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Me on the Equifax Breach

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2017/11/me_on_the_equif.html

Testimony and Statement for the Record of Bruce Schneier
Fellow and Lecturer, Belfer Center for Science and International Affairs, Harvard Kennedy School
Fellow, Berkman Center for Internet and Society at Harvard Law School

Hearing on “Securing Consumers’ Credit Data in the Age of Digital Commerce”

Before the

Subcommittee on Digital Commerce and Consumer Protection
Committee on Energy and Commerce
United States House of Representatives

1 November 2017
2125 Rayburn House Office Building
Washington, DC 20515

Mister Chairman and Members of the Committee, thank you for the opportunity to testify today concerning the security of credit data. My name is Bruce Schneier, and I am a security technologist. For over 30 years I have studied the technologies of security and privacy. I have authored 13 books on these subjects, including Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World (Norton, 2015). My popular newsletter CryptoGram and my blog Schneier on Security are read by over 250,000 people.

Additionally, I am a Fellow and Lecturer at the Harvard Kennedy School of Government –where I teach Internet security policy — and a Fellow at the Berkman-Klein Center for Internet and Society at Harvard Law School. I am a board member of the Electronic Frontier Foundation, AccessNow, and the Tor Project; and an advisory board member of Electronic Privacy Information Center and VerifiedVoting.org. I am also a special advisor to IBM Security and the Chief Technology Officer of IBM Resilient.

I am here representing none of those organizations, and speak only for myself based on my own expertise and experience.

I have eleven main points:

1. The Equifax breach was a serious security breach that puts millions of Americans at risk.

Equifax reported that 145.5 million US customers, about 44% of the population, were impacted by the breach. (That’s the original 143 million plus the additional 2.5 million disclosed a month later.) The attackers got access to full names, Social Security numbers, birth dates, addresses, and driver’s license numbers.

This is exactly the sort of information criminals can use to impersonate victims to banks, credit card companies, insurance companies, cell phone companies and other businesses vulnerable to fraud. As a result, all 143 million US victims are at greater risk of identity theft, and will remain at risk for years to come. And those who suffer identify theft will have problems for months, if not years, as they work to clean up their name and credit rating.

2. Equifax was solely at fault.

This was not a sophisticated attack. The security breach was a result of a vulnerability in the software for their websites: a program called Apache Struts. The particular vulnerability was fixed by Apache in a security patch that was made available on March 6, 2017. This was not a minor vulnerability; the computer press at the time called it “critical.” Within days, it was being used by attackers to break into web servers. Equifax was notified by Apache, US CERT, and the Department of Homeland Security about the vulnerability, and was provided instructions to make the fix.

Two months later, Equifax had still failed to patch its systems. It eventually got around to it on July 29. The attackers used the vulnerability to access the company’s databases and steal consumer information on May 13, over two months after Equifax should have patched the vulnerability.

The company’s incident response after the breach was similarly damaging. It waited nearly six weeks before informing victims that their personal information had been stolen and they were at increased risk of identity theft. Equifax opened a website to help aid customers, but the poor security around that — the site was at a domain separate from the Equifax domain — invited fraudulent imitators and even more damage to victims. At one point, the official Equifax communications even directed people to that fraudulent site.

This is not the first time Equifax failed to take computer security seriously. It confessed to another data leak in January 2017. In May 2016, one of its websites was hacked, resulting in 430,000 people having their personal information stolen. Also in 2016, a security researcher found and reported a basic security vulnerability in its main website. And in 2014, the company reported yet another security breach of consumer information. There are more.

3. There are thousands of data brokers with similarly intimate information, similarly at risk.

Equifax is more than a credit reporting agency. It’s a data broker. It collects information about all of us, analyzes it all, and then sells those insights. It might be one of the biggest, but there are 2,500 to 4,000 other data brokers that are collecting, storing, and selling information about us — almost all of them companies you’ve never heard of and have no business relationship with.

The breadth and depth of information that data brokers have is astonishing. Data brokers collect and store billions of data elements covering nearly every US consumer. Just one of the data brokers studied holds information on more than 1.4 billion consumer transactions and 700 billion data elements, and another adds more than 3 billion new data points to its database each month.

These brokers collect demographic information: names, addresses, telephone numbers, e-mail addresses, gender, age, marital status, presence and ages of children in household, education level, profession, income level, political affiliation, cars driven, and information about homes and other property. They collect lists of things we’ve purchased, when we’ve purchased them, and how we paid for them. They keep track of deaths, divorces, and diseases in our families. They collect everything about what we do on the Internet.

4. These data brokers deliberately hide their actions, and make it difficult for consumers to learn about or control their data.

If there were a dozen people who stood behind us and took notes of everything we purchased, read, searched for, or said, we would be alarmed at the privacy invasion. But because these companies operate in secret, inside our browsers and financial transactions, we don’t see them and we don’t know they’re there.

Regarding Equifax, few consumers have any idea what the company knows about them, who they sell personal data to or why. If anyone knows about them at all, it’s about their business as a credit bureau, not their business as a data broker. Their website lists 57 different offerings for business: products for industries like automotive, education, health care, insurance, and restaurants.

In general, options to “opt-out” don’t work with data brokers. It’s a confusing process, and doesn’t result in your data being deleted. Data brokers will still collect data about consumers who opt out. It will still be in those companies’ databases, and will still be vulnerable. It just don’t be included individually when they sell data to their customers.

5. The existing regulatory structure is inadequate.

Right now, there is no way for consumers to protect themselves. Their data has been harvested and analyzed by these companies without their knowledge or consent. They cannot improve the security of their personal data, and have no control over how vulnerable it is. They only learn about data breaches when the companies announce them — which can be months after the breaches occur — and at that point the onus is on them to obtain credit monitoring services or credit freezes. And even those only protect consumers from some of the harms, and only those suffered after Equifax admitted to the breach.

Right now, the press is reporting “dozens” of lawsuits against Equifax from shareholders, consumers, and banks. Massachusetts has sued Equifax for violating state consumer protection and privacy laws. Other states may follow suit.

If any of these plaintiffs win in the court, it will be a rare victory for victims of privacy breaches against the companies that have our personal information. Current law is too narrowly focused on people who have suffered financial losses directly traceable to a specific breach. Proving this is difficult. If you are the victim of identity theft in the next month, is it because of Equifax or does the blame belong to another of the thousands of companies who have your personal data? As long as one can’t prove it one way or the other, data brokers remain blameless and liability free.

Additionally, much of this market in our personal data falls outside the protections of the Fair Credit Reporting Act. And in order for the Federal Trade Commission to levy a fine against Equifax, it needs to have a consent order and then a subsequent violation. Any fines will be limited to credit information, which is a small portion of the enormous amount of information these companies know about us. In reality, this is not an effective enforcement regime.

