Securing Information

Systems
 You’re on LinkedIn? Watch Out!

• Problem: Massive data breach; using old security

practices
• Solution: Initiative to use minimal up-to-date
industry practices, for example, salting passwords
• Illustrates the need for security practices to keep up
with current standards and threats
• Demonstrates the lack of regulation for corporate
computer security and social network data security;
poor data protection by many companies
 System Vulnerability and Abuse

• Security:
• Policies, procedures and technical measures used to prevent
unauthorized access, alteration, theft, or physical damage to
information systems

• Controls:
• Methods, policies, and organizational procedures that ensure
safety of organization’s assets; accuracy and reliability of its
accounting records; and operational adherence to
management standards
 System Vulnerability and Abuse
• Why systems are vulnerable
• Hardware problems
• Breakdowns, configuration errors, damage from improper use or
crime
• Software problems
• Programming errors, installation errors, unauthorized changes)
• Disasters
• Power failures, flood, fires, etc.
• Use of networks and computers outside of firm’s
control - . When data are available over a network, there are
even more vulnerabilities
• E.g., with domestic or offshore outsourcing vendors
 System Vulnerability and Abuse

Contemporary Security Challenges and Vulnerabilities

The architecture of a Web-based application typically includes a

Web client, a server, and corporate information systems linked to
databases. Each of these components presents security
challenges and vulnerabilities. Floods, fires, power failures, and
other electrical problems can cause disruptions at any point in the
network.
 System Vulnerability and Abuse

• Internet vulnerabilities - Internet is so huge that when abuses do occur,

they can have an enormously widespread impact. And when the Internet
becomes part of the corporate network, the organization’s information
systems are even more vulnerable to actions from outsiders
• Network open to anyone

• Size of Internet means abuses can have wide impact

• Use of fixed Internet addresses with permanent connections to Internet

eases identification by hackers

• E-mail attachments

• E-mail used for transmitting trade secrets

• IM messages lack security, can be easily intercepted

 Compromising Web Sites
• SQL injection technique exploits sloppy programming practices
that do not validate user input
– Hackers submit data to Web forms that exploits site’s unprotected
software and sends rogue SQL query to database
– IBM identifies SQL injection as the fastest growing security threat, with
over half a million attack attempts recorded each day.
– Firms have to check the integrity of their Web sites for
vulnerabilities
• Related programming exploits:
– DNS cache poisoning exploits
• can redirect Internet address to IP address mapping and the
consequences are huge.
– Cross-site scripting attacks
• may be used by attackers to bypass access controls accounted for
roughly 80.5% of all security vulnerabilities documented by Symantec
as of 2007
1-7
 Securing Wireless Networks - Challenges
• Radio frequency bands easy to scan
• SSIDs (service set identifiers)
• Identify access points.
• Broadcast multiple times.
• War driving
• Eavesdroppers drive by buildings and try to intercept network traffic
• When hacker gains access to SSID, has access to network’s resources
• WEP (Wired Equivalent Privacy)
• Security standard for 802.11
• The WEP specification calls for an access point and its users to
share the same 40-bit encrypted password.
• Basic specification uses shared password for both users and access point
• Users often fail to use security features
• Assigning unique name to network’s SSID
• TJX fiasco – they should have used WPA (Now WPA2)
• Wi-Fi Alliance finalized WAP2 specification, replacing WEP with stronger
standards
• Continually changing keys
• Encrypted authentication system with central server
 System Vulnerability and Abuse

The service set

identifiers (SSIDs) Wi-Fi Security Challenges
identifying the access
points in a Wi-Fi
network are broadcast
multiple times (as
illustrated by the orange
sphere) and can be
picked up fairly easily
by intruders’ sniffer
programs
Many Wi-Fi networks can be
penetrated easily by intruders
using sniffer programs to
obtain an address to access the
resources of a network without
authorization.
 The TJX Breach
• Business establishments are increasingly under risk of information
security threats
– Network in TJX retail store was infiltrated via an insecure Wi-Fi base station
– 45.7 million credit and debit card numbers were stolen
– Driver’s licenses and other private information pilfered from 450,000
customers
– TJX suffered under settlement costs and court-imposed punitive action to
the tune of $150 million
– Even without lawsuit liabilities, Forrester Research estimates that the
cost to TJX for the data breach could surpass $1 billion over five years.

