By Arshad Noor, CTO, StrongKey
Technology is evolving so rapidly that it leaves IT security professionals gasping for breath.
Keeping a financial services organization’s data safe can seem like mission impossible, but focusing on the application layer will eliminate the vast majority of data breach risks.
Within this layer, the information received, stored and processed must have the following three properties to ensure security:
- Confidentiality, where appropriate, and
This article provides best practices for banks and other financial institutions to make sure that their data meet these three criteria, also referred to as ACT.
What is Authentic Data?
When a power company bills a customer for power consumption, the meter reading must pertain to the specific customer, originate from an authorized meter and be accurate. This makes the information authentic. When data is accepted as being “authentic,” it establishes an initial level of trust in the data. However, an initial level of trust does not necessarily make data trustworthy later, unless the proper controls are in place.
Not all devices that produce data have security components built into them to guarantee data authenticity—the cost is still too high for general-purpose computing. As a result, the world has learned to use proxies to attest to the authenticity of information. The meter-reader is trained to identify customers’ premises, read meters and record data into information systems, all of which are proxies for the data’s authenticity.
The technology used to authenticate humans to information systems is the vulnerability in such a proxy-based system. If an information system can be tricked into accepting a masquerader as the “authentic source” (which most current systems can) then assumptions that data are authentic fall apart.
In addition to authenticity, confidentiality is another critical data attribute necessary to preserve stable business ecosystems. Data breaches that destroy confidentiality weaken the foundations of such ecosystems. Some of the largest and best-known financial services organizations in the world have been affected by data breaches, including Equifax,JPMorgan Chase, Bangladesh Central Bank through the Federal Reserve of New York and Veridian Credit Union.
The reason for most data breaches is the incorrect assumption that it is easier to stop “barbarians at the gate” rather than actually protect sensitive data in the application. Financial institutions over-invest in network-based security tools, such as firewalls, anti-virus, malware detection or intrusion prevention, rather than invest in the control mechanism that provides the highest level of data protection: application-level encryption.
Financial services organizations that use anything other than application-level encryption have a higher probability of getting breached. Data security today requires multiple strategies to deter attackers. Short of eliminating sensitive data from a system, encrypting and decrypting data within authorized applications (combined with a hardware-backed, cryptographic key management system) provides strong data protection control. When combined with FIDO-based strong authentication, risk management becomes formidable.
Making Data Trustworthy
Being able to trust the data is the third key to security. However, because of how standard database management systems are designed, it is always possible for a privileged user to modify data-at-rest directly without the knowledge of the application or users who created the record.
This risk is not easily mitigated, even when controls are in place so that the database system tracks changes and stores audit logs offline that privileged users cannot access. This is because even database management systems use usernames and passwords to authenticate users and applications. The probability of an attacker using a legitimate user’s compromised password to modify information in the database is very high—creating a breakdown in data trustworthiness.
Most applications today function on the premise that information stored within their databases is accurate. Even application programmers and system administrators are constrained in protecting the integrity of data for a variety of reasons: lack of knowledge, lack of resources, lack of business imperative, etc. It is possible to implement FIDO-based strong authentication and application-level encryption but still remain vulnerable to integrity attacks on data unless additional security capabilities are designed into the system.
Developing a data security strategy to preserve trustworthiness includes implementing digital signatures for both user transactions and stored database records. Transaction digital signatures using FIDO-based protocols are one of the strongest risk mitigation protection mechanisms to ensure only authorized users are capable of modifying stored data.
Similarly, transactions stored in databases must be secured using digital signatures generated by the applications themselves; the cryptographic key performing application-level signatures must be inaccessible to any human user—privileged or otherwise. Upon reading a database record, the application must verify the signature of the retrieved record before attempting to use it. Only when the signature is verified successfully can the application be sure it is using the same data it stored previously.
Financial institutions are responsible to both their customers, who are entrusting them with their personal information, and to a variety of data security and privacy regulations. Defending data through strong authentication, encryption and digital signatures provides extraordinarily high levels of security because it assumes an attacker may already be within the network and/or host, and if designed correctly into the application, can still protect data from being compromised.
When designed with appropriate cryptographic key management, authenticity, confidentiality and trustworthiness (ACT) protections create formidable barriers. While they are not infallible, they are the strongest risk mitigation technologies available today. In the past, implementation was a challenge due to the cost and complexity of integrating such technologies into business applications. But with today’s new market offerings, this is no longer true.
Today’s information systems work under an enormous security burden. Attackers from the far corners of the earth are capable of compromising systems as easily as an attacker next door. The above guidelines create powerful mechanisms to protect financial information, users and investments. Following them will ensure the authenticity, confidentiality and trustworthiness of your data.
About the author:
Arshad Noor is the CTO of StrongKey, a Silicon Valley-based company focused on securing data through key management, strong authentication, encryption and digital signatures. He has 32 years of experience in the Information Technology sector, of which, more than 17 were devoted to architecting and building key-management infrastructures for dozens of mission-critical environments around the world, including Central Banks. He has been published in periodicals and journals, as well as authored XML-based protocols for two Technical Committees as OASIS. He is a member of the FIDO Alliance, and also a frequent speaker at forums such as RSA, ISACA, OWASP and the ISSE. He can be reached at [email protected].
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg
LONDON (Reuters) – The Bank of England might need to cut interest rates below zero later this year or in 2022 if a recovery in the economy disappoints, especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday.
Vlieghe said he thought the likeliest scenario was that the economy would recover strongly as forecast by the central bank earlier this month, meaning a further loosening of monetary policy would not be needed.