Although the FTC is investigating Equifax, it is unclear if it has a viable case.

6. The market cannot fix this because we are not the customers of data brokers.

The customers of these companies are people and organizations who want to buy information: banks looking to lend you money, landlords deciding whether to rent you an apartment, employers deciding whether to hire you, companies trying to figure out whether you’d be a profitable customer — everyone who wants to sell you something, even governments.

Markets work because buyers choose from a choice of sellers, and sellers compete for buyers. None of us are Equifax’s customers. None of us are the customers of any of these data brokers. We can’t refuse to do business with the companies. We can’t remove our data from their databases. With few limited exceptions, we can’t even see what data these companies have about us or correct any mistakes.

We are the product that these companies sell to their customers: those who want to use our personal information to understand us, categorize us, make decisions about us, and persuade us.

Worse, the financial markets reward bad security. Given the choice between increasing their cybersecurity budget by 5%, or saving that money and taking the chance, a rational CEO chooses to save the money. Wall Street rewards those whose balance sheets look good, not those who are secure. And if senior management gets unlucky and the a public breach happens, they end up okay. Equifax’s CEO didn’t get his $5.2 million severance pay, but he did keep his $18.4 million pension. Any company that spends more on security than absolutely necessary is immediately penalized by shareholders when its profits decrease.

Even the negative PR that Equifax is currently suffering will fade. Unless we expect data brokers to put public interest ahead of profits, the security of this industry will never improve without government regulation.

7. We need effective regulation of data brokers.

In 2014, the Federal Trade Commission recommended that Congress require data brokers be more transparent and give consumers more control over their personal information. That report contains good suggestions on how to regulate this industry.

First, Congress should help plaintiffs in data breach cases by authorizing and funding empirical research on the harm individuals receive from these breaches.

Specifically, Congress should move forward legislative proposals that establish a nationwide “credit freeze” — which is better described as changing the default for disclosure from opt-out to opt-in — and free lifetime credit monitoring services. By this I do not mean giving customers free credit-freeze options, a proposal by Senators Warren and Schatz, but that the default should be a credit freeze.

The credit card industry routinely notifies consumers when there are suspicious charges. It is obvious that credit reporting agencies should have a similar obligation to notify consumers when there is suspicious activity concerning their credit report.

On the technology side, more could be done to limit the amount of personal data companies are allowed to collect. Increasingly, privacy safeguards impose “data minimization” requirements to ensure that only the data that is actually needed is collected. On the other hand, Congress should not create a new national identifier to replace the Social Security Numbers. That would make the system of identification even more brittle. Better is to reduce dependence on systems of identification and to create contextual identification where necessary.

Finally, Congress needs to give the Federal Trade Commission the authority to set minimum security standards for data brokers and to give consumers more control over their personal information. This is essential as long as consumers are these companies’ products and not their customers.

8. Resist complaints from the industry that this is “too hard.”

The credit bureaus and data brokers, and their lobbyists and trade-association representatives, will claim that many of these measures are too hard. They’re not telling you the truth.

Take one example: credit freezes. This is an effective security measure that protects consumers, but the process of getting one and of temporarily unfreezing credit is made deliberately onerous by the credit bureaus. Why isn’t there a smartphone app that alerts me when someone wants to access my credit rating, and lets me freeze and unfreeze my credit at the touch of the screen? Too hard? Today, you can have an app on your phone that does something similar if you try to log into a computer network, or if someone tries to use your credit card at a physical location different from where you are.

Moreover, any credit bureau or data broker operating in Europe is already obligated to follow the more rigorous EU privacy laws. The EU General Data Protection Regulation will come into force, requiring even more security and privacy controls for companies collecting storing the personal data of EU citizens. Those companies have already demonstrated that they can comply with those more stringent regulations.

Credit bureaus, and data brokers in general, are deliberately not implementing these 21st-century security solutions, because they want their services to be as easy and useful as possible for their actual customers: those who are buying your information. Similarly, companies that use this personal information to open accounts are not implementing more stringent security because they want their services to be as easy-to-use and convenient as possible.

9. This has foreign trade implications.

The Canadian Broadcast Corporation reported that 100,000 Canadians had their data stolen in the Equifax breach. The British Broadcasting Corporation originally reported that 400,000 UK consumers were affected; Equifax has since revised that to 15.2 million.

Many American Internet companies have significant numbers of European users and customers, and rely on negotiated safe harbor agreements to legally collect and store personal data of EU citizens.

The European Union is in the middle of a massive regulatory shift in its privacy laws, and those agreements are coming under renewed scrutiny. Breaches such as Equifax give these European regulators a powerful argument that US privacy regulations are inadequate to protect their citizens’ data, and that they should require that data to remain in Europe. This could significantly harm American Internet companies.

10. This has national security implications.

Although it is still unknown who compromised the Equifax database, it could easily have been a foreign adversary that routinely attacks the servers of US companies and US federal agencies with the goal of exploiting security vulnerabilities and obtaining personal data.

When the Fair Credit Reporting Act was passed in 1970, the concern was that the credit bureaus might misuse our data. That is still a concern, but the world has changed since then. Credit bureaus and data brokers have far more intimate data about all of us. And it is valuable not only to companies wanting to advertise to us, but foreign governments as well. In 2015, the Chinese breached the database of the Office of Personal Management and stole the detailed security clearance information of 21 million Americans. North Korea routinely engages in cybercrime as way to fund its other activities. In a world where foreign governments use cyber capabilities to attack US assets, requiring data brokers to limit collection of personal data, securely store the data they collect, and delete data about consumers when it is no longer needed is a matter of national security.

11. We need to do something about it.

Yes, this breach is a huge black eye and a temporary stock dip for Equifax — this month. Soon, another company will have suffered a massive data breach and few will remember Equifax’s problem. Does anyone remember last year when Yahoo admitted that it exposed personal information of a billion users in 2013 and another half billion in 2014?

Unless Congress acts to protect consumer information in the digital age, these breaches will continue.

Thank you for the opportunity to testify today. I will be pleased to answer your questions.

Hot Startups on AWS – October 2017

Post Syndicated from Tina Barr original https://aws.amazon.com/blogs/aws/hot-startups-on-aws-october-2017/

In 2015, the Centers for Medicare and Medicaid Services (CMS) reported that healthcare spending made up 17.8% of the U.S. GDP – that’s almost $3.2 trillion or $9,990 per person. By 2025, the CMS estimates this number will increase to nearly 20%. As cloud technology evolves in the healthcare and life science industries, we are seeing how companies of all sizes are using AWS to provide powerful and innovative solutions to customers across the globe. This month we are excited to feature the following startups:

  • ClearCare – helping home care agencies operate efficiently and grow their business.
  • DNAnexus – providing a cloud-based global network for sharing and managing genomic data.