1-10
 The TJX Breach
• Factors that amplified severity of TJX security breach are:
– Personnel betrayal: An alleged FBI informant used insider information to
mastermind the attacks
– Management gaffe: Executives made conscious decisions not to upgrade
legacy systems that were vulnerable to security compromises
– Technology lapse: TJX used WEP, a insecure wireless security
technology
• failed to follow the most basic security measures like installing antivirus
software, upgrading wireless security, encrypting data, and creating and
using access controls, and establishing information system controls
(general and application).
– Procedural gaffes: TJX had received an extension on the rollout of
mechanisms that might have discovered and plugged the hole before
the hackers got in
• Also willfully violated the Payment Card Industry (PCI) Data Security
Standard by holding onto data for years
1-11
 System Vulnerability and Abuse
• Malware (malicious software)
– Viruses
• Rogue software program that attaches itself to other
software programs or data files in order to be executed
– Worms
• Independent programs that copy themselves from one
computer to other computers over a network.
– Worms and viruses spread by
• Downloads (drive-by downloads)
• E-mail, IM attachments
• Downloads on Web sites and social networks
 System Vulnerability and Abuse
• Malware (cont.)
– Smartphones as vulnerable as computers
• Study finds 13,000 types of smartphone malware
– Trojan horses
• Software that appears benign but does something other than
expected
• In 2004, users were enticed by a sales message from a supposed anti-
virus vendor.
• On the vendor’s site, a small program called Mitglieder was
downloaded to the user’s machine. The program

– SQL injection attacks (already discussed)

• Hackers submit data to Web forms that exploits site’s unprotected
software and sends rogue SQL query to database
 System Vulnerability and Abuse

• Malware (cont.)
– Spyware
• Small programs install themselves surreptitiously on
computers to monitor user Web surfing activity and serve
up advertising
• Key loggers
– Record every keystroke on computer to steal serial numbers,
passwords, launch Internet attacks
• Other types:
– Reset browser home page
– Redirect search requests
– Slow computer performance by taking up memory
 Cookies
• Cookie – a small file that contains information about you and
your Web activities, which a Web site places on your computer
• Handle cookies by using
– Web browser cookie management option
– Buy a program that manages cookies
• Not executable, cannot deliver a virus or other malicious code
• Only web server that delivered it can read it
• Your computer can store cookies from many web sites
• May be a security risk if it is implemented poorly on site that
you have shared personal information with and rely on cookies
to access it
– Anyone who can access the cookie on your hard drive can now access
that personal information
– Most reputable sites to not rely on cookies for authentication alone.

8-15
 Hackers and Computer Crime
• Computer crime
• Defined as “any violations of criminal law that
involve a knowledge of computer technology for
their perpetration, investigation, or prosecution”
• Computer may be target of crime:
• Computer may be instrument of crime:
 Examples of Computer Crime

Computers as Targets of Crime

•Breaching confidentiality of protected computerized
data
•Accessing a computer system without authority
•Knowingly accessing a protected computer to
commit fraud
•Intentionally accessing a protected computer and
causing damage, negligently or knowingly
•Knowingly transmitting program, program code, or
command that intentionally cause damage to a
protected computer
•Threatening to cause damage to a protected
system
 Examples of Computer Crime

Computers as Instruments of Crime

•Theft of trade secrets
•Unauthorized copying of software or copyrighted
intellectual property, such as articles, books, music,
and video
•Schemes to defraud
•Using e-mail for threats or harassment
•Intentionally attempting to intercept electronic
communication
•Illegally accessing stored electronic communication,
including e-mail and voice mail
•Transmitting or possessing child pornography
• Hackers and computer crime
• Hackers vs. crackers (hacker with criminal intent)
• White hat hacker – hackers hired by companies to reveal security
weaknesses within the firm’s systems
• Activities include
• System intrusion
• Theft of goods and information
• System damage
• Cybervandalism
• Intentional disruption, defacement, destruction of Web site or
corporate information system
 Hackers and Computer Crime
• Denial-of-service attacks (DoS)
• Flooding server with thousands of false requests to crash the
network.
• Distributed denial-of-service attacks (DDoS)
• Use of numerous computers to launch a DoS
• Botnet or zombie armies
A group of computers that have been compromised and brought under
the control of an individual. The individual uses malware installed on
the compromised computers to launch
• denial-of-service attacks,
• send spam, or perpetrate other malicious acts.

