Digital Transformation of

Banking Services

SECURING INFORMATION SYSTEMS

 Plan of Presentation

 System Vulnerability and Abuse

 Business Value of Security and Control
 Establishing a Framework for Security and Control
 Technologies and Tools for Security
 System Vulnerability and Abuse

 Security:
Policies, procedures and technical measures used to prevent
unauthorized access, alteration, theft, or physical damage to
information systems

 Controls:
Methods, policies, and organizational procedures that ensure
safety of organization’s assets; accuracy and reliability of its
accounting records; and operational adherence to management
standards
 System Vulnerability and Abuse

Why systems are vulnerable?

 Hardware problems
 Breakdowns, configuration errors, damage from improper use or crime
 Software problems
 Programming errors, installation errors, unauthorized changes)
 Disasters
 Power failures, flood, fires, etc.
 Use of networks and computers outside of firm’s control
 E.g., with domestic or offshore outsourcing vendors
 System Vulnerability and Abuse

Contemporary Security Challenges and Vulnerabilities

The architecture of a Web-based application typically includes a Web client, a server, and corporate
information systems linked to databases. Each of these components presents security challenges
and vulnerabilities. Floods, fires, power failures, and other electrical problems can cause disruptions
at any point in the network.
 System Vulnerability and Abuse

 Internet vulnerabilities
 Network open to anyone

 Size of Internet means abuses can have wide impact

 Use of fixed Internet addresses with permanent connections

to Internet eases identification by hackers

 E-mail attachments

 E-mail used for transmitting trade secrets

 IM messages lack security, can be easily intercepted

 System Vulnerability and Abuse

 Wireless security challenges

 Radio frequency bands easy to scan

 SSIDs (service set identifiers)
• Identify access points
• Broadcast multiple times
 War driving
• Eavesdroppers drive by buildings and try to intercept network traffic
• When hacker gains access to SSID, has access to network’s
resources
 WEP (Wired Equivalent Privacy)
• Security standard for 802.11
• Basic specification uses shared password for both users and access
point
• Users often fail to use security features
 System Vulnerability and Abuse

Wi-Fi Security Challenges

Many Wi-Fi networks

can be penetrated
easily by intruders
using sniffer programs
to obtain an address to
access the resources
of a network without
authorization.
 System Vulnerability and Abuse

 Malicious software (malware)

 Viruses: Rogue software program that attaches itself to other
software programs or data files in order to be executed
 Worms: Independent computer programs that copy
themselves from one computer to other computers over a
network
 Trojan horses: Software program that appears to be benign
but then does something other than expected
 Spyware: Small programs install themselves surreptitiously
on computers to monitor user Web surfing activity and serve
up advertising
• Key loggers: Record every keystroke on computer to
steal serial numbers, passwords, launch Internet attacks
 System Vulnerability and Abuse

 Hackers and computer crime

 Hackers vs. crackers

 Activities include
 System intrusion
 Theft of goods and information
 System damage
 Cybervandalism
• Intentional disruption, defacement, destruction of
Web site or corporate information system
 System Vulnerability and Abuse

 Spoofing
 Misrepresenting oneself by using fake e-mail addresses or
masquerading as someone else
 Redirecting Web link to address different from intended one,
with site masquerading as intended destination

 Sniffer: Eavesdropping program that monitors information

traveling over network

 Denial-of-service attacks (DoS): Flooding server with

thousands of false requests to crash the network

 Distributed denial-of-service attacks (DDoS): Use of

numerous computers to launch a DoS
 Botnets: Networks of “zombie” PCs infiltrated by bot
malware
 System Vulnerability and Abuse

 Computer crime
Defined as “any violations of criminal law that involve a knowledge of
computer technology for their perpetration, investigation, or
prosecution”

 Computer may be target of crime, e.g.:

• Breaching confidentiality of protected computerized data
• Accessing a computer system without authority

 Computer may be instrument of crime, e.g.:

• Theft of trade secrets
• Using e-mail for threats or harassment
 System Vulnerability and Abuse

 Identity theft: Theft of personal Information (social security id,

driver’s license or credit card numbers) to impersonate
someone else
 Phishing: Setting up fake Web sites or sending e-mail
messages that look like legitimate businesses to ask users for
confidential personal data.
 Evil twins: Wireless networks that pretend to offer trustworthy
Wi-Fi connections to the Internet
 Pharming: Redirects users to a bogus Web page, even when
individual types correct Web page address into his or her
browser
 System Vulnerability and Abuse

