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The Fluid CFO: Adapting to the Evolution of Cybersecurity

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The Fluid CFO: Adapting to the Evolution of Cybersecurity

Alan Levine, Security Advisor to Wombat Security, a division of Proofpoint 

While many may see the role of the Chief Financial Officer as relatively static, today this couldn’t be further from the truth. The role of the CFO has in fact been constantly developing over the last twenty years, with one of the catalysts for this change being digital transformation. This is partly because many of the tasks that have traditionally been attributed to the CFO, such as producing and analysing financial statements, have now largely been automated. Because of this, the CFO’s role is now more strategic. Naturally, CFOs must have complete control over the business’s finances, ensuring constant growth and minimising loss. Furthermore, they must also be adhering to an increasing number of stringent regulatory requirements and must protect against all manner of risks. 

The Modern, Multi-tasking CFO

Effectively, the CFO’s role has expanded to include a number of other important business facets aside from simply crunching numbers. In fact, Deloitte has commented on the changing nature of the CFO’s role and has argued that there are now ‘four faces’ that they are expected to reflect; the steward, the operator, the strategist and the catalyst. The steward, “…preserv[es] the assets of the organisation by minimising risk and getting the books right,” and the operator, “…run[s] a tight finance operation that is efficient and effective”.These encompass the CFOs traditional roles. Additional are the two more dynamic ‘faces’ which require the CFO to “…shape overall strategy and direction,” as a strategist and instil “…a financial approach and mindset throughout the organisation,” as a catalyst.

As strategists, the modern CFO therefore has a role to play across multiple business departments, including security. Cybersecurity needs to become a high priority for the CFO, particularly as cyberattacks have become much more costly due to the growth of ransomware. Furthermore, on a departmental level, the finance department holds a wealth of sensitive data that cybercriminals would love to get their hands on. It is therefore the CFO’s responsibility to advise other board members, as well as the entirety of the organisation, on the potential financial impact of cybercrime and ensure that funds are allocated for preventing and containing incidents. Frankly, it’s impossible to argue that cybercrime isn’t a financial concern. Verizon’s 2018 Data Breach Investigations Report(DBIR) found that 76% of the breaches were financially motivated and scams, such as business email compromise (BEC), strike directly at the heart of the balance sheet.

 Cybercrime: One Man’s Loss is Another Man’s Gain 

Cybercrime is a booming business. A recent independent research study commissioned by Bromium revealed that global cybercrime generates (conservatively)$1.5 trillion a year in revenue.

They noted that, “If cybercrime was a country it would have the 13th highest GDP in the world.” It has now been predicted that the cost of global cybercrime damage will reach $6 trillion annually by 2021.

Verizon’s DBIR also revealed that phishing attacks and pretexting(in which cybercriminals pose as trusted contacts in order to gather information and/or lay a trap for unsuspecting employees)represents 98% of social cyber-incidents and causes93% of data breaches. Importantly, the report identified that finance and HRare the departments most likelyto be targeted in pretexting attacks, which can often result in the execution of fraudulent wire transfers. With financial teams being a particular target, it is critical that CFOsare part of the team responsible foraddressing the real business risks ofcybercrime. They must also be given the appropriate training to be able to identify and mitigate risks; this training must also go out to their teams, with a particular focus on identifying threats pertinent to them, such as Business Email Compromise (BEC)

The Growing Threat of Business Email Compromise (BEC) 

BEC in particular is a growing threat targeting organisations of all sizes around the globe. Last year, the FBI identified BEC as a ‘hot topic’ that businesses needed to be made more aware of.  And, last year alone, they identified more than 15,690 BEC incidents, resulting in a loss of over $675million.

The Internet Crime Complaint Centre (IC3) has identified the five main BEC scenarios by which this scam is executed. A cybercriminal can spoof an invoice request from a foreign supplier and trick businesses into completing a fraudulent wire transfer; a hacked or spoofed email account of a business can initiate a request for a wire transfer(this is also referred to as ‘CEO fraud’); a business contact or customer can receive a fraudulent correspondence with requests for invoice payments from a compromised email;a cybercriminal can impersonate trusted individuals, such as lawyers, and request outstanding or time sensitive invoices to be paid; lastly, a criminal can make fraudulent requests for employees’ tax identifiers or other personally identifiable information (PII).

As can be noted from the above, these tailored attacks are often multi-faceted, mixing phone, fax and email communications. Cybercriminals are experts in social engineering and will also execute these scams over an extended time period in order to establish a basis of trust with the target, meaning their attacks are more likely to be a success. For example, criminal group Gold Galleontargetedglobal maritime businesses and related companies with a BEC campaign that utilised fraudulent invoices and financial documents. Gold Galleon attempted to steal $4million over a seven-month span using fraudulent invoice requests but were foiled just in time by security experts.

