Data Breach Response After the Fact

Your email has been frozen and your company website is down. Your IT department has confirmed a data breach. What do you do next? Incident Expert Lee Neubecker and legal expert Kari Rollins offer easy instructions about your next important steps.

It’s a fact! Your IT team confirmed a Data Breach or incident has occurred. What do you do after the fact? Forensic Expert Lee Neubecker and Legal Expert Kari Rollins say don’t panic! First, convene with your incident response team, start to investigate under privilege and contact a 3rd Party forensic expert to help preserve vital information. Watch the rest of this video for further recommendations about data breach response after the fact!

View Part 3 of our 3-Part Series on Data Breach

Part 3 of our 3-Part Series on Data Breach

The Video Transcripts of Part 3 of our 3-Part Series on Data Breach follows

Lee Neubecker: Hi I’m back again with Kari Rollins, and she’s here talking with me today about data breach incident response. The Sedona Conference recommends, how an organization should respond to such incidents. And we’re talking in this third part segment about what to do after an incident has been reported. So Kari, please tell me what the initial issues are that come to mind when you get that phone call from a client that says something happened.

Kari Rollins: Sure, so usually, as we were talking about in a prior segment, you may not know whether you’ve had a breach as defined by law. You are just told by your information’s security team, or an employee or a manager that you’ve had, there’s been an attack. Or there’s been, “I can’t get access to my email,” Or, “My account’s frozen.” So you immediately start to investigate. You want your.. according to your incident response plan which we’ll hopefully have in place, you’ll convene your incident response team; you’ll start to investigate under privilege. You’ll call if you need your outside forensic investigator to help you access it. Help you access what’s happened, right? That the facts in an incident are really, really important because they drive the legal conclusions. Have you had a breach, or have you had an incident that has resulted in the acquisition with just the access to personally protected information? Or are you.. did you have an incident where maybe the systems that house the personal information were accessed, but there’s no evidence that the malware ever made it into the room where the family jewels are hidden and they were taken out. And that’s an important part of understanding whether you actually have a legal obligation to notify regulatory authorities or consumers. So the first step is always convening the team, putting it under privilege, calling your experts, and starting to investigate the important facts. Was this an outside threat, was it an insider threat? I know you’ve had experience a lot with investigating internal threats, which are on the rise these days as I would expect.

LN: And a lot of these incidents, it may be reported as a data breach, and the question is well, how did it happen? And sometimes, it’s not too uncommon that IT staff don’t receive the resources they request, and that data incidents happen as a result of being under-resourced. And in circumstances like that, there’s still a lot of pressure on the people managing IT, to not only run the organization ongoing but to deal with this whole new layer of troubles. So having that team in place beforehand where those relationships are there really helps.

KR: Yes

LN: And the other thing too is, you know, if there is a failure internally, it’s more difficult and less likely that you’re going to get the facts quickly if you’re using the team responsible in some way for the breach to report on what happened. I always recommend that after that initial meeting that preservation of key data occurs, and is offloaded outside the organization. You know, log files, certain key computers, email systems to the extent that they were modified so that there’s the ability to do that analysis. Because when an organization has an incident, it’s quite possible that all the data disappears, and the effort to cover the tracks.

KR: Or it’s not even, it may not be as nefarious as that. It could be that the teams are working so quickly a lot of the remediation plans are to thwart the malware and to remove it. But, in a lot of instances, you need to safely remove it and keep a copy of it, because you need to reverse engineer it. And understand how it got there, understand other signatures it might have; so being thoughtful, and we talk about this being thoughtful about evidence preservation is really critical, especially if you get to the point at which you do have a breach that requires notification. And litigation regulatory inquiry ensues, you will have been expected to preserve that evidence and show the chain of custody. Otherwise, you could have allegations of spoliation leveled against your company.

LN: And I’ve seen circumstances too where a legitimate data incident happens and we’re able to get it quickly and identify the impacted individuals. And sometimes it’s just been a few people; in a circumstance like that, it’s much easier to reach out to those individuals, make things right, and resolve the issue. And be able to report to them what happened. It’s much better than having to publish on your website and report to the attorney general that you had some massive data breach. So, not all data incidences are massive data breaches.