 Click fraud
 Individual or computer program clicks online ad without
any intention of learning more or making a purchase

 Global threats - Cyberterrorism and cyberwarfare

 Concern that Internet vulnerabilities and other networks
make digital networks easy targets for digital attacks by
terrorists, foreign intelligence services, or other groups
 System Vulnerability and Abuse

 Internal threats – Employees

Security threats often originate inside an
organization
 Inside knowledge
 Sloppy security procedures
 User lack of knowledge
 Social engineering:
 Tricking employees into revealing their passwords by
pretending to be legitimate members of the company
in need of information
 System Vulnerability and Abuse

 Software vulnerability
 Commercial software contains flaws that create
security vulnerabilities
• Hidden bugs (program code defects)
 Zero defects cannot be achieved because complete
testing is not possible with large programs
• Flaws can open networks to intruders
 Patches
• Vendors release small pieces of software to repair flaws
• However, amount of software in use can mean exploits
created faster than patches be released and implemented
 Plan of Presentation

 System Vulnerability and Abuse

 Business Value of Security and Control
 Establishing a Framework for Security and Control
 Technologies and Tools for Security
 Business Value of Security and Control

Lack of security, control can lead to

 Loss of revenue
 Failed computer systems can lead to significant or
total loss of business function
 Lowered market value:
 Information assets can have tremendous value
 A security breach may cut into firm’s market value
almost immediately
 Legal liability
 Lowered employee productivity
 Higher operational costs
 Business Value of Security and Control

 Legal and regulatory requirements for electronic

records management
 Firms face new legal obligations for the retention
and storage of electronic records as well as for
privacy protection
 HIPAA: Medical security and privacy rules and procedures
 Gramm-Leach-Bliley Act: Requires financial institutions to
ensure the security and confidentiality of customer data
 Sarbanes-Oxley Act: Imposes responsibility on companies
and their management to safeguard the accuracy and integrity
of financial information that is used internally and released
externally
 Business Value of Security and Control

 Electronic evidence
 Evidence for white collar crimes often found in
digital form
 Data stored on computer devices, e-mail, instant messages, e-
commerce transactions

 Proper control of data can save time, money when

responding to legal discovery request

 Computer forensics:
 Scientific collection, examination, authentication, preservation, and
analysis of data from computer storage media for use as evidence
in court of law
 Includes recovery of ambient and hidden data
 Plan of Presentation

 System Vulnerability and Abuse

 Business Value of Security and Control
 Establishing a Framework for Security and Control
 Technologies and Tools for Security
Establishing a Framework for Security and Control

 Information systems controls

 General controls
 Govern design, security, and use of computer programs and data
throughout organization’s IT infrastructure
 Combination of hardware, software, and manual procedures to
create overall control environment
 Types of general controls
• Software controls
• Hardware controls
• Computer operations controls
• Data security controls
• Implementation controls
• Administrative controls
 Establishing a Framework for Security and Control

 Application controls
 Specific controls unique to each computerized application,
such as payroll or order processing
 Include both automated and manual procedures
 Ensure that only authorized data are completely and accurately
processed by that application
 Types of application controls:
• Input controls
• Processing controls
• Output controls
 Establishing a Framework for Security and Control

 Risk assessment
 Determines level of risk to firm if specific activity or process is
not properly controlled
• Types of threat
• Probability of occurrence during year
• Potential losses, value of threat
• Expected annual loss

EXPOSURE PROBABILITY LOSS RANGE (AVERAGE) EXPECTED

ANNUAL LOSS

Power failure 30% $5K - $200K ($102,500) $30,750

Embezzlement 5% $1K - $50K ($25,500) $1,275

User error 98% $200 - $40K ($20,100) $19,698

 Establishing a Framework for Security and Control

 Security policy
 Ranks information risks, identifies acceptable security goals,
and identifies mechanisms for achieving these goals
 Drives other policies
• Acceptable use policy (AUP): Defines acceptable uses
of firm’s information resources and computing equipment
• Authorization policies: Determine differing levels of user
access to information assets

 Authorization management systems

 Allow each user access only to those portions of system that
person is permitted to enter, based on information established
by set of access rules, profile
 Establishing a Framework for Security and Control

 Disaster recovery planning: Devises plans for restoration of

disrupted services
 Business continuity planning: Focuses on restoring
business operations after disaster
 Both types of plans needed to identify firm’s most critical
systems and business processes
 Business impact analysis to determine impact of an outage
 Management must determine
• Maximum time systems can be down
• Which systems must be restored first
 Establishing a Framework for Security and Control

