We provided incident response and incident response preparedness services to hundreds of companies in 2015. The questions we answered were as unique and varied as the incidents companies faced. Some were challenging, and occasionally they were easy to answer (e.g., Can we create a fake employee to sign the notification letter?), but often they were focused on what practical steps companies can take to be better prepared to respond, how to make certain decisions during an incident, and what is likely to happen after disclosing the incident.

(1) If incidents and attacks are inevitable, what preparedness steps should be taken? We talk to companies about being “compromise ready”—a constant state of diligence focused on prevention and improvement of response capabilities. The areas of preparedness that go into becoming compromise ready include: (1) preventative and detective security capabilities; (2) threat information gathering; (3) personnel awareness and training; (4) proactive security assessments focusing on identifying the location of critical assets and data and implementing reasonable safeguards and detection capabilities around them; (5) assessing and overseeing vendors; (6) developing, updating, and practicing incident response plans; (7) understanding current and emerging regulatory hot buttons; and (8) evaluating cyber liability insurance.

Obviously, accepting that incidents are inevitable does not mean it is not worth trying to stop them. Companies still need to use preventative technologies to build the proverbial moat around their castle to protect their systems and comply with any applicable security requirements (e.g., statutory, contractual, or formal/informal precedent from enforcement actions by their regulators). The right technological safeguards may prove sufficient to prevent many attacks. But when companies find a way to stop one attack vector, attackers do not give up and look for a new line of work. Rather, they are repeatedly observed finding ways around technological barriers. Most security firms will tell you that a capable attacker will eventually find a way in. Why? Most networks are built, maintained, and used by people, and those people are both fallible (e.g., able to be phished) and subject to a range of constraints (e.g., budgets, production priorities). Thus, companies should assume that even if they install the most advanced technology solutions and receive certain security certifications, their security measures may fail and an unauthorized person may gain access to their environment.

That reality drives the next two areas of preparedness: (1) implementing detective capabilities (e.g., logging and endpoint monitoring tools and procedures) so that unauthorized access is detected quickly, and (2) developing and practicing a flexible incident response plan. Two key parts of incident response planning are identifying the companies you will work with to respond and then building those relationships before an incident arises. In a prior blog post, I discussed “How and Why to Pick a Forensic Firm Before the Inevitable Occurs.” Companies do not always get the “luxury” of having 30 days to investigate, determine who may be affected, and then mail letters. Spending a few days just negotiating and executing a master services agreement and a statement of work with a forensic firm so that the forensic firm can begin to investigate can make the difference between meeting or missing a 30-day disclosure deadline.

Companies can use the Law & Order approach to building a tabletop exercise—read disclosures from other companies and the security firm reports that detail the incidents they investigate. It is often beneficial to have the law firm, forensic firm, and crisis communications firm that will work with you during the incident participate in developing and leading the exercises. An experienced incident responder leading the exercise will be able to provide helpful context during the exercise if the CISO states that he or she will identify, contain, and fully investigate a significant incident in a few days, or if the communications team wants to make notification no later than seven days after discovery or say that the company is implementing “state-of-the-art security measures” to make sure an incident never happens again.

(2) Where can companies improve? Three places: (1) detect incidents sooner, (2) contain them faster after detection, and (3) keep good logs to facilitate a more precise determination of what occurred before the attack was stopped. In general, after an attacker gains an initial foothold in a network, there is a period of internal reconnaissance when the attacker works to learn about the network so the attacker can escalate privileges, move laterally, and complete the attack mission. The goal of implementing detective capabilities as part of a defense-in-depth strategy is to find and stop the attack at the earlier phases of the “cyber kill chain,” before the attacker reaches sensitive data. This approach goes beyond trying to prevent attacks with firewalls and antivirus to incorporate endpoint monitoring and a SIEM to aggregate logs. Companies are signing retainer agreements with security firms that will conduct investigations when incidents are detected. A good use of the annual hours that are usually provided in exchange for the retainer payment involves different onboarding activities—helping the security firm understand the company’s environment, looking at logging practices to see if the company is logging what the forensic firm will need to conduct an investigation, and understanding the deployment process (or even doing pre-incident deployment) of endpoint monitoring and other tools the security firm will use to conduct the investigation. Our blog titled “Incident Response Tip: Five Ways to Improve Information Security and Reduce the Impact of a Data Breach” provides additional insight on this topic.