KR: That’s true, some of ’em impact you know, one or two individuals, and you may still have an obligation to notify them under the relevant law. But they don’t have to be the big massive breaches. And again, I think the great thing about the Sedona Conference Guide is that it’s, you know, it helps companies navigate small to big breaches. You know, it’s not intended to be the ultimate authority on the law in this area, because the law is ever-changing. But what it does is it helps companies issue spot from a practical perspective so that they know what laws they need to consult, and why and what issues they need to address, like for example, notifying your insurance carrier. One of the big questions we always get is, Well, we’re the victims, here; the company X is a victim of this cyber attack. Who’s going to pay for it?

LN: Yes.

KR: And so, insurance coverage for cyber incidents has is a really hot button issue these days. And so it’s important for companies to know in advance what their policies say, what the notification requirements are. Even if they just have a sniff of an incident – maybe it’s not a breach. So that the third party and first-party costs are covered, and that you’re working with your insurance carrier, and you’re working with your insurance council to ensure that coverage. And to make sure that you’re getting the right information to your insurance carrier about your forensic teams. Are they approved? What rate are they going to be reimbursed? What type of reporting do you have to do from a cost an expense perspective to your insurance carrier? So.

LN: And, it true that if companies use their own internal IT resources to do the investigation, that the insurance carriers usually won’t pay out their own internal resources?

KR: It really depends. It depends on the policy.

KR: It really depends on the policy. There are, in some instances, some policies would cover the first party staffing costs, so for example, if you had to pay staff overtime to work 24 hours a day to try and investigate, you may be able to claim that. But it really depends on your policy. There’s certain.. there’s certainly reimbursement line items for business disruption and business interruption. Or, you know the loss of business, loss profits line items, as a result of ransomware tax. But again, knowing your policy is a critical step in preparing.

LN: Where do you see the benefits of using an outside forensic investigator as opposed to internal IT to investigate when an incident happens?

KR: You know I think it’s two-fold, one, a lot of internal IT teams are taxed as it is with their day to day obligations. And if an incident is one that is medium-high critical, you want to be able to dedicate the resources to the incident to investigate swiftly, and to ensure that there’s no delay. And so pulling in a third-party forensic expert alleviates some of that burden and stress on the IT teams. And then separately and secondly, it also creates a level of objectivity that is.. that benefits the company in the event. Or in the unfortunate event, someone in the IT group may have made a mistake that caused the vulnerability. There’s less likely that that mistake would be covered up. Or there’s going to be more candor from the third party expert, the to management team say like, “Hey, this issue should have been addressed”. And it wasn’t, and now you know what thwarts may be in the event. You have some litigation down the road and you need to defend. But so I would say really sort of time and devotion of resources where needed, and objectivity.

LN: Great, well thanks a bunch for being on this show; this was great.

KR: Absolutely, thank you.

Part 1 of our 3-Part Series on Data Breach

Part 1 of our 3-Part Series

Part 2 0f our 3-Part Series on Data Breach

Part 2 of our 3-Part Series
Data Breach Incident

To Learn More About Sheppard Mullin / Kari Rollins

https://www.sheppardmullin.com/krollins

Cyber Insurance Coverage

Cyber insurance and security protection

Engima Forensics CEO & President Lee Neubecker and Tressler, LLP, Cyber Insurance Coverage Attorney Todd Rowe sit down for a video discussion. These experts stress the importance of understanding the full scope of your data risk in case of a cyber attack. Both agree cyber attacks are getting more and more sophisticated and urge every company no matter the size to take the necessary steps to protect themselves before a date breach occurs. Prepare your company by working with computer forensics experts and legal counsel and create a game plan to lessen the potential threat posed by a cyber attack. Tune in to find out more about cyber insurance and maximizing your potential for coverage when a cyber attack strikes.

