end of this year more than 2 billion personal records will have been lost or stolen since 1980. The report, entitled "News Accounts of Hacker, Consumer, and Organizational Responsibility for Compromised Digital Records, 1980-2006," analyzed 550 confirmed data breach incidents between 1980 and 2006.

That amounts to about nine personal digital records compromised for every adult in the U.S. And it doesn't look like the pace is going to change anytime soon. There were more reported incidents in 2005 and 2006 than in the previous 25 years combined, although some of this can be explained by the increase in state breach notification laws that mandate businesses let their customers know when unencrypted personal information has been lost or stolen.

Most data breaches, 61%, can be attributed to "organizational mismanagement," a category that includes theft by insiders, the study concludes. Intrusions by malicious hackers made up 31% of the data breaches studied, with the cause of the remaining 8% of breaches not specified in the news reports studied.

Insider theft is the security problem that chief security officers most fear but have the most difficulty defending against. During the CSO Interchange forum held at this year's RSA Conference in San Francisco, 85 security chiefs from companies including Oracle, PayPal, and TransUnion were asked whether they deemed insiders or external attackers to be the greater threat. Sixty percent said it was the insiders that concerned them most. These concerns could only have been heightened by the news shortly after that DuPont scientist Gary Min stole $400 million worth of trade secrets from the chemical company and now faces up to 10 years in prison, a fine of $250,000, and restitution during his sentencing, which was rescheduled from March 29 to May 10.

The DuPont theft was entirely preventable, but "so many companies are so concerned with watching privileged IT users and employees of third-party outsourcers that they don't properly watch their regular user base," Buck French told me earlier this week. French is the chairman and CEO of Securify, a maker of network security appliances.

While he's got a vested interest in pointing out the dangers that employees can pose to their companies, I agree with his assertion that the insider theft problem will continue until companies devote the right resources to stopping it. "It's a couple years out before companies accelerate their efforts in this area," French said. "Financial institutions, for example, set aside a certain amount to deal with fraud. This says it's acceptable to us to lose a certain amount of money. It's a proxy for the acceptance of the problem."

As it turns out, fraud and identity theft -- some of the things that criminals do with the information that insiders steal -- is a whole other subject I'll be writing about extensively in the coming months. Until then, keep an ear out for unusual chatter around the water cooler and an eye on that guy in accounting whose been using the widowed account of one of your recently retired engineers to peek at your latest product designs.