ClearCare (San Francisco, CA)

ClearCare envisions a future where home care is the only choice for aging in place. Home care agencies play a critical role in the economy and their communities by significantly lowering the overall cost of care, reducing the number of hospital admissions, and bending the cost curve of aging. Patients receiving home care typically have multiple chronic conditions and functional limitations, driving over $190 billion in healthcare spending in the U.S. each year. To offset these costs, health insurance payers are developing in-home care management programs for patients. ClearCare’s goal is to help home care agencies leverage technology to improve costs, outcomes, and quality of life for the aging population. The company’s powerful software platform is specifically designed for use by non-medical, in-home care agencies to manage their businesses.

Founder and CEO Geoff Nudd created ClearCare because of his own grandmother’s need for care. Keeping family members and caregivers up to date on a loved one’s well being can be difficult, so Geoff created what is now ClearCare’s Family Room, which enables caregivers and agency staff to check schedules and receive real-time updates about what’s happening in the home. Since then, agencies have provided feedback on others areas of their businesses that could be streamlined. ClearCare has now built over 20 modules to help home care agencies optimize operations with services including a telephony service, billing and payroll, and more. ClearCare now serves over 4,000 home care agencies, representing 500,000 caregivers and 400,000 seniors.

Using AWS, ClearCare is able to spin up reliable infrastructure for proofs of concept and iterate on those systems to quickly get value to market. The company runs many AWS services including Amazon Elasticsearch Service, Amazon RDS, and Amazon CloudFront. Amazon EMR and Amazon Athena have enabled ClearCare to build a Hadoop-based ETL and data warehousing system that processes terabytes of data each day. By utilizing these managed services, ClearCare has been able to go from concept to customer delivery in less than three months.

To learn more about ClearCare, check out their website.

DNAnexus (Mountain View, CA)

DNAnexus is accelerating the application of genomic data in precision medicine by providing a cloud-based platform for sharing and managing genomic and biomedical data and analysis tools. The company was founded in 2009 by Stanford graduate student Andreas Sundquist and two Stanford professors Arend Sidow and Serafim Batzoglou, to address the need for scaling secondary analysis of next-generation sequencing (NGS) data in the cloud. The founders quickly learned that users needed a flexible solution to build complex analysis workflows and tools that enable them to share and manage large volumes of data. DNAnexus is optimized to address the challenges of security, scalability, and collaboration for organizations that are pursuing genomic-based approaches to health, both in clinics and research labs. DNAnexus has a global customer base – spanning North America, Europe, Asia-Pacific, South America, and Africa – that runs a million jobs each month and is doubling their storage year-over-year. The company currently stores more than 10 petabytes of biomedical and genomic data. That is equivalent to approximately 100,000 genomes, or in simpler terms, over 50 billion Facebook photos!

DNAnexus is working with its customers to help expand their translational informatics research, which includes expanding into clinical trial genomic services. This will help companies developing different medicines to better stratify clinical trial populations and develop companion tests that enable the right patient to get the right medicine. In collaboration with Janssen Human Microbiome Institute, DNAnexus is also launching Mosaic – a community platform for microbiome research.

AWS provides DNAnexus and its customers the flexibility to grow and scale research programs. Building the technology infrastructure required to manage these projects in-house is expensive and time-consuming. DNAnexus removes that barrier for labs of any size by using AWS scalable cloud resources. The company deploys its customers’ genomic pipelines on Amazon EC2, using Amazon S3 for high-performance, high-durability storage, and Amazon Glacier for low-cost data archiving. DNAnexus is also an AWS Life Sciences Competency Partner.

Learn more about DNAnexus here.

-Tina

High Court Passes Judgment in Illegal Sky Sports Streaming Case

Post Syndicated from Andy original https://torrentfreak.com/high-court-passes-judgment-in-illegal-sky-sports-streaming-case-171026/

Without doubt, streaming is the hot topic in piracy right now, with thousands of illicit channels, TV shows and movies just a few clicks away.

As widely reported, the legal Kodi software augmented with illicit third-party addons is the preferred way to watch for millions of users. However, if people don’t mind sitting at a desktop machine, there’s also a thriving underbelly of indexing sites and similar platforms offering unauthorized access to infringing content.

According to information released by the Federation Against Copyright Theft, an individual in the UK has just felt the wrath of the High Court for providing content to one such platform.

“On Monday 23 October 2017 a judgment was obtained in the High Court against a Sky customer who had been streaming Sky Sports content illegally online,” FACT reports.

“Mr Yusuf Mohammed, of Bristol, has been ordered to pay legal costs of over £16,000, and to disclose details about the money he made and people he colluded with.”

With FACT releasing no more information, TorrentFreak contacted the anti-piracy group for more details on the case.

“Mohammed shared the Sky Sports stream via a piracy blog,” FACT Director of Communications Alice Skeats told TF.

Although FACT didn’t directly answer our question on the topic, their statement that Mohammed was a Sky customer seems to suggest that he might’ve re-streamed content he previously paid for. When we can clarify this point, we will.

FACT didn’t name the ‘piracy blog’ either, nor did it respond to questions about how many people may have viewed Mohammed’s illegal streams. However, FACT did confirm that he streamed Sky Sports channels so potentially a wide range of sports was made available.

The other interesting factor is the claim that Mohammed made money from his streams. Again, FACT didn’t reveal how that revenue was generated (understandable since the case is ongoing) but it seems likely that advertising played a part, as it often does on pirate platforms.

Whether Mohammed will comply with the High Court’s orders to reveal who he colluded with is something for the future but even if he does, Sky isn’t finished with him yet. According to FACT, Mohammed’s already sizeable costs bill will be augmented with a claim for damages from the satellite broadcaster.

While providing and profiting from illegal streams could easily be considered criminal in the UK, FACT confirmed that the case against Mohammed was brought by Sky and supported by FACT in a civil proceeding alone. That was also the case last week when an individual who shared the Joshua vs Klitschko fight on Facebook apologized to Sky and agreed to pay Sky legal costs.

That’s an option Middlesborough businessman Brian Thompson didn’t enjoy when he was arrested for selling infringing ‘Kodi boxes’ two years ago. He was handed an 18 month suspended prison sentence last Friday, after being prosecuted by his local council.

Thompson won’t have to pay compensation but he still gets a criminal record, which can be a major hindrance when trying to get a job or even something as simple as cost-effective insurance cover. Whether these details will have any effect on other commercial pirates in the UK will remain to be seen but it’s certainly possible that some will begin to think twice.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Surviving Your First Year

Post Syndicated from Gleb Budman original https://www.backblaze.com/blog/startup-stages-surviving-your-first-year/

Surviving Your First Year

This post by Backblaze’s CEO and co-founder Gleb Budman is the fifth in a series about entrepreneurship. You can choose posts in the series from the list below:

  1. How Backblaze got Started: The Problem, The Solution, and the Stuff In-Between
  2. Building a Competitive Moat: Turning Challenges Into Advantages
  3. From Idea to Launch: Getting Your First Customers
  4. How to Get Your First 1,000 Customers
  5. Surviving Your First Year

Use the Join button above to receive notification of new posts in this series.