In order to combat this threat to the finance team, CFOs should regularly examine policies and procedures within their downlines and tighten up any potential weaknesses. Something as simple as requiring voice-to-voice confirmation with a known individual prior to executing a wire transfer can help to identify and stop a BEC attack. CFOsmust be willing to go through the formal steps to prove their identities as well, becauseit is often high-level executives that are being impersonated via email in order to secure these payments.

Lights, Camera, ACTION …What Steps Can a CFO Take? 

The growing cyber threatapplies to the entirety of the C-Suite, and the CFO should encourage fellow C-Level executives to also take an in-depth interest. A top-down cybersecurity culture that has senior management leading by example can play a significant role in mitigating against the risk ofsocial engineering–driven fraud. CFOs should have a detailed understanding of how the security budget is spent andshould proactively reach across the aisle and develop a good working relationship with the CISOs, CSOs, and other cybersecurity “spenders” in their organisations. Cybercrime is not just a concern for cybersecurity professionals – it most certainly affects the finance team, and the organisation in its entirety.

As the role of the CFO evolves so must their willingness to accept accountability for their roles in implementing a businesses’ security defences. As a prime target of attackers, the CFO needs to become a cybersecurity stakeholder, advocate and champion, as ultimately this will benefit the security and finances of the organisation a whole.

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Oil extends losses as Texas prepares to ramp up output

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Oil extends losses as Texas prepares to ramp up output 1

By Ahmad Ghaddar

LONDON (Reuters) – Oil prices fell from recent highs for a second day on Friday as Texas energy firms began to prepare for restarting oil and gas fields shuttered by freezing weather.

Brent crude futures were down $1.16, or 1.8%, to $62.77 per barrel, by 1150 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell $1.42, or 2.4%, to $59.10 a barrel.

Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude oil production and 21 billion cubic feet of natural gas, according to analysts.

Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.

However, firms in the region on Friday were expected to prepare for production restarts as electric power and water services slowly resume, sources said.

“The market was ripe for a correction and signs of the power and overall energy situation starting to normalise in Texas provided the necessary trigger,” said Vandana Hari, energy analyst at Vanda Insights.

Oil fell despite a surprise fall in U.S. crude stockpiles in the week to Feb. 12, before the 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 both nations returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons.

While the thawing relations could raise the prospect of reversing sanctions imposed by the previous U.S. administration, analysts did not expect Iranian oil sanctions to be lifted anytime soon.

“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,” StoneX analyst Kevin Solomon said.

(Additional reporting by Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; editing by Jason Neely)

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Analysis: Carmakers wake up to new pecking order as chip crunch intensifies

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Analysis: Carmakers wake up to new pecking order as chip crunch intensifies 2

By Douglas Busvine and Christoph Steitz

BERLIN (Reuters) – The semiconductor crunch that has battered the auto sector leaves carmakers with a stark choice: pay up, stock up or risk getting stuck on the sidelines as chipmakers focus on more lucrative business elsewhere.

Car manufacturers including Volkswagen, Ford and General Motors have cut output as the chip market was swept clean by makers of consumer electronics such as smartphones – the chip industry’s preferred customers because they buy more advanced, higher-margin chips.

The semiconductor shortage – over $800 worth of silicon is packed into a modern electric vehicle – has exposed the disconnect between an auto industry spoilt by decades of just-in-time deliveries and an electronics industry supply chain it can no longer bend to its will.

“The car sector has been used to the fact that the whole supply chain is centred around cars,” said McKinsey partner Ondrej Burkacky. “What has been overlooked is that semiconductor makers actually do have an alternative.”

Automakers are responding to the shortage by lobbying governments to subsidize the construction of more chip-making capacity.

In Germany, Volkswagen has pointed the finger at suppliers, saying it gave them timely warning last April – when much global car production was idled due to the coronavirus pandemic – that it expected demand to recover strongly in the second half of the year.

That complaint by the world’s No.2 volume carmaker cuts little ice with chipmakers, who say the auto industry is both quick to cancel orders in a slump and to demand investment in new production in a recovery.

“Last year we had to furlough staff and bear the cost of carrying idle capacity,” said a source at one European semiconductor maker, who spoke on condition of anonymity.

“If the carmakers are asking us to invest in new capacity, can they please tell us who will pay for that idle capacity in the next downturn?”

LOW-TECH CUSTOMER

The auto industry spends around $40 billion a year on chips – about a tenth of the global market. By comparison, Apple spends more on chips just to make its iPhones, Mirabaud tech analyst Neil Campling reckons.

Moreover, the chips used in cars tend to be basic products such as micro controllers made under contract at older foundries – hardly the leading-edge production technology in which chipmakers would be willing to invest.

“The suppliers are saying: ‘If we continue to produce this stuff there is nowhere else for it to go. Sony isn’t going to use it for a Playstation 5 or Apple for its next iPhone’,” said Asif Anwar at Strategy Analytics.

