More than half of Californians whose personal information was exposed in data breaches last year wouldn't be a statistic if the breached companies had used encryption.
That's one of the main takeaways of a voluntary, first-ever report, published last week by California Attorney General Kamala Harris, which found that 2.5 million residents of the state were affected by the 131 reported data breach incidents in 2012.
"If encryption had been used, over 1.4 million Californians would not have had their information put at risk in 2012," Harris said. "It is my strong recommendation that companies and agencies implement encryption as a basic protection and reasonable security measure to help them meet their obligation to safeguard personal information entrusted to them."
California in 2003 passed the first data breach notification law that mandated that businesses and state agencies notify citizens when their personal data was exposed in a security breach. The state later passed a law requiring organizations to report breaches to the Attorney General's Office that affect more than 500 residents.
Harris also recommends amending the existing breach notification legislation to include the breach of online credentials.
Security experts applauded the Attorney General's new, voluntary report. "I think the California data breach report is on the leading edge of better breach reporting that we need," says Chris Wysopal, CTO at Veracode. "It makes recommendations based on the breaches studied, which is welcome news."
The catch is that companies are not required by law to use encryption for personal data in transit. "We are all familiar with PCI requirements to encrypt credit card numbers, but that doesn't extend outside of that limited scope. On the other hand, HIPAA requires PHI to be kept private, which I would interpret as requiring encryption as PHI transits a public network, such as the Internet, or is moved physically where it can be lost or physically stolen," he says.
Even so, Wysopal says Harris' recommendation for encryption use is good news. In the report, Harris says her office will prioritize the investigation of breaches that involved unencrypted personal information, and urge other law enforcement agencies to do the same. She even makes a pitch to California lawmakers: "The Legislature may also want to consider requiring the use of encryption to protect personal information in transit," Harris said in the report.
Organizations don't encrypt personally identifiable information mainly for convenience reasons, Wysopal notes. "It is an extra step to encrypt and transfer the key securely to the recipient of the data. So we often see attachments sent through email and files on removable media or laptops unencrypted," he says. "Frankly, at this point it is practically negligent not to encrypt data that would require notification if lost or stolen."
He says California has the opportunity to spearhead the use of encryption. "California wants to be on the cutting edge of the technology industry and consumer data protection. Improving the way businesses handle data will give confidence to consumers and speed innovation, which helps their economy," he says.
The report also said that if encryption had been used in the breaches, 28 percent of the incidents would not have required notification. The average incident affected 22,500 citizens' information, while the median breach size affected 2,500 people, with five breaches affecting 100,000 or more people.
Retail was the most breached industry in California last year, accounting for 26 percent of all of the reported breaches. The financial and insurance industry was second, with 23 percent.
Social security numbers were exposed in 56 percent of the breaches, and more than half of all reported breaches in the state came from outside attackers or insider threats. Some 45 percent were due to error or not employing the proper security measures.
Veracode's Wysopal says a national cybersafety board, akin to the National Transportation Safety Board, is needed. "A National Cyber Safety Board could take the detail provided in the CA breach report to a whole new level," he says.
That could help drill down into the core issues behind the breach, he says. "What security controls were in place that failed? What was the failure? A 0day vulnerability, an unpatched computer, a misconfigured computer, a human error? Were there processes that failed? What was the training of the operators? Did detection technology detect the breach or did it fail?"
The full California Data Breach Report 2012 is available here for download.
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