Evolution of Cyber Insurance and Security

The transcript on Cyber Insurance Coverage follows:

Lee Neubecker: Hello, today I have Todd Rowe on the show. Todd is a specialist in cyber insurance related litigation and data breach litigation Todd, thanks for being on the show.

Todd Rowe: No, thank you, this is great. I appreciate it.

Lee Neubecker: And so, Todd, can you tell us a little bit about how cyber has evolved over the last five years?

Todd Rowe: It’s wide open, I mean, we’ve seen everything. First, I think, when we look at the threats, and the evolution of a cyber threat or a privacy threat, we’ve seen things from the classic data breach, which would have been the target data breaches move into more of a social engineering component and tricking users that way, by emails and things like that. Getting around the technology safeguards a little bit and getting in there and tricking people is the biggest development I think we’ve seen in the evolution of threats.

Lee Neubecker: And, how has coverage evolved for cyber insurance over the last five years?

Todd Rowe: Yeah, I mean, we’ve seen huge leaps in insurance coverage and what the policies look like and what we would call cyber policies. We’ve seen the developments first in what would be considered first party insurance coverage, which would be actually responding to the damage that happens. And then, the third party liability piece, responding and giving a defense in the case of an incident. While we’ve seen a lot of developments, I think, with cyber insurance, we still don’t see the uniform policy language. So, there’s still a lot of uncertainty there, but we’ve seen some big developments recently.

Lee Neubecker: So, when a company suspects that they have a data breach incident, what’s your first role on the ground, talking with the client in terms of what you’re advising them?

Todd Rowe: Yeah, all things being equal, we would have loved to have been in there before there was an incident. Preparation is always the best scenario, and what preparation should look like is a corporation or a business working with forensics and legal and getting a game plan together, assessing what those threats might be, and what to do if there are those threats. But, afterward, hopefully you have the game plan. If you don’t, it’s pretty much all boots on ground, getting in there with forensics and legal, and understanding what the threat was, and making sure that the threat is extinguished, and moving on and notifying people that were involved in the threat.

Lee Neubecker: I know from experience that companies that take the time to proactively assemble their team before something happens, and bring in legal, forensics, and outside help, are often in a much better situation when something goes down. They face less downtime, their business can be back up and running. I think the biggest challenge I’ve seen is when companies have no idea what is legitimately their, what their devices are, because when you’re trying to assess are we still compromised, you need to know what good looks like. And if you haven’t mapped out your organization’s IT resources, that really creates a problem.

Todd Rowe: From our point, there’s always been, it’s been a tough sell to go in and try to get in before there’s an incident. A lot of corporations don’t want to think about something until it actually happens. But, the sort of, the wisdom in getting in there beforehand is getting that game plan together, figuring out what data you’re storing and what data you can get rid of. And so, the more data you can get rid of, the better you do on cutting down your liability in the end. Also, working on technology safeguards and having those in place. So, working with forensics, legal, and even PR a little bit really helps in the long run, no doubt about it.

Lee Neubecker: So, if you have cyber insurance, does that mean that you don’t have to worry about a cyber incident?

Todd Rowe: The thought right now, I think, and it has been for a number of years, is an incident’s going to happen, and it just, you need to go in and do things to prep. And while we were discussing earlier, the preparation that you need to do to get sort of an inventory, cyber insurance is another piece of that preparation that needs to be in place. Once again, working with professionals, insurance professionals, brokers, forensics, legal, on what that cyber product that best suits your needs, is the best situation to have that in place once something happens. It will happen, it’s just a matter of having all the right pieces in place when it does happen.

Lee Neubecker: So, if a company has, is storing biometric information, which could even include video cam footage of a certain resolution, what are some of the unique challenges that are raised by some of the laws here in Illinois and elsewhere?