In my previous posts, I talked about coming up with an idea, determining the solution, and getting your first customers. But you’re building a company, not a product. Let’s talk about what the first year should look like.

The primary goals for that first year are to: 1) set up the company; 2) build, launch, and learn; and 3) survive.

Setting Up the Company

The company you’re building is more than the product itself, and you’re not going to do it alone. You don’t want to spend too much time on this since getting customers is key, but if you don’t set up the basics, there are all sorts of issues down the line.

startup idea board

Find Your Co-Founders & Determine Roles

You may already have the idea, but who do you need to execute it? At Backblaze, we needed people to build the web experience, the client backup application, and the server/storage side. We also needed someone to handle the business/marketing aspects, and we felt that the design and user experience were critical. As a result, we started with five co-founders: three engineers, a designer, and me for the business and marketing.

Of course not every role needs to be filled by a co-founder. You can hire employees for positions as well. But think through the strategic skills you’ll need to launch and consider co-founders with those skill sets.

Too many people think they can just “work together” on everything. Don’t. Determine roles as quickly as possible so that it’s clear who is responsible for what work and which decisions. We were lucky in that we had worked together and thus knew what each person would do, but even so we assigned titles early on to clarify roles.

Takeaway:   Fill critical roles and explicitly split roles and responsibilities.

Get Your Legal Basics In Place

When we’re excited about building a product, legal basics are often the last thing we want to deal with. You don’t need to go overboard, but it’s critical to get certain things done.

  1. Determine ownership split. What is the percentage breakdown of the company that each of the founders will own? It can be a tough discussion, but it only becomes more difficult later when there is more value and people have put more time into it. At Backblaze we split the equity equally five ways. This is uncommon. The benefit of this is that all the founders feel valued and “in it together.” The benefit of the more common split where someone has a dominant share is that person is typically empowered to be the ultimate decision-maker. Slicing Pie provides some guidance on how to think about splitting equity. Regardless of which way you want you go, don’t put it off.
  2. Incorporate. Hard to be a company if you’re not. There are various formats, but if you plan to raise angel/venture funding, a Delaware-based C-corp is standard.
  3. Deal With Stock. At a minimum, issue stock to the founders, have each one buy their shares, and file an 83(b). Buying your shares at this stage might be $100. Filing the 83(b) election marks the date at which you purchased your shares, and shows that you bought them for what they were worth. This one piece of paper paper can make the difference between paying long-term capital gains rates (~20%) or income tax rates (~40%).
  4. Assign Intellectual Property. Ask everyone to sign a Proprietary Information and Inventions Assignment (“PIIA”). This document says that what they do at the company is owned by the company. Early on we had a friend who came by and brainstormed ideas. We thought of it as interesting banter. He later said he owned part of our storage design. While we worked it out together, a PIIA makes ownership clear.

The ownership split can be worked out by the founders directly. For the other items, I would involve lawyers. Some law firms will set up the basics and defer payment until you raise money or the business can pay for services out of operations. Gunderson Dettmer did that for us (ask for Bennett Yee). Cooley will do this on a casey-by-case basis as well.

Takeaway:  Don’t let the excitement of building a company distract you from filing the basic legal documents required to protect and grow your company.

Get Health Insurance

This item may seem out of place, but not having health insurance can easily bankrupt you personally, and that certainly won’t bode well for your company. While you can buy individual health insurance, it will often be less expensive to buy it as a company. Also, it will make recruiting employees more difficult if you do not offer healthcare. When we contacted brokers they asked us to send the W-2 of each employee that wanted coverage, but the founders weren’t taking a salary at first. To work around this, make the founders ‘officers’ of the company, and the healthcare brokers can then insure them. (Of course, you need to be ok with your co-founders being officers, but hopefully, that is logical anyway.)

Takeaway:  Don’t take your co-founders’ physical and financial health for granted. Health insurance can serve as both individual protection and a recruiting tool for future employees.

Building, Launching & Learning

Getting the company set up gives you the foundation, but ultimately a company with no product and no customers isn’t very interesting.

Build

Ideally, you have one person on the team focusing on all of the items above and everyone else can be heads-down building product. There is a lot to say about building product, but for this post, I’ll just say that your goal is to get something out the door that is good enough to start collecting feedback. It doesn’t have to have every feature you dream of and doesn’t have to support 1 billion users on day one.

Launch

If you’re building a car or rocket, that may take some time. But with the availability of open-source software and cloud services, most startups should launch inside of a year.

Launching forces a scoping of the feature set to what’s critical, rallies the company around a goal, starts building awareness of your company and solution, and pushes forward the learning process. Backblaze launched in public beta on June 2, 2008, eight months after the founders all started working on it full-time.

Takeaway:  Focus on the most important features and launch.

Learn & Iterate

As much as we think we know about the customers and their needs, the launch process and beyond opens up all sorts of insights. This early period is critical to collect feedback and iterate, especially while both the product and company are still quite malleable. We initially planned on building peer-to-peer and local backup immediately on the heels of our online offering, but after launching found minimal demand for those features. On the other hand, there was tremendous demand from companies and resellers.

Takeaway:  Use the critical post-launch period to collect feedback and iterate.

Surviving

“Live to fight another day.” If the company doesn’t survive, it’s hard to change the world. Let’s talk about some of the survival components.

Consider What You As A Founding Team Want & How You Work

Are you doing this because you hope to get rich? See yourself on the cover of Fortune? Make your own decisions? Work from home all the time? Founder fighting is the number one reason companies fail; the founders need to be on the same page as much as possible.

At Backblaze we agreed very early on that we wanted three things:

  1. Build products we were proud of
  2. Have fun
  3. Make money

This has driven various decisions over the years and has evolved into being part of the culture. For example, while Backblaze is absolutely a company with a profit motive, we do not compromise the product to make more money. Other directions are not bad; they’re just different.

Do you want a lifestyle business? Or want to build a billion dollar business? Want to run it forever or build it for a couple years and do something else?

Pretend you’re getting married to each other. Do some introspection and talk about your vision of the future a lot. Do you expect everyone to work 20 or 100 hours every week? In the office or remote? How do you like to work? What pet peeves do you have?

When getting married each person brings the “life they’ve known,” often influenced by the life their parents lived. Together they need to decide which aspects of their previous lives they want to keep, toss, or change. As founders coming together, you have the same opportunity for your new company.

