View on demand webinar: https://securityintelligence.com/events/security-trends-in-the-retail-industry/ In 2014, significant threats and massive breaches made front-page news on a regular basis, and those that hit retailers seemed to be the ones that jumped to mind first. This may have been due, in part, to a sizable uptick in the number of cyber attacks against US retailers versus the prior year. In 2015 however, the cybercrime focus has shifted to online retailers and smaller businesses. With large retailers tightening security controls and safer chip cards coming into use, hackers are turning their sights to online transactions and smaller retail targets to capture consumer credit card data. Join us as Nick Bradley, Practice Leader of the Threat Research Group at IBM Security, and Michelle Alvarez, Threat Researcher and Editor for IBM Managed Security Services, discuss findings from two recently-published reports on the threat landscape in the retail industry: IBM 2015 Cyber Security Intelligence Index for Retail, and Security trends in the retail industry, an IBM X-Force Research Managed Security Services report. This webinar will cover: - An overview of security events, attacks, and incidents in the retail industry - Attack trends over Black Friday-Cyber Monday, including 2015 data - Who the attackers are, where the attacks are happening and what types of attacks are most commonly used - The number of records compromised, and where the weak points are in retailer networks - How cyber criminals are responding to the introduction of chip cards

1. © 2016 IBM Corporation
Nick Bradley
Sr. Manager and Practice Lead, MSS Threat Research
IBM Security
Michelle Alvarez
Researcher and Editor, MSS Threat Research
IBM Security
Security Trends in the
Retail Industry

2. 2© 2016 IBM Corporation
Today’s panelists
Nick Bradley
Practice Leader
Threat Research Group
IBM Security
https://securityintelligence.com/author/nick-bradley/
https://www.linkedin.com/in/nick-bradley-3406442
Michelle Alvarez
Threat Researcher, Publisher and Editor
Managed Security Services
IBM Security
securityintelligence.com/author/michelle-alvarez/
linkedin.com/pub/michelle-alvarez/65/867/445

3. 3© 2016 IBM Corporation
! 2014 review
! 2015 findings
– Attack types targeting retailers
– Black Friday/Cyber Monday trends
! A look at Data Breaches: Attackers are shifting their focus
! POS Malware
! Potential actions for defense
! Addressing fraud
Agenda

4. 4© 2016 IBM Corporation
In 2014, the retail industry remained fourth overall in incident rates,
but with an upward trend year-to-year over 2013
Source: IBM Managed Security Services data

5. 5© 2016 IBM Corporation
! Although the retail industry experienced fewer events than average, the numbers of attacks
and incidents were higher than average
2014 saw attackers having a higher success rate with retailers than
the cross-industry average
Source: IBM Managed Security Services data

6. 6© 2016 IBM Corporation
Prevalent attack vectors targeting the retail industry in 2015
! Analysis of IBM MSS data accumulated between January 1 2015 and November 30 2015
reveals attack vectors affecting the retail industry.
Attacks from the Tor network
Malicious documents
introduce malware
Shellshock
! Criminals often use the Tor network to trade with
each other and to launch attacks against surface
targets
! 5% of attacks against retailers came from the Tor
network—a higher percentage than any other
industry
2
! A vulnerability in the GNU Bash shell widely used
on Linux, Solaris and Mac OS systems
! The number three attack vector, making up just over
13% of the attacks
! Remains a significant and persistent threat across
all industries in 2015
3 4
! The number one attack vector, making up almost
18% of the attacks
! Attackers trick victims into opening malicious
documents or clicking on links to malicious sites
! Intent is almost always to have the victim download
malware, which is the largest single attack type
! The number two attack vector, making up just over
14% of the attacks
! Also the number two attack type associated with
retail security breaches
! Weak SQL database security policy is a common
denominator in successful attacks
SQL injection
1

7. 7© 2016 IBM Corporation
! Attackers do exploit the holiday season via spam, phishing and compromised websites
! However, on average there is no significant uptick in attack activity in the
Black Friday/Cyber Monday period
! While traffic may appear to have spiked on Cyber Monday in 2015, the spike is only slightly
above average for the holiday timeframe
Black Friday/Cyber Monday: attackers were shopping, not attacking
Source: IBM Managed Security Services data

8. 8© 2016 IBM Corporation
! The IBM X-Force Interactive Security Incidents tool on the web provides a continuously
updated view of notable security incidents across all industries
Retail security incidents occur at a consistent rate throughout the year
Source: IBM X-Force Security Incidents data (January 1 2014 – November 31 2015). http://www-03.ibm.com/security/xforce/xfisi/
Note: Data is a sampling of notable incidents for each year and not a full representation of all incidents.