(3) Does the worst-case scenario have to be assumed if there is limited forensic data? One of the most difficult decisions during an incident response occurs when the forensic findings are inconclusive because there is not sufficient forensic data available to determine what occurred. Unfortunately, this is not uncommon. Companies often find themselves confronted with findings that show an attacker gained access to the network and had the capability to access and acquire sensitive data, but the investigation screeches to a halt at that point. For example, a forensic firm may tell a company that it sees an attacker gained access to the network six months ago, installed tools, and then used the tools to connect to a database server. But beyond stating that the attacker had the capability to query and exfiltrate the results, the firm cannot determine whether the attacker’s queries failed, returned one row of data, or accessed the contents of the entire database. The company then has to turn to secondary indicators to attempt to infer the likelihood of unauthorized acquisition (e.g., are customers reporting fraud or misuse, or did law enforcement provide the initial notice because of intelligence they obtained?). Lack of forensic data can occur because the attack began long enough ago that logs necessary to complete the analysis have been overwritten, logging was not configured to capture the necessary details, logging was not enabled at all, or the attacker used anti-forensic techniques to destroy forensic artifacts (e.g., s-delete, time stomping).

Because the state breach notification laws are consumer protection laws, a company may choose to notify out of an abundance of caution. This usually results in over-notification. In many investigations where there is adequate forensic data, the findings usually show that the data at risk is less than the worst-case scenario. If you read breach notification press releases, it is not uncommon for companies to state that the attack affected only a percentage of their locations or involved only certain data elements. Surprisingly, being able to show precisely what was accessed during the attack usually results in notification to a smaller group of individuals about fewer at-risk data elements. Knowing with greater certainty what was at risk and having the ability to show that certain data elements were not affected often plays a key part in a company’s dialogue with regulators, customers, and provides support for defenses in enforcement actions and lawsuits.

(4) What happens after the company provides notice? Many companies assume that they will be sued as soon as they disclose the incident. While putting our 2015 Incident Response report together, we noticed that we worked with companies that provided notification by mail or substitute notice 75 times in 2014, and lawsuits were filed against only five of the companies. Our 2015 Incident Response report reveals a more frequent post-disclosure event—inquiries from state or federal regulators (31% of the time). Predicting whether class actions will be filed or investigations will occur is difficult, but common factors include: listing the number of affected individuals in the notice and the number is “big,” sensitive data is at risk (e.g., SSNs or PHI), the attack went undetected for a while, there is a gap between detection and notification, the company’s size and brand, and whether media coverage of the incident goes beyond reporting the facts and includes criticism of the company. Notwithstanding the common factors, we have worked with national brands that disclosed significant incidents and were not sued or investigated, and we have worked with small companies that faced multiple investigations and claims.

(5) How will this impact the company? The most obvious and immediate impact will be the first-party costs (e.g., costs of mailing letters, providing credit monitoring, forensic investigation, crisis communications) and third-party costs (e.g., paying customer claims, defense of lawsuits and regulatory investigations). A lot gets written about the potential for “churn” and loss of revenue, but these are not routine occurrences, and when they do happen, it is hard to isolate and attribute them solely to the incident. Public companies face a decision about whether to file an 8-k contemporaneously with their initial public disclosure, followed by preparing quarterly updates on impact for their 10-q filings. One of the most underestimated and least discussed post-incident impacts comes from disruption and loss of productivity. For significant incidents, key personnel may spend some or all of the business day (or more) on incident response tasks for several months. Their day jobs either get done at night, delegated, or delayed. After the continuous intensity of the initial response dwindles, members of the incident response team still face completion of remedial measures, regulatory investigations, defense of lawsuits, insurance recoveries, financial reporting, etc. The impact on productivity caused by an incident can easily last a year or longer. Even if the company gets through the incident relatively unscathed, should the company fail to take steps to prevent a reoccurrence or a different event occurs, multiple publicly known incidents will subject the company to greater scrutiny and possibly an increased likelihood of adverse consequences.

Although these are five frequently asked questions, companies never actually run out of questions during an incident or when they are seriously preparing to be better able to respond. The volume of questions reflects the diversity of incident types and unique challenges that arise during a response. Unless you have experienced incidents firsthand, it is hard to fully appreciate the complexity and intensity a significant incident brings. We have talked to regulators who have acknowledged that they would benefit from actually going through an incident on the company side. You soon learn that there is no such thing as a perfect response.