Takeaway:  In order for a company to survive, the founders must agree on what they want the company to be. Have the discussions early.

Determine How You Will Fund Your Business

Raising venture capital is often seen as the only path, and considered the most important thing to start doing on day one. However, there are a variety of options for funding your business, including using money from savings, part-time work, friends & family money, loans, angels, and customers. Consider the right option for you, your founding team, and your business.

Conserve Cash

Whichever option you choose for funding your business, chances are high that you will not be flush with cash on day one. In certain situations, you actually don’t want to conserve cash because you’ve raised $100m and now you want to run as fast as you can to capture a market — cash is plentiful and time is not. However, with the exception of founder struggles, running out of cash is the most common way companies go under. There are many ways to conserve cash — limit hiring of employees and consultants, use lawyers and accountants sparingly, don’t spend on advertising, work from a home office, etc. The most important way is to simply ensure that you and your team are cash conscious, challenging decisions that commit you to spending cash.

Backblaze spent a total of $94,122 to get to public beta launch. That included building the backup application, our own server infrastructure, the website with account/billing/restore functionality, the marketing involved in getting to launch, and all the steps above in setting up the company, paying for healthcare, etc. The five founders took no salary during this time (which, of course, would have cost dramatically more), so most of this money went to computers, servers, hard drives, and other infrastructure.

Takeaway:  Minimize cash burn — it extends your runway and gives you options.

Slowly Flesh Out Your Team

We started with five co-founders, and thus a fairly fleshed-out team. A year in, we only added one person, a Mac architect. Three months later we shipped a beta of our Mac version, which has resulted in more than 50% of our revenue.

Minimizing hiring is key to cash conservation, and hiring ahead of getting market feedback is risky since you may realize that the talent you need will change. However, once you start getting feedback, think about the key people that you need to move your company forward. But be rigorous in determining whether they’re critical. We didn’t hire our first customer support person until all five founders were spending 20% of their time on it.

Takeaway:  Don’t hire in anticipation of market growth; hire to fuel the growth.

Keep Your Spirits Up

Startups are roller coasters of emotion. There have been some serious articles about founders suffering from depression and worse. The idea phase is exhilarating, then there is the slog of building. The launch is a blast, but the week after there are crickets.

On June 2, 2008, we launched in public beta with great press and hordes of customers. But a few months later we were signing up only about 10 new customers per month. That’s $50 new monthly recurring revenue (MRR) after a year of work and no salary.

On August 25, 2008, we brought on our Mac architect. Two months later, on October 26, 2008, Apple launched Time Machine — completely free and built-in backup for all Macs.

There were plenty of times when our prospects looked bleak. In the rearview mirror it’s easy to say, “well sure, but now you have lots of customers,” or “yes, but Time Machine doesn’t do cloud backup.” But at the time neither of these were a given.

Takeaway:  Getting up each day and believing that as a team you’ll figure it out will let you get to the point where you can look in the rearview mirror and say, “It looked bleak back then.”

Succeeding in Your First Year

I titled the post “Surviving Your First Year,” but if you manage to, 1) set up the company; 2) build, launch, and learn; and 3) survive, you will have done more than survive: you’ll have truly succeeded in your first year.

The post Surviving Your First Year appeared first on Backblaze Blog | Cloud Storage & Cloud Backup.

On the Equifax Data Breach

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2017/09/on_the_equifax_.html

Last Thursday, Equifax reported a data breach that affects 143 million US customers, about 44% of the population. It’s an extremely serious breach; hackers got access to full names, Social Security numbers, birth dates, addresses, driver’s license numbers — exactly the sort of information criminals can use to impersonate victims to banks, credit card companies, insurance companies, and other businesses vulnerable to fraud.

Many sites posted guides to protecting yourself now that it’s happened. But if you want to prevent this kind of thing from happening again, your only solution is government regulation (as unlikely as that may be at the moment).

The market can’t fix this. Markets work because buyers choose between sellers, and sellers compete for buyers. In case you didn’t notice, you’re not Equifax’s customer. You’re its product.

This happened because your personal information is valuable, and Equifax is in the business of selling it. The company is much more than a credit reporting agency. It’s a data broker. It collects information about all of us, analyzes it all, and then sells those insights.

Its customers are people and organizations who want to buy information: banks looking to lend you money, landlords deciding whether to rent you an apartment, employers deciding whether to hire you, companies trying to figure out whether you’d be a profitable customer — everyone who wants to sell you something, even governments.

It’s not just Equifax. It might be one of the biggest, but there are 2,500 to 4,000 other data brokers that are collecting, storing, and selling information about you — almost all of them companies you’ve never heard of and have no business relationship with.

Surveillance capitalism fuels the Internet, and sometimes it seems that everyone is spying on you. You’re secretly tracked on pretty much every commercial website you visit. Facebook is the largest surveillance organization mankind has created; collecting data on you is its business model. I don’t have a Facebook account, but Facebook still keeps a surprisingly complete dossier on me and my associations — just in case I ever decide to join.

I also don’t have a Gmail account, because I don’t want Google storing my e-mail. But my guess is that it has about half of my e-mail anyway, because so many people I correspond with have accounts. I can’t even avoid it by choosing not to write to gmail.com addresses, because I have no way of knowing if [email protected] is hosted at Gmail.

And again, many companies that track us do so in secret, without our knowledge and consent. And most of the time we can’t opt out. Sometimes it’s a company like Equifax that doesn’t answer to us in any way. Sometimes it’s a company like Facebook, which is effectively a monopoly because of its sheer size. And sometimes it’s our cell phone provider. All of them have decided to track us and not compete by offering consumers privacy. Sure, you can tell people not to have an e-mail account or cell phone, but that’s not a realistic option for most people living in 21st-century America.

The companies that collect and sell our data don’t need to keep it secure in order to maintain their market share. They don’t have to answer to us, their products. They know it’s more profitable to save money on security and weather the occasional bout of bad press after a data loss. Yes, we are the ones who suffer when criminals get our data, or when our private information is exposed to the public, but ultimately why should Equifax care?

Yes, it’s a huge black eye for the company — this week. Soon, another company will have suffered a massive data breach and few will remember Equifax’s problem. Does anyone remember last year when Yahoo admitted that it exposed personal information of a billion users in 2013 and another half billion in 2014?

This market failure isn’t unique to data security. There is little improvement in safety and security in any industry until government steps in. Think of food, pharmaceuticals, cars, airplanes, restaurants, workplace conditions, and flame-retardant pajamas.

Market failures like this can only be solved through government intervention. By regulating the security practices of companies that store our data, and fining companies that fail to comply, governments can raise the cost of insecurity high enough that security becomes a cheaper alternative. They can do the same thing by giving individuals affected by these breaches the ability to sue successfully, citing the exposure of personal data itself as a harm.