• Zombie PCs used to initiate DDoS attacks

• Extortionists might leverage botnets or hacked data to demand payment to
avoid retribution
 System Vulnerability and Abuse
• Computer crime
• Defined as “any violations of criminal law that involve a knowledge of computer technology for their
perpetration, investigation, or prosecution”
• Computer may be target of crime, e.g.:
• Breaching confidentiality of protected computerized data
• Accessing a computer system without authority
• Computer may be instrument of crime, e.g.:
• Theft of trade secrets
• Using e-mail for threats or harassment
• According to CSI Computer Crime and Security Survey of nearly 500 companies, companies’ average
annual loss from computer crime and security attacks was $350,424
• many companies are reluctant to report computer crimes. Why?
• What are the most economically damaging types of computer crime? (DoS, introducing viruses, theft of
services, disruption of computer systems.)
 System Vulnerability and Abuse

• Identity theft: Theft of personal Information (social security id,

driver’s license or credit card numbers) to impersonate someone
else
• Phishing: Setting up fake Web sites or sending e-mail
messages that look like legitimate businesses to ask users for
confidential personal data.
• Evil twins: Wireless networks that pretend to offer trustworthy
Wi-Fi connections to the Internet
• Pharming: Redirects users to a bogus Web page, even when
individual types correct Web page address into his or her browser
 System Vulnerability and Abuse

• Click fraud
• Individual or computer program clicks online ad without any
intention of learning more or making a purchase
• Link farming
• a type of online advertising fraud where fraudsters attempt to
increase a page's results in organic search by creating a
series of bogus Web sites linking back to it
• Global threats - Cyberterrorism and cyberwarfare
• Concern that Internet vulnerabilities and other networks make
digital networks easy targets for digital attacks by terrorists,
foreign intelligence services, or other groups
 Hackers and Computer Crime
•Spoofing
•Misrepresenting oneself by using fake e-mail addresses or
masquerading as someone else
•Redirecting Web link to address different from intended one, with site
masquerading as intended destination
•Sniffer / Packet sniffer
•Eavesdropping program that monitors information traveling over
network
•Enables hackers to steal proprietary information such as e-mail,
company files, and so on
• use your debit card information to purchase items illegally.
• steal your logon and passwords for various accounts.
• assume your identity.
 System Vulnerability and Abuse

• Internal threats – Employees

• Security threats often originate inside an
organization
• Inside knowledge
• Sloppy security procedures
• User lack of knowledge
• Must have separation of duties and controls
• Social engineering:
• Tricking employees into revealing their passwords by
pretending to be legitimate members of the company in
need of information

• San Francisco Hack: Where Was the Oversight?

 Security Testing
• You may be aware that there are professional security firms that organizations
can hire to break into their own networks to test security. BABank (pseudonym)
was about to launch a new online banking application, so it hired such a firm to
test its security before the launch. The bank’s system failed the security test –
badly.
• The security team began by mapping the bank’s network. It used network
security analysis software to test password security, and dialing software to test
for dial-in phone numbers. This process found many accounts with default
passwords (i.e. passwords set by the manufacturer that are supposed to be
changed when the systems are first set up).
• The team then tricked several high-profile users into revealing their passwords to
gain access to several high-privilege accounts. Once into these computers, the
team used password-cracking software to find passwords on these computers
and ultimately gain the administrator passwords on several servers.
• At this point, the team transferred $1000 into their test account. They could have
transferred much more, but the security point was made.
 System Vulnerability and Abuse

• Software vulnerability
• Commercial software contains flaws that create security
vulnerabilities
• Hidden bugs (program code defects)
• Zero defects cannot be achieved because complete testing is not
possible with large programs
• Flaws can open networks to intruders
• Patches
• Vendors release small pieces of software to repair flaws
• However, amount of software in use can mean exploits created faster
than patches be released and implemented

The cost to the U.S. economy from software flaws runs to nearly
$60 billion each year.
• Lack of security, control can lead to
• Loss of revenue
• Failed computer systems can lead to significant or total loss of business
function
• Lowered market value:
• Information assets can have tremendous value
• A security breach may cut into firm’s market value almost immediately
• Legal liability - U.S. Federal Trade Commission has sued companies for allowing hackers to
access systems and steal credit and debit card data for fraudulent purchase.
• Lowered employee productivity
• Higher operational costs
• What types of data have tremendous value or require protection? .
• individual confidential information (taxes, finances, medical records, job performance
reviews) and high-value data (trade secrets, new product development, marketing strategies,
government information).
 Business Value of Security and Control