 MIS audit
 Examines firm’s overall security environment as well as
controls governing individual information systems
 Reviews technologies, procedures, documentation, training,
and personnel
 May even simulate disaster to test response of technology, IS
staff, other employees
 Lists and ranks all control weaknesses and estimates
probability of their occurrence
 Assesses financial and organizational impact of each threat
 Plan of Presentation

 System Vulnerability and Abuse

 Business Value of Security and Control
 Establishing a Framework for Security and Control
 Technologies and Tools for Security
 Technologies and Tools for Security

 Access control: Policies and procedures to prevent

improper access to systems by unauthorized
insiders and outsiders
 Authorization
 Authentication
 Password systems
 Tokens
 Smart cards
 Biometric authentication
 Technologies and Tools for Security

 Firewall: Hardware and/or software to prevent

unauthorized access to private networks
 Screening technologies
• Packet filtering
• Stateful inspection
• Network address translation (NAT)
• Application proxy filtering

 Intrusion detection systems: Monitor vulnerable points on

networks to detect and deter intruders
 Examines events as they are happening to discover attacks in
progress
 Scans network to find patterns indicative of attacks
 Technologies and Tools for Security

A Corporate Firewall

The firewall is
placed between
the firm’s private
network and the
public Internet or
another distrusted
network to protect
against
unauthorized traffic.
 Technologies and Tools for Security

 Antivirus and antispyware software:

 Checks computers for presence of malware and can often
eliminate it as well
 Require continual updating

 Unified threat management (UTM)

 Comprehensive security management products
 Tools include
• Firewalls
• Intrusion detection
• VPNs
• Web content filtering
• Antispam software
 Technologies and Tools for Security

 Securing wireless networks

 WEP security can be improved:
• Activating it
• Assigning unique name to network’s SSID
• Using it with VPN technology

 Wi-Fi Alliance finalized WAP2 specification,

replacing WEP with stronger standards
• Continually changing keys
• Encrypted authentication system with central server
 Technologies and Tools for Security

 Encryption:
Transforming text or data into cipher text that cannot be read
by unintended recipients
 Two methods for encrypting network traffic
• Secure Sockets Layer (SSL) and successor Transport
Layer Security (TLS)
• Secure Hypertext Transfer Protocol (S-HTTP)
• Two methods of encryption
• Symmetric key encryption
• Public key encryption
 Technologies and Tools for Security

Public Key Encryption

A public key encryption system can be viewed as a series of public and private keys that lock data
when they are transmitted and unlock the data when they are received. The sender locates the
recipient’s public key in a directory and uses it to encrypt a message. The message is sent in
encrypted form over the Internet or a private network. When the encrypted message arrives, the
recipient uses his or her private key to decrypt the data and read the message.
 Technologies and Tools for Security

 Digital certificate:
 Data file used to establish the identity of users and electronic assets
for protection of online transactions
 Uses a trusted third party, certification authority (CA), to validate a
user’s identity
 CA verifies user’s identity, stores information in CA server, which
generates encrypted digital certificate containing owner ID
information and copy of owner’s public key

 Public key infrastructure (PKI)

 Use of public key cryptography working with certificate authority
 Widely used in e-commerce
 Technologies and Tools for Security

Digital Certificates

Digital certificates
help establish the
identity of people or
electronic assets.
They protect online
transactions by
providing secure,
encrypted, online
communication.
 Technologies and Tools for Security

 Ensuring system availability

 Online transaction processing requires 100%
availability, no downtime
 Fault-tolerant computer systems
• For continuous availability
• Contain redundant hardware, software, and power
supply components to provide continuous, uninterrupted
service
 High-availability computing
• Helps recover quickly from crash
• Minimizes, does not eliminate downtime
 Technologies and Tools for Security

 Recovery-oriented computing
 Designing systems that recover quickly with capabilities to help
operators pinpoint and correct of faults in multi-component systems

 Controlling network traffic

 Deep packet inspection (DPI)

 Security outsourcing
 Managed security service providers (MSSPs)
 Technologies and Tools for Security

 Ensuring software quality

 Software Metrics: Objective assessments of system in
form of quantified measurements
• Number of transactions
• Online response time
• Payroll checks printed per hour
• Known bugs per hundred lines of code

 Testing: Early and regular testing

• Walkthrough: Review of specification or design
document by small group of qualified people
• Debugging: Process by which errors are eliminated
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