By all means, take the recommended steps to protect yourself from identity theft in the wake of Equifax’s data breach, but recognize that these steps are only effective on the margins, and that most data security is out of your hands. Perhaps the Federal Trade Commission will get involved, but without evidence of “unfair and deceptive trade practices,” there’s nothing it can do. Perhaps there will be a class-action lawsuit, but because it’s hard to draw a line between any of the many data breaches you’re subjected to and a specific harm, courts are not likely to side with you.

If you don’t like how careless Equifax was with your data, don’t waste your breath complaining to Equifax. Complain to your government.

This essay previously appeared on CNN.com.

EDITED TO ADD: In the early hours of this breach, I did a radio interview where I minimized the ramifications of this. I didn’t know the full extent of the breach, and thought it was just another in an endless string of breaches. I wondered why the press was covering this one and not many of the others. I don’t remember which radio show interviewed me. I kind of hope it didn’t air.

AWS Hot Startups – August 2017

Post Syndicated from Tina Barr original https://aws.amazon.com/blogs/aws/aws-hot-startups-august-2017/

There’s no doubt about it – Artificial Intelligence is changing the world and how it operates. Across industries, organizations from startups to Fortune 500s are embracing AI to develop new products, services, and opportunities that are more efficient and accessible for their consumers. From driverless cars to better preventative healthcare to smart home devices, AI is driving innovation at a fast rate and will continue to play a more important role in our everyday lives.

This month we’d like to highlight startups using AI solutions to help companies grow. We are pleased to feature:

  • SignalBox – a simple and accessible deep learning platform to help businesses get started with AI.
  • Valossa – an AI video recognition platform for the media and entertainment industry.
  • Kaliber – innovative applications for businesses using facial recognition, deep learning, and big data.

SignalBox (UK)

In 2016, SignalBox founder Alain Richardt was hearing the same comments being made by developers, data scientists, and business leaders. They wanted to get into deep learning but didn’t know where to start. Alain saw an opportunity to commodify and apply deep learning by providing a platform that does the heavy lifting with an easy-to-use web interface, blueprints for common tasks, and just a single-click to productize the models. With SignalBox, companies can start building deep learning models with no coding at all – they just select a data set, choose a network architecture, and go. SignalBox also offers step-by-step tutorials, tips and tricks from industry experts, and consulting services for customers that want an end-to-end AI solution.

SignalBox offers a variety of solutions that are being used across many industries for energy modeling, fraud detection, customer segmentation, insurance risk modeling, inventory prediction, real estate prediction, and more. Existing data science teams are using SignalBox to accelerate their innovation cycle. One innovative UK startup, Energi Mine, recently worked with SignalBox to develop deep networks that predict anomalous energy consumption patterns and do time series predictions on energy usage for businesses with hundreds of sites.

SignalBox uses a variety of AWS services including Amazon EC2, Amazon VPC, Amazon Elastic Block Store, and Amazon S3. The ability to rapidly provision EC2 GPU instances has been a critical factor in their success – both in terms of keeping their operational expenses low, as well as speed to market. The Amazon API Gateway has allowed for operational automation, giving SignalBox the ability to control its infrastructure.

To learn more about SignalBox, visit here.

Valossa (Finland)

As students at the University of Oulu in Finland, the Valossa founders spent years doing research in the computer science and AI labs. During that time, the team witnessed how the world was moving beyond text, with video playing a greater role in day-to-day communication. This spawned an idea to use technology to automatically understand what an audience is viewing and share that information with a global network of content producers. Since 2015, Valossa has been building next generation AI applications to benefit the media and entertainment industry and is moving beyond the capabilities of traditional visual recognition systems.

Valossa’s AI is capable of analyzing any video stream. The AI studies a vast array of data within videos and converts that information into descriptive tags, categories, and overviews automatically. Basically, it sees, hears, and understands videos like a human does. The Valossa AI can detect people, visual and auditory concepts, key speech elements, and labels explicit content to make moderating and filtering content simpler. Valossa’s solutions are designed to provide value for the content production workflow, from media asset management to end-user applications for content discovery. AI-annotated content allows online viewers to jump directly to their favorite scenes or search specific topics and actors within a video.

Valossa leverages AWS to deliver the industry’s first complete AI video recognition platform. Using Amazon EC2 GPU instances, Valossa can easily scale their computation capacity based on customer activity. High-volume video processing with GPU instances provides the necessary speed for time-sensitive workflows. The geo-located Availability Zones in EC2 allow Valossa to bring resources close to their customers to minimize network delays. Valossa also uses Amazon S3 for video ingestion and to provide end-user video analytics, which makes managing and accessing media data easy and highly scalable.

To see how Valossa works, check out www.WhatIsMyMovie.com or enable the Alexa Skill, Valossa Movie Finder. To try the Valossa AI, sign up for free at www.valossa.com.

Kaliber (San Francisco, CA)

Serial entrepreneurs Ray Rahman and Risto Haukioja founded Kaliber in 2016. The pair had previously worked in startups building smart cities and online privacy tools, and teamed up to bring AI to the workplace and change the hospitality industry. Our world is designed to appeal to our senses – stores and warehouses have clearly marked aisles, products are colorfully packaged, and we use these designs to differentiate one thing from another. We tell each other apart by our faces, and previously that was something only humans could measure or act upon. Kaliber is using facial recognition, deep learning, and big data to create solutions for business use. Markets and companies that aren’t typically associated with cutting-edge technology will be able to use their existing camera infrastructure in a whole new way, making them more efficient and better able to serve their customers.

Computer video processing is rapidly expanding, and Kaliber believes that video recognition will extend to far more than security cameras and robots. Using the clients’ network of in-house cameras, Kaliber’s platform extracts key data points and maps them to actionable insights using their machine learning (ML) algorithm. Dashboards connect users to the client’s BI tools via the Kaliber enterprise APIs, and managers can view these analytics to improve their real-world processes, taking immediate corrective action with real-time alerts. Kaliber’s Real Metrics are aimed at combining the power of image recognition with ML to ultimately provide a more meaningful experience for all.

Kaliber uses many AWS services, including Amazon Rekognition, Amazon Kinesis, AWS Lambda, Amazon EC2 GPU instances, and Amazon S3. These services have been instrumental in helping Kaliber meet the needs of enterprise customers in record time.

Learn more about Kaliber here.

Thanks for reading and we’ll see you next month!

-Tina

 

A Framework for Cyber Security Insurance

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2017/08/a_framework_for.html

New paper: “Policy measures and cyber insurance: a framework,” by Daniel Woods and Andrew Simpson, Journal of Cyber Policy, 2017.