Chipmakers were surprised by the panicked reaction of the German car industry, which persuaded Economy Minister Peter Altmaier to write a letter in January to his counterpart in Taiwan to ask its semiconductor makers to supply more chips.

No extra supplies were forthcoming, with one German industry source joking that the Americans stood a better chance of getting more chips from Taiwan because they could at least park an aircraft carrier off the coast – referring to the ability of the United States to project power in Asia.

Closer to home, a source at another European chipmaker expressed disbelief at the poor understanding at one carmaker of how it operates.

“We got a call from one auto maker that was desperate for supply. They said: Why don’t you run a night shift to increase production?” this person said.

“What they didn’t understand is that we have been running a night shift since the beginning.”

NO QUICK FIX

While Infineon, the leading supplier of chips to the global auto industry, and Robert Bosch, the top ‘Tier 1’ parts supplier, both plan to commission new chip plants this year, there is little chance of supply shortages easing soon.

Specialist chipmakers like Infineon outsource some production of automotive chips to contract manufacturers led by Taiwan Semiconductor Manufacturing Co Ltd (TSMC), but the Asian foundries are currently prioritising high-end electronics makers as they come up against capacity constraints.

Over the longer term, the relationship between chip makers and the car industry will become closer as electric vehicles are more widely adopted and features such as assisted and autonomous driving develop, requiring more advanced chips.

But, in the short term, there is no quick fix for the lack of chip supply: IHS Markit estimates that the time it takes to deliver a microcontroller has doubled to 26 weeks and shortages will only bottom out in March.

That puts the production of 1 million light vehicles at risk in the first quarter, says IHS Markit. European chip industry executives and analysts agree that supply will not catch up with demand until later in the year.

Chip shortages are having a “snowball effect” as auto makers idle some capacity to prioritize building profitable models, said Anwar at Strategy Analytics, who forecasts a drop in car production in Europe and North America of 5%-10% in 2021.

The head of Franco-Italian chipmaker STMicroelectronics, Jean-Marc Chery, forecasts capacity constraints will affect carmakers until mid-year.

“Up to the end of the second quarter, the industry will have to manage at the lean inventory level,” Chery told a recent Goldman Sachs conference.

(Douglas Busvine from Berlin and Christoph Steitz from Frankfurt; Additional reporting by Mathieu Rosemain and Gilles Gillaume in Paris; Editing by Susan Fenton)

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Aussie and sterling hit multi-year highs on recovery bets

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Aussie and sterling hit multi-year highs on recovery bets 3

By Tommy Wilkes

LONDON (Reuters) – The Australian dollar rose to near a three-year high and the British pound scaled $1.40 for the first time since 2018 on optimism about economic rebounds in the two countries and after the U.S. dollar was knocked by disappointing jobs data.

The U.S. currency had been rising in recent days as a jump in Treasury yields on the back of the so-called reflation trade drew investors. But an unexpected increase in U.S. weekly jobless claims soured the economic outlook and sent the dollar lower overnight.

On Friday it traded down 0.3% against a basket of currencies, with the dollar index at 90.309.

The Aussie rose 0.8% to $0.784, its highest since March 2018. The currency, which is closely linked to commodity prices and the outlook for global growth, has been helped by a recent rally in commodity prices.

The New Zealand dollar also gained, and was not far off a more than two-year high, while the Canadian dollar rose too.

Sterling rose to $1.4009 on Friday, an almost three-year high amid Britain’s aggressive vaccination programme.

Given the size of Britain’s vital services sector, analysts say the faster it can reopen the economy, the better for the currency. Sterling was also helped by better-than-expected purchasing managers index flash survey data for February.

The U.S. dollar has been weighed down by a string of soft labour data, even as other indicators have shown resilience, and as President Joe Biden’s pandemic relief efforts take shape, including a proposed $1.9 trillion spending package.

Despite the recent rise in U.S. yields, many analysts think they won’t climb too much higher, limiting the benefit for the dollar.

“Our view remains that the Fed will hold the line and remain very cautious about tapering asset purchases. We think it will keep communicating that tightening is very far off, which should dampen pro-dollar sentiment,” said UBS Global Wealth Management strategist Gaétan Peroux and analyst Tilmann Kolb.

ING analysts said “the rise in rates will be self-regulating, meaning the dollar need not correct too much higher”.

They see the greenback index trading down to the 90.10 to 91.05 range.

U.S. dollar

Aussie and sterling hit multi-year highs on recovery bets 4

The euro rose 0.4% to $1.2134. The single currency showed little reaction to purchasing manager index data, which showed a slowdown in business activity in February. However, factories had their busiest month in three years, buoying sentiment.

The dollar bought 105.39 yen, down 0.3% and a continued retreat from the five-month high of 106.225 reached Wednesday.

(Editing by Hugh Lawson and Pravin Char)

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