The Sony Pictures Entertainment hack: lessons for business leaders

The November 2014 hack against Sony Pictures Entertainment reads like something straight out of a low-budget movie: employees walk into work one morning to see red skulls appear on their computer monitors, with threats of destruction unless certain demands are met. Move the clock forward several months and while Sony is still picking up the pieces, the security community is trying to figure out if this is just another data breach or a watershed moment in the cat-and-mouse game that defines this line of work.

Plenty of retrospection has occurred, both inside Sony and out, and (rightly so) the conversation has centered on what could have been done differently to prevent, detect and respond to this unprecedented hack. What some people think of as a problem that is limited to cyber-security is actually a problem that spans all aspects of a business.

What lessons can business leaders, outside of the field of cyber-security, learn from the hack?

Enterprise Resiliency

On Monday, November 24th the hacking group, Guardians of Peace or GOP, made the attack known to both Sony and to the public at the same time. Sony management made the decision to shut down computer systems: file servers, email, Internet access, access for remote employees — all computing equipment. Under the circumstances, shutting down a global company was a bold, but necessary, thing to do. The depth and scope of the breach wasn’t completely known at the time and those in charge felt it was important to stop the bleeding and prevent further damage from occurring.

Sony systems were down for over six days. In that time, employees used other methods to communicate with each other, such as text messaging and personal email; in other words, they reverted to manual workarounds. Manual workarounds are the cornerstone of a good business continuity plan, which helps firms be more resilient during an emergency. During a crisis or a serious incident, a company has to assume that access to any computing resources could be unavailable for an extended period of time. There is no way of knowing if Sony had business continuity plans that included an extended outage of IT equipment or whether they evoked them, but one thing is clear — most companies do not factor in this type of disaster. Most business continuity planning revolves around localized disasters, such as terrorist attacks, hurricanes and severe weather. The outage that Sony experienced was global, total and extended.

If you manage a department, make sure you have a printed business continuity plan that includes call trees, manual workarounds and information on how to get a hold of each other if company resources are unreachable. Many companies’ plans assume a worst-case scenario consisting of a building or facility being inaccessible, such as a power outage or mandatory evacuation due to a natural disaster, but we are in a new era in which the worst case could be the complete shut-down of all computing equipment. Plan for it.

Defense in Depth

Defense in depth is a concept from the military that has been adopted by many in the cyber-security space. The basic idea is to have rings or layers of defense, rather than putting all your resources in one method. Think of a medieval castle under assault. The defenders are not going to place all of their men in front of the door of the throne room to protect the King. They dig a moat to make it harder to reach the door, raise bridges, close gates, place archers in parapets, pour hot oil on attackers using ladders, strategically deploy swordsmen inside the castle for when it is breached and a special King’s Guard as a last resort.

This method is very effective because if one method of defense fails, there are still others for the attackers to overcome. This also delays the attackers, buying valuable time for the defender to respond.

This technique is used in the cyber-security space in a similar way, as one would deploy resources to defend a castle. Many companies already implement some form of defense in depth, but the Sony hack is a good reminder to audit defenses and ensure you have the right resources in the right places. From outside the network coming in, firewalls and intrusion detection systems (IDS) are deployed. Computers are protected with antivirus and encryption. The most valuable data (in Sony’s case, presumably unreleased movies and internal emails) should be protected with a separate set of firewalls, intrusion detection, etc. — a King’s Guard. Strong company policies and security awareness training are also used as defense measures.

Caerphilly Castle, Caerphilly South Wales

Admittedly, this is a lot — and it is only half of the story. Protecting a company relies just as much on resources outside of the security department as it does resources inside the security department. Do you spend a million dollars a year on security measures but don’t have any method of controlling access to and from your physical building? Can someone waltz in the front door wearing an orange vest and a hardhat and walk off with the CFO’s laptop? Do you encrypt every laptop but don’t perform criminal background checks on employees, consultant and contractors? Maybe you spend a fortune on penetration testing your web sites but don’t do any security checks on vendors that have access to the company network. Target learned this lesson the hard way.

In order to create defense in depth, it is crucial to have the commitment of other departments such as human resources, facilities management, vendor management, communications and others, as they all contribute to the security posture of a company. You can’t rely on your security department to protect the whole company. It truly is a team effort that requires cooperation across all levels in a company. Just like defending a castle. Everyone has a job to do.

Managing Risk

Sony has been criticized for what have been perceived to be lax security measures. Some of the criticism is Monday morning quarterbacking and some of it is valid. In an article for CIO Magazine in 2007, the Executive Director of Sony Pictures Entertainment, Jason Spaltro, was profiled in a cringe-worthy piece called “Your Guide to Good-Enough Security.” In it, Spaltro brags about convincing a SOX auditor not to write up weak passwords as a control failure and explains that it doesn’t make business sense to spend $10 million on fixing a security problem that would only cause $1 million in loss.

He’s right, partly. It doesn’t make sense to spend 10 times more on a problem than the asset is worth. This isn’t a control failure or a problem with perception — this is a risk management problem. The first question a business leader needs to ask is, “Where did you come up with the $1 million in loss figure and is it accurate?” The viewpoint taken by Sony doesn’t fully take into account the different types of losses that a company can experience during a data breach. The Sony breach clearly demonstrates a failure of security controls in several different areas, but the real failure is the firm’s inability to measure and manage risk.

A good risk analysis program identifies an asset, whether it may be employee health information or movie scripts, or even reputation and investor confidence. From there, any threat that can act against an asset is identified, with corresponding vulnerabilities. For example, company intellectual property stored on file servers is a very important asset, with cybercriminals being a well-resourced and motivated threat. Several vulnerabilities can exist at the same time, ranging from weak passwords to access the file server to users that are susceptible to phishing emails that install malware on their systems.

Quantifying Risk

A rigorous risk analysis will take the aforementioned data and run it through a quantitative risk model. The risk analyst will gather data of different types of loss events such as productivity loss, loss of competitive advantage, asset replacement cost, fines, judgments — the list goes on. The final risk assessment will return an annualized exposure. In other words, a data breach could occur once every ten years at a cost of $100 million per incident; therefore, the company has an annualized exposure of $10 million. This makes it very easy for business managers to run a cost benefit analysis on security expenditures. If the analysis is done correctly and sound methods are used, security sells itself.

Components of a risk analysis

In other words, Spaltro is right. You would never spend more on a control than the cost of an incident. However, not all risk is communicated to management in a way that allows for informed business decisions. As a business leader, look at how risk is being communicated to you. Is risk being communicated in a way that makes business decisions easy (dollars) or are softer methods being used, such as, “This vulnerability is a high risk!” (High compared to what? What exactly does High mean?)

In many other aspects of business and in other fields, risk is communicated in terms of annualized exposure and run through a cost-benefit analysis. Information Security, however, is lagging behind and the Sony hack is proof that the field must mature and adopt more advanced methods of quantifying and communicating risk. Decision makers must insist on it.

Conclusion

There are some battles in ancient history that strategists never tire of studying. Lessons and tactics are taught in schools to this day and employed in the battlefield. The Sony Hack will go down in history as one such battle that we will continue to learn from for years to come. Sony had strategic choices to make in the moment and those are continuing to play out in the media, and across the cyber-security landscape. What we can glean from this today is that the firms that are winning are the firms that look at cyber-security on a macro, holistic level. Individual components of successful program are interconnected throughout all aspects of the business, and it is through this understanding that business leaders can stay one step ahead.