Data published on Friday suggested the economy had stabilised after a new COVID-19 lockdown hit retailers last month, while businesses and consumers are hopeful a fast vaccination campaign will spur a recovery.
Vlieghe said in a speech published by the BoE that there was a risk of lasting job market weakness hurting wages and prices.
“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative Bank Rate as the tool to implement the stimulus,” he said.
“The time to implement it would be whenever the data, or the balance of risks around it, suggest that the recovery is falling short of fully eliminating economic slack, which might be later this year or into next year,” he added.
Vlieghe’s comments are similar to those of fellow policymaker Michael Saunders, who said on Thursday negative rates could be the BoE’s best tool in future.
Earlier this month the BoE gave British financial institutions six months to get ready for the possible introduction of negative interest rates, though it stressed that no decision had been taken on whether to implement them.
Investors saw the move as reducing the likelihood of the BoE following other central banks and adopting negative rates.
Some senior BoE policymakers, such as Deputy Governor Dave Ramsden, believe that adding to the central bank’s 875 billion pounds ($1.22 trillion) of government bond purchases remains the best way of boosting the economy if needed.
Vlieghe underscored the scale of the hit to Britain’s economy and said it was clear the country was not experiencing a V-shaped recovery, adding it was more like “something between a swoosh-shaped recovery and a W-shaped recovery.”
“I want to emphasise how far we still have to travel in this recovery,” he said, adding that it was “highly uncertain” how much of the pent-up savings amassed by households during the lockdowns would be spent.
By contrast, last week the BoE’s chief economist, Andy Haldane, likened the economy to a “coiled spring.”
Vlieghe also warned against raising interest rates if the economy appeared to be outperforming expectations.
“It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
Higher interest rates were unlikely to be appropriate until 2023 or 2024, he said.
($1 = 0.7146 pounds)
(Reporting by David Milliken; Editing by William Schomberg)
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken
LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month hit retailers, and business and consumers are hopeful the vaccination campaign will spur a recovery, data showed on Friday.
The IHS Markit/CIPS flash composite Purchasing Managers’ Index, a survey of businesses, suggested the economy was barely shrinking in the first half of February as companies adjusted to the latest restrictions.
A separate survey of households showed consumers at their most confident since the pandemic began.
Britain’s economy had its biggest slump in 300 years in 2020, when it contracted by 10%, and will shrink by 4% in the first three months of 2021, the Bank of England predicts.
The central bank expects a strong subsequent recovery because of the COVID-19 vaccination programme – though policymaker Gertjan Vlieghe said in a speech on Friday that the BoE could need to cut interest rates below zero later this year if unemployment stayed high.
Prime Minister Boris Johnson is due on Monday to announce the next steps in England’s lockdown but has said any easing of restrictions will be gradual.
Official data for January underscored the impact of the latest lockdown on retailers.
Retail sales volumes slumped by 8.2% from December, a much bigger fall than the 2.5% decrease forecast in a Reuters poll of economists, and the second largest on record.
“The only good thing about the current lockdown is that it’s no way near as bad for the economy as the first one,” Paul Dales, an economist at Capital Economics, said.
The smaller fall in retail sales than last April’s 18% plunge reflected growth in online shopping.
BORROWING SURGE SLOWED IN JANUARY
There was some better news for finance minister Rishi Sunak as he prepares to announce Britain’s next annual budget on March 3.
Though public sector borrowing of 8.8 billion pounds ($12.3 billion) was the first January deficit in a decade, it was much less than the 24.5 billion pounds forecast in a Reuters poll.
That took borrowing since the start of the financial year in April to 270.6 billion pounds, reflecting a surge in spending and tax cuts ordered by Sunak.
The figure does not count losses on government-backed loans which could add 30 billion pounds to the shortfall this year, but the deficit is likely to be smaller than official forecasts, the Institute for Fiscal Studies think tank said.
Sunak is expected to extend a costly wage subsidy programme, at least for the hardest-hit sectors, but he said the time for a reckoning would come.
“It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” he said.
Some economists expect higher taxes sooner rather than later.
“Big tax rises eventually will have to be announced, with 2022 likely to be the worst year, so that they will be far from voters’ minds by the time of the next general election in May 2024,” Samuel Tombs, at Pantheon Macroeconomics, said.
Public debt rose to 2.115 trillion pounds, or 97.9% of gross domestic product – a percentage not seen since the early 1960s.
The PMI survey and a separate measure of manufacturing from the Confederation of British Industry, showing factory orders suffering the smallest hit in a year, gave Sunak some cause for optimism.
IHS Markit’s chief business economist, Chris Williamson, said the improvement in business expectations suggested the economy was “poised for recovery.”
However the PMI survey showed factory output in February grew at its slowest rate in nine months. Many firms reported extra costs and disruption to supply chains from new post-Brexit barriers to trade with the European Union since Jan. 1.
Vlieghe warned against over-interpreting any early signs of growth. “It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
“We are experiencing something between a swoosh-shaped recovery and a W-shaped recovery. We are clearly not experiencing a V-shaped recovery.”
($1 = 0.7160 pounds)
(Editing by Angus MacSwan and Timothy Heritage)
Oil extends losses as Texas prepares to ramp up output
By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Brent crude futures were down 33 cents, or 0.5%, at $63.60 a barrel by 11:06 a.m. (1606 GMT) U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1%, to $59.92.
This week, both benchmarks had climbed to the highest in more than a year.
“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.
“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.
Oil fell despite a surprise drop in U.S. crude stockpiles in the week to Feb. 12, before the big freeze. Inventories fell by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]
The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.
“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.
(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Jason Neely, David Goodman and David Gregorio)
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