Todd Rowe: Really, being in Illinois is, and I don’t want to use a cliche, but is on the cutting edge of biometric data. And we have BIPA, which is the Biometric Information Protection Act. And what that does is it protects a lot of things like face scans, and finger and thumbprint templates. And, I think one of the biggest issues we see is recently, now BIPA’s been around for 10 years or so, it’s been around for a long time. But we’re seeing a huge uptick in BIPA cases right now, because a number of businesses went in and put in timekeeping systems for their employees that work on thumb and finger scans rather than the old punch card systems. So, the law didn’t change, but the technology did, and so now, there was warnings that should have been put in place before you take that biometric data with those systems. So, they put the systems in, and they didn’t necessarily have the law in place. That’s a perfect scenario where we could’ve had forensics and legal all working together beforehand to avoid a lot of liability, so.

Lee Neubecker: So, what do you see happening in the future with the insurance coverage laws? Especially, you know, one of the concerns I have is, you know, there’s this act of war exclusion, and if you have cyber insurance and you’re hacked by someone outside of the country, what happens there, is that covered?

Todd Rowe: It depends, really, on the policy form. So, we’ve seen, once again, Illinois is on the cutting edge of that law as well. A lot of insurance policies, CGL, commercial liability policies, and even some cyber policies to some extent, have terrorism or war exclusions, excluding acts of war. And that was fine when we were looking at Pearl Harbor, perhaps, or something like a real act of war where a government might declare war on a country, and some damage that results of that would be an act of war. But, with privacy and hackers, and hackers sitting in nation states, but maybe not being an agent of that nation state. So, the case that we have right now that gives a good example of this is a Zurich case, insurance case with Mondelez, they’re a snack food maker. And, Zurich denied coverage, and it looks like the hacker may have come from perhaps China or North Korea. So, what do you do with that, as far as, if you’re going to exclude coverage for that, nobody’s declared war on any of those countries, so that’s going to be a struggle. And I think that demonstrates some of the strengths and weaknesses of cyber coverage right now, as it stands.

Lee Neubecker: And, what do you see happening, what’s the likelihood that the federal government stops in, steps up to the plate should a major data breach happen that could be considered an act of war?

Todd Rowe: Yeah, I mean, well first off, the government brings up another point, as far as right now as it stands, privacy and data laws, we just have a patchwork of things here in the U.S. Of course, there’s frameworks that have been adopted in, for example, the E.U. with GDPR, and we don’t really have that in the U.S. So, we first don’t really have a clear idea of who would do the response in the government. Would it be the Federal Trade Commission, or who would handle that type of situation? So, we have a lot of state laws, so we have a lot of problems like that. And, we have California, which is adopting some stronger guidelines as well. So, what would happen there as far, it’s going to be really left to ironing things out with the insurers and the insurance. Once again, what a great opportunity to sort of look at this issue before an incident happens. You really wouldn’t want to get into this complex of an issue when you’re trying to respond to an incident. So, another reason is, to go and prep a little bit, would be exactly what we’re discussing right now.

Lee Neubecker: Yeah, I know from experience that clients of ours that have had data breach incidents, if they’re working with someone that’s experienced litigation professional in the area of cyber and insurance, the likelihood that, you know, my firm’s fees get covered goes way up, and there are, there’s a potential for coverage of that forensic response. But ideally, you want to have your own team. You want to be picking your team. You don’t want the insurance companies assigning your people, if you can avoid it.

Todd Rowe: Yeah, a lot of insurers do have panels, and there are a lot of insurers that prefer that, because they don’t know where to go. So, that actually, if there’s an incident, that helps out. But, the best scenarios, and we’ve been involved in a lot of responses, and the best scenario is when we’ve had an opportunity to sit down, and maybe you and I talk, the forensic side of things and the legal side of things, and figuring out exactly how we can cooperate and what that response would look like. So, absolutely, if you can sit down and chat beforehand, you’re going to really save yourself a lot of stress and pressure.

Lee Neubecker: Well, thanks a bunch Todd, for being on the show. This has been great.

Todd Rowe: Absolutely, thank you so much, I appreciate it.

More articles that relate to data breach response and cyber insurance coverage follow:

https://enigmaforensics.com/blog/secure-home-from-cyber-attacks/
https://enigmaforensics.com/news/wgn-cyber-security-chicago-2018/

https://www.thebalancesmb.com/what-s-covered-under-a-cyber-liability-policy-462459