Abstract: The role of the insurance industry in driving improvements in cyber security has been identified as mutually beneficial for both insurers and policy-makers. To date, there has been no consideration of the roles governments and the insurance industry should pursue in support of this public­-private partnership. This paper rectifies this omission and presents a framework to help underpin such a partnership, giving particular consideration to possible government interventions that might affect the cyber insurance market. We have undertaken a qualitative analysis of reports published by policy-making institutions and organisations working in the cyber insurance domain; we have also conducted interviews with cyber insurance professionals. Together, these constitute a stakeholder analysis upon which we build our framework. In addition, we present a research roadmap to demonstrate how the ideas described might be taken forward.

Roombas will Spy on You

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2017/07/roombas_will_sp.html

The company that sells the Roomba autonomous vacuum wants to sell the data about your home that it collects.

Some questions:

What happens if a Roomba user consents to the data collection and later sells his or her home — especially furnished — and now the buyers of the data have a map of a home that belongs to someone who didn’t consent, Mr. Gidari asked. How long is the data kept? If the house burns down, can the insurance company obtain the data and use it to identify possible causes? Can the police use it after a robbery?

EDITED TO ADD (6/29): Roomba is backtracking — for now.

AWS HIPAA Eligibility Update (July 2017) – Eight Additional Services

Post Syndicated from Jeff Barr original https://aws.amazon.com/blogs/aws/aws-hipaa-eligibility-update-july-2017-eight-additional-services/

It is time for an update on our on-going effort to make AWS a great host for healthcare and life sciences applications. As you can see from our Health Customer Stories page, Philips, VergeHealth, and Cambia (to choose a few) trust AWS with Protected Health Information (PHI) and Personally Identifying Information (PII) as part of their efforts to comply with HIPAA and HITECH.

In May we announced that we added Amazon API Gateway, AWS Direct Connect, AWS Database Migration Service, and Amazon Simple Queue Service (SQS) to our list of HIPAA eligible services and discussed our how customers and partners are putting them to use.

Eight More Eligible Services
Today I am happy to share the news that we are adding another eight services to the list:

Amazon CloudFront can now be utilized to enhance the delivery and transfer of Protected Health Information data to applications on the Internet. By providing a completely secure and encryptable pathway, CloudFront can now be used as a part of applications that need to cache PHI. This includes applications for viewing lab results or imaging data, and those that transfer PHI from Healthcare Information Exchanges (HIEs).

AWS WAF can now be used to protect applications running on AWS which operate on PHI such as patient care portals, patient scheduling systems, and HIEs. Requests and responses containing encrypted PHI and PII can now pass through AWS WAF.

AWS Shield can now be used to protect web applications such as patient care portals and scheduling systems that operate on encrypted PHI from DDoS attacks.

Amazon S3 Transfer Acceleration can now be used to accelerate the bulk transfer of large amounts of research, genetics, informatics, insurance, or payer/payment data containing PHI/PII information. Transfers can take place between a pair of AWS Regions or from an on-premises system and an AWS Region.

Amazon WorkSpaces can now be used by researchers, informaticists, hospital administrators and other users to analyze, visualize or process PHI/PII data using on-demand Windows virtual desktops.

AWS Directory Service can now be used to connect the authentication and authorization systems of organizations that use or process PHI/PII to their resources in the AWS Cloud. For example, healthcare providers operating hybrid cloud environments can now use AWS Directory Services to allow their users to easily transition between cloud and on-premises resources.

Amazon Simple Notification Service (SNS) can now be used to send notifications containing encrypted PHI/PII as part of patient care, payment processing, and mobile applications.

Amazon Cognito can now be used to authenticate users into mobile patient portal and payment processing applications that use PHI/PII identifiers for accounts.

Additional HIPAA Resources
Here are some additional resources that will help you to build applications that comply with HIPAA and HITECH:

Keep in Touch
In order to make use of any AWS service in any manner that involves PHI, you must first enter into an AWS Business Associate Addendum (BAA). You can contact us to start the process.

Jeff;

Developers and Ethics

Post Syndicated from Bozho original https://techblog.bozho.net/developers-and-ethics/

“What are some areas you are particularly interested in” – recruiters (head-hunters) tend to ask that question a lot. I don’t have a good answer for that – I’ll know it when I see it. But I have a list of areas that I wouldn’t like to work in. And one of them is gambling.

Several years ago I got a very lucrative offer for a gambling company, both well paid and technically challenging. But I rejected it. Because I didn’t want to contribute to abusing peoples’ weaknesses for the sake of getting their money. And no, I’m not a raging Marxist, but gambling is bad. You may argue that it’s a necessary vice and people need it to suppress other internal struggles, but I’m not buying that as a motivator.

I felt it’s unethical to write code that does that. Like I feel it’s unethical to profile users’ behaviours and “read” their emails in order to target ads, or to write bots to disseminate fake news.

A few months ago I was part of the campaign HQ for a party in a parliamentary election. Cambridge Analytica had already become popular after “delivering Brexit and Trump’s victory”, that using voters’ data in order to target messages at them sounded like the new cool thing. As head of IT & data, I rejected this approach. Because it would be unethical to bait unsuspecting users to take dumb tests in order to provide us with facebook tokens. Yes, we didn’t have any money to hire Cambridge Analytica-like companies, but even if we had, is “outsourcing” the dubious practice changing anything? If you pay someone to trick users into unknowingly giving their personal data, it’s as if you did it yourself.

This can be a very long post about technology and ethics. But it won’t, as this is a technical blog, not a philosophical one. It won’t be about philosophy – for interesting takes on the matter you can listen to Damon Horowitz’s TED talk or even go through all of Michael Sandel’s Justice lectures at Harvard. It won’t be about how companies should be ethical (e.g. following the ethical design manifesto)

Instead, it will be a short post focusing on developers and their ethical choices.

I think we have the freedom to be ethical – there’s so much demand on the job market that rejecting an offer, refusing to do something, or leaving a company for ethical reasons is something we have the luxury to do without compromising our well-being. When asked to do something unethical, we can refuse (several years ago I was asked to take part in some shady interactions related to a potential future government contract, which I refused to do). When offered jobs that are slightly better paid but would have us build abusive technology, we can turn the offer down. When a new feature requires us to breach people’s privacy, we can argue it, and ultimately not do it.

But in order to start making these ethical choices, we have to start thinking about ethics. To put ourselves in context. We, developers, are building the world of tomorrow (it sounds grandiose, but we know it’s way more mundane than that). We are the “tools” with which future products will be shaped. And yes, that’s true even for the average back-office system of an insurance company (which allows for raising the insurance for pre-existing conditions), and true for boring banking software (which allows mortgages way beyond the actual coverage the bank has), and so on.