9. 9© 2016 IBM Corporation
! The number of records
reported is down…but the
number of incidents is up
In 2015, breaches were occurring at a high rate, but companies were
not reporting the number of records compromised
Records
not
reported
70%
2015 rate of reporting records
compromised in a breach
Source: IBM X-Force Interactive Security Incidents data (January 1, 2013 – November 30, 2015).
http://www-03.ibm.com/security/xforce/xfisi/
Source: IBM X-Force Interactive Security Incidents
data (January 1, 2015 – November 30, 2015).
http://www-03.ibm.com/security/xforce/xfisi/

10. 10© 2016 IBM Corporation
! Attackers are shifting from targeting a few large organizations to targeting a large number of
smaller businesses
! A lot of little payoffs can add up to the same $$$ as a few big ones
– Payment card records sell for between $1 and $25 on the black market
! Large breaches can be less effective because compromised credit cards get cancelled faster
when the target is a large company that reports all affected credit cards to banks
! Smaller companies may also lack the resources to discover compromises quickly
Attackers are shifting their focus to smaller businesses

11. 11© 2016 IBM Corporation
Source: IBM X-Force Security Incidents data (January 1 2011 – November 31 2015).
http://www-03.ibm.com/security/xforce/xfisi/
Note: Data is a sampling of notable incidents for each year and not a full
representation of all incidents.
! In 44% of the retail breaches sampled,
malware was the most relevant attack
type
! In 42% of breaches, victim organizations
have not to date disclosed exactly what
type of attack they sustained
! The banking Trojan “Shifu” scans for
POS endpoints and, when it finds one,
uses a RAM-scraping plug-in to siphon
payment card data
! The Dyre malware, used by cybercrime
gangs to attack bank accounts, is adding
retail targets to its configuration file,
preying on online customer orders
Malware “planted” via malicious documents and links is the leading
cause of retail breaches in 2015

12. 12© 2016 IBM Corporation
! POS malware is designed to extract customer payment card (credit and debit) data and
send it back to the attacker’s command and control server
! Half of the ten largest retail breaches recorded since 2011 were caused by POS malware.
! These compromises resulted in the theft of nearly 195 million records, the majority
containing credit card data.
In the retail industry, malware attacks against point-of-sale (POS)
systems directly target payment card data
Source: IBM X-Force Security Incidents data (January 1 2011 – November 31 2015). http://www-03.ibm.com/security/xforce/xfisi/
Note: Data is a sampling of notable incidents for each year and not a full representation of all incidents.

13. 13© 2016 IBM Corporation
Recommendations for protecting enterprise and POS systems
Update POS software
Use endpoint protection
Restrict access to the
Internet
Disallow remote access
Segment POS networks
Physically protect POS
systems
Use strong passwords
Educate users

14. 14© 2016 IBM Corporation
! October 2015 in US liability for fraud shifted from card issuers to merchants not using EMV
! Current debate: Which is more secure, chip-and-PIN or chip-and-signature?
– Chip-and-PIN vulnerability: PIN is encoded in magnetic stripe
– Chip-and-signature vulnerability: Signatures are easy to “scribble”
! Will virtual payments replace cards…and present a whole new set of security challenges?
Addressing retail fraud: PIN vs signature or physical vs virtual?

15. 15© 2016 IBM Corporation
What you can do to help protect against fraud
• Encourage awareness of
“lurkers”
• Consider point-to-point
encryption
• Consider contactless POS
systems
• Report lost or stolen cards
promptly
• Record all your account
numbers and their phone
numbers
• Don’t lend your cards or
leave them unprotected
Retailers Consumers

16. 16© 2016 IBM Corporation
! This and other IBM® X-Force® threat research reports can be downloaded here
Get the complete picture
About this report
This IBM X-Force report was created by the IBM
Managed Security Services Threat Research group, a
team of experienced and skilled security analysts working
diligently to keep IBM clients informed and prepared for
the latest cybersecurity threats. This research team
analyzes security data from many internal and external
sources including event data, activity, and trends sourced
from thousands of endpoints managed and monitored by
IBM for Managed Security Services accounts around the
globe.

17. 17© 2016 IBM Corporation
! IBM offers key security services to help you address these challenges
How IBM can help
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