• Legal and regulatory requirements for electronic

records management
• Firms face new legal obligations for the retention and
storage of electronic records as well as for privacy
protection
• HIPAA: Medical security and privacy rules and procedures
• Gramm-Leach-Bliley Act: Requires financial institutions to ensure
the security and confidentiality of customer data
• Sarbanes-Oxley Act: Imposes responsibility on companies and
their management to safeguard the accuracy and integrity of
financial information that is used internally and released externally
 Business Value of Security and Control

• Sarbanes-Oxley Act: designed to protect investors after the

scandals at Enron, WorldCom, and other public companies.
Sarbanes-Oxley is fundamentally about ensuring that internal
controls are in place to govern the creation and documentation
of information in

• Financial statements. Because managing this data involves

information systems, information systems must implement
controls to make sure this information is accurate and to
enforce integrity, confidentiality, and accuracy.
 Business Value of Security and Control

• Electronic evidence
• Evidence for white collar crimes often found in digital form
• Data stored on computer devices, e-mail, instant messages, e-commerce
transactions
• Proper control of data can save time, money when responding
to legal discovery request
• Computer forensics:
• Scientific collection, examination, authentication, preservation, and analysis of
data from computer storage media for use as evidence in court of law
• Includes recovery of ambient and hidden data
• Ambient data is information that lies in areas not generally accessible to the user: file
slack, unallocated clusters, virtual memory files and other areas not allocated to
active files. This is a forensic term that describes, in general terms, data stored in
non-traditional computer storage areas and formats.
 Legal Action
• In a legal action, a firm is obligated to respond to a
discovery request for access to information that may be
used as evidence,
• and the company is required by law to produce this data.
• The cost of responding to a discovery request can be
enormous if the company has trouble assembling the
required data or the data have been corrupted or
destroyed.
• Courts impose severe financial and even criminal penalties
for improper destruction of electronic documents.
 Establishing a Framework for Security and Control
• Information systems controls
• General controls
• controls are methods, policies, and organizational procedures that ensure safety of
organization’s assets; accuracy and reliability of its accounting records; and
operational adherence to management standards. There are two main types of
controls, general controls and application controls
• Govern design, security, and use of computer programs and data throughout
organization’s IT infrastructure
• Combination of hardware, software, and manual procedures to create overall control
environment
• Types of general controls
• Software controls
• Hardware controls
• Computer operations controls
• Data security controls
• Implementation controls
• Administrative controls
 Establishing a Framework for Security and Control

• Application controls
• Specific controls unique to each computerized application, such as
payroll or order processing
• Include both automated and manual procedures
• Ensure that only authorized data are completely and accurately
processed by that application
• Types of application controls:
• Input controls - input authorization, data conversion, data editing,
and error handling
• Processing controls - establish that data are complete and
accurate during updating
• Output controls - ensure that the results of computer processing
are accurate, complete, and properly distributed
 Establishing a Framework for Security and Control
• Risk assessment
• Determines level of risk to firm if specific activity or process is not
properly controlled
• Types of threat
• Probability of occurrence during year
• Potential losses, value of threat
• Expected annual loss
• Risk cost = probability X impact

EXPOSURE PROBABILITY LOSS RANGE (AVERAGE) EXPECTED ANNUAL

LOSS

Power failure 30% $5K - $200K ($102,500) $30,750

Embezzlement 5% $1K - $50K ($25,500) $1,275

User error 98% $200 - $40K ($20,100) $19,698

 Establishing a Framework for Security and Control

• Security policy
• Ranks information risks, identifies acceptable security goals,
and identifies mechanisms for achieving these goals
• Drives other policies
• Acceptable use policy (AUP): Defines acceptable uses
of firm’s information resources and computing equipment
• Authorization policies: Determine differing levels of user
access to information assets

• Authorization management systems

• Allow each user access only to those portions of system that
person is permitted to enter, based on information established
by set of access rules, profile
1. Disaster recovery planning : Devises plans for restoration of disrupted services
• focus primarily on the technical issues involved in keeping systems up and running, such as which files to back
up and the maintenance of backup computer systems or disaster recovery services
• MasterCard, maintains a duplicate computer center in Kansas City, Missouri, to serve as an emergency backup
to its primary computer center in St. Louis.