Are these decisions ours to make? Isn’t it legislators that should define what’s allowed and what isn’t? We are just building whatever they tell us to build. Forgive me the far-fetched analogy, but Nazi Germany was an anti-humanity machine based on people who “just followed orders”. Yes, we’ll refuse, someone else will come and do it, but collective ethics gets built over time.

As Hannah Arendt had put it – “The sad truth is that most evil is done by people who never make up their minds to be good or evil.”. We may think that as developers we don’t have a say. But without us, no software can be built. So with our individual ethical stance, a certain unethical software may not be built or be successful, and that’s a stance worth considering, especially when it costs us next to nothing.

The post Developers and Ethics appeared first on Bozho's tech blog.

Introducing the Self-Service Business Associate Addendum

Post Syndicated from Chad Woolf original https://aws.amazon.com/blogs/security/introducing-the-self-service-business-associate-addendum/

HIPAA logo

Today, we made available a new feature in AWS Artifact (our auditing and compliance portal) that enables you to review, accept, and track the status of your Business Associate Addendum (BAA). With this new feature, you can accept the terms of a BAA online, and instantly designate an AWS account as a “HIPAA Account” for use with protected health information (PHI) under the U.S. Health Insurance Portability and Accountability Act (HIPAA). In addition, you can sign in to AWS Artifact to confirm that your account is designated as a HIPAA Account, and review the terms of the BAA for that account. If you are no longer using a designated HIPAA Account in connection with PHI, you can remove that designation using the AWS Artifact interface.

Today’s release addresses two key customer needs in particular: (1) the need to enter into a BAA quickly, and (2) the need to easily track and control whether an AWS account is designated as a HIPAA Account under a BAA.

The BAA is the first specialized industry agreement that AWS is making available online. We chose to launch with the BAA as a commitment to AWS customer organizations who are reinventing the way healthcare is researched and delivered with the cloud. Many AWS customers have great stories to tell as we work together to use technology to advance the healthcare industry.

If you already have a BAA with AWS, or if you are considering designing or migrating a new solution that will create, receive, maintain, or transmit PHI on AWS, you can use AWS Artifact to manage your HIPAA Accounts today. As with all AWS Artifact features, there are no additional fees for using AWS Artifact to review, accept, and manage BAAs online.

– Chad

Analyzing Cyber Insurance Policies

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2017/04/analyzing_cyber.html

There’s a really interesting new paper analyzing over 100 different cyber insurance policies. From the abstract:

In this research paper, we seek to answer fundamental questions concerning the current state of the cyber insurance market. Specifically, by collecting over 100 full insurance policies, we examine the composition and variation across three primary components: The coverage and exclusions of first and third party losses which define what is and is not covered; The security application questionnaires which are used to help assess an applicant’s security posture; and the rate schedules which define the algorithms used to compute premiums.

Overall, our research shows a much greater consistency among loss coverage and exclusions of insurance policies than is often assumed. For example, after examining only 5 policies, all coverage topics were identified, while it took only 13 policies to capture all exclusion topics. However, while each policy may include commonly covered losses or exclusions, there was often additional language further describing exceptions, conditions, or limits to the coverage. The application questionnaires provide insights into the security technologies and management practices that are (and are not) examined by carriers. For example, our analysis identified four main topic areas: Organizational, Technical, Policies and Procedures, and Legal and Compliance. Despite these sometimes lengthy questionnaires, however, there still appeared to be relevant gaps. For instance, information about the security posture of third-party service and supply chain providers and are notoriously difficult to assess properly (despite numerous breaches occurring from such compromise).

In regard to the rate schedules, we found a surprising variation in the sophistication of the equations and metrics used to price premiums. Many policies examined used a very simple, flat rate pricing (based simply on expected loss), while others incorporated more parameters such as the firm’s asset value (or firm revenue), or standard insurance metrics (e.g. limits, retention, coinsurance), and industry type. More sophisticated policies also included information specific information security controls and practices as collected from the security questionnaires. By examining these components of insurance contracts, we hope to provide the first-ever insights into how insurance carriers understand and price cyber risks.

Case 230: All Together Now

Post Syndicated from The Codeless Code original http://thecodelesscode.com/case/230

The Hungry Worm Clan was building a website
for a craftsman who made custom farming tools.
Young master Zjing was reviewing the code
of their three developers.

“I do not understand the purpose of the LatestSellByDate property
in your shopping cart’s PurchaseItem,” she said to the three.
“Shovels and rakes do not expire.”

“That property was requested by the Red Pebble Clan,”
replied the first monk. “They are building a system for
managing a merchant’s cherry farms, and they plan to use our
order-placement service instead of building their own.”

“What?” asked Zjing in disbelief. “Who suggested that?”

“You did,” said the second monk. “For did you not
tell two of our clans that the reuse of services
was superior to the copying and pasting of code?”

“Yes, but the business needs of your two clans are
completely different!” cried Zjing.
“Eventually, the cherry purchasers may need options for crate size,
refrigerated shipping, and insurance against pests.
All of these could have their own rules and calculations!”

“You are worrying about a future that may never come to
pass,” countered the third monk. “And even if it does, so
what? The more features we implement, the greater the
chance that we can support our other clients.”

“Other clients?” asked Zjing.

“Two other Tiny Clans have expressed interest in our services,”
said the first monk.

“For unicycle parts and novelty wedding costumes,”
said the second monk.

“And I have begun designing a plug-in mechanism to handle
unforeseen cases,” said the third monk. “In the end the
Temple will save much development time overall.”

- - -

Later that week Zjing called a meeting of the Tiny Clans
under her tutelage. Dozens of monks and nuns crowded
into the dim, stuffy, windowless Hall of Irresistable
Somnolence where long presentations were given.*

Most of the benches had already been taken up by unfamiliar
villagers—employees, explained Zjing, of the novelty
wedding costume shop, who were there to ensure that their
requirements would be met. The meeting then began with an
extraordinarily dull presentation about tailoring, during
which many of the monks and nuns could be seen nodding off.

After the final slide the villagers were excused. When the
last of them had gone, Zjing brought forth a lantern from
behind the podium, and without a word she set the huge rice
paper projection screen on fire. Flames climbed swiftly and
spread across the dry ceiling timbers; heat seared the air;
smoke billowed forth; monks coughed or cried out; the fire
alarm clanged; then somewhere overhead the sprinkers came to
life and began gushing water ineffectively on the scene of
pandemonium below. It was only then—as the occupants
rose to flee in four different directions to the four exit
doors—that they discovered that their robes had been
swiftly and skillfully sewn to the robes of their neighbors.

* Usually these were mandated by the HR department, and included yearly refresher courses like: “First Aid For Accidental Injuries”, “First Aid For Intentional Injuries”, “How to Choose a Comprehensive Life Insurance Plan”, and “The Importance of Good Workplace Morale.”