2. Business impact analysis identifies all critical business functions and the effect that a specific
disaster may have upon them.
• Management must determine
• Maximum time systems can be down
• Which systems must be restored first

3. Business continuity planning: Focuses on restoring business operations after disaster

• All three are needed to identify firm’s most critical systems and business processes
 Establishing a Framework for Security and Control

The Role of Auditing

• MIS audit - determines if existing security measures and
controls are effective
• Examines firm’s overall security environment as well as controls
governing individual information systems
• Reviews technologies, procedures, documentation, training,
and personnel
• May even simulate disaster to test response of technology, IS
staff, other employees
• Lists and ranks all control weaknesses and estimates
probability of their occurrence
• Assesses financial and organizational impact of each threat
 Establishing a Framework for Security and Control

Sample Auditor’s List of Control Weaknesses

This chart is a
sample page from a
list of control
weaknesses that an
auditor might find in
a loan system in a
local commercial
bank. This form
helps auditors
record and evaluate
control weaknesses
and shows the
results of discussing
those weaknesses
with management,
as well as any
corrective actions
taken by
management.
 Technologies and Tools for Security

• Firewall: Hardware and/or software to prevent

unauthorized access to private networks
• Must maintain detailed internal rules identifying the people,
applications, or addresses that are allowed or rejected.
• Firewalls can deter, but not completely prevent, network
penetration by outsiders and should be viewed as one element in
an overall security plan

• Intrusion detection systems: Monitor vulnerable points

on networks to detect and deter intruders
• Examines events as they are happening to discover attacks in
progress
• Scans network to find patterns indicative of attacks
• Scans for known problems such as Bad passwords, removal of
important files etc.
 Technologies and Tools for Security
• Ensuring system availability
• Online transaction processing requires 100% availability, no downtime.
• There is a huge $$ loss in downtime
• Fault-tolerant computer systems
• For continuous availability e.g. stock mk’t, airline reservation
• Contain redundant hardware, software, and power supply components to provide continuous,
uninterrupted service
• High-availability computing
• Helps recover quickly from crash
• Minimizes, does not eliminate downtime

• Firms with heavy e-commerce processing or for firms that depend on digital networks for
their internal operations require high-availability computing, using tools such as backup servers,
distribution of processing across multiple servers, high-capacity storage, and good disaster
recovery and business continuity plans
 Hot Site
• A hot site is a commercial disaster recovery service that allows a business to
continue computer and network operations in the event of a computer or
equipment disaster.
• If an firm’s data center becomes inoperable it can move all data processing
operations to a hot site.
• A hot site is a duplicate of the original site of the organization, with full
computer systems as well as near-complete backups of user data.
– The site has all the equipment needed for the enterprise to continue
operation, including office space and furniture, telephone jacks and
computer equipment.
• Real time synchronization between the two sites may be used to completely
mirror the data environment of the original site.
• Following a disruption to the original site, the hot site exists so that the
organization can relocate with minimal losses to normal operations.
• Ideally, a hot site will be up and running within a matter of hours or even less.
• Example – Hurricane Katrina - oil company hot sites
 Cold Site
• A cold site is the most inexpensive type of backup site for an
organization to operate.
• Does not include backed up copies of data and information
from the original location of the organization,
• Does not include hardware already set up.
– The lack of hardware contributes to the minimal startup costs of the
cold site,
– Requires additional time following the disaster to have the operation
running at a capacity close to that prior to the disaster.
• Typically, a business has an annual contract with a company that
offers hot and cold site services with a monthly service charge.
• Some disaster recovery services offer backup services so that all
company data is available regardless of whether a hot site or
cold site is used.
 Technologies and Tools for Security

• Recovery-oriented computing
• Designing systems that recover quickly with capabilities to help operators
pinpoint and correct of faults in multi-component systems
• Controlling network traffic- enables a network to sort low-priority data packets
from high-priority ones in order to improve performance for business critical
communication
• Deep packet inspection (DPI) - enables a network to sort low-priority data
packets from high-priority ones in order to improve performance for business
critical communication.
• Security outsourcing
• Managed security service providers (MSSPs)
• Ensuring software quality
• Software Metrics: Objective assessments of system in form of
quantified measurements
• Number of transactions
• Online response time
• Payroll checks printed per hour
• Known bugs per hundred lines of code
• Testing: Early and regular testing - WalkthTesting is complex and
requires various types of tests
• rough: Review of specification or design document by small group
of qualified people
• Debugging: Process by which errors are eliminated
• Majority of testing done by IS – error free, performance: response
time, throughput, accuracy
• Some testing done by end users – does the system meet the
functional requirements as originally described in the Requirements
document