External cyber risk is any risk that comes from outside your organization or its extended ecosystem. These are the threats you might think about first when you think of cyber risk: cyberattacks, phishing, ransomware, DDoS attacks — any attack that comes from the outside world.
They’re also some of the most common attacks: cyber attacks were the primary cause of data compromises reported in the last months of 2020, says the Identity Theft Resource Center.
Cyber risk is growing as cybercrime evolves, and it has never been more important for a business to have a system of precautionary measures in place.
Risk management is critical, but it’s not a guarantee against cyberattacks: if your risk assessment indicates your business may be more vulnerable than you thought, it’s worth looking into specialized coverage for some peace of mind. Some of the biggest cyber threats stem from the move to new technologies, like the Internet of Things (IoT). As networks disperse and more devices develop greater connectivity, security measures will have to evolve, too.
The most common types of cyberattacks
Phishing is a social engineering attack in which an attacker sends a message to a person within an organization, attempting to trick them into opening the email or an attachment that will release malware or ransomware into the system, or to reveal credentials that will allow the attacker access or the organization’s network and data. Phishing is on the rise and according to data from Microsoft, attackers have shifted their focus from malware attacks to using phishing to harvest people’s credentials.
Malware is malicious software that is often inserted into computers when attachments on phishing emails are opened or links are clicked it breaches information systems by exploiting network vulnerabilities. Malware can include viruses, keyloggers, spyware, worms, or ransomware.
Ransomware is a form of malware that locks a user out of their information systems unless a ransom is paid to the attacker. Some attackers who don’t get their ransom will retaliate by posting a company’s proprietary data online.
Distributed denial-of-service attack (DDoS)
A distributed denial-of-service attack bombard an organization’s central server with simultaneous data requests, causing it to freeze up, holding a company hostage until an attacker’s demands are met.
External risks can come from a variety of sources, including competitors, nation-states, individuals, or hacktivist groups.
Other cyberattacks include brute force attacks, SQL injections, and other social engineering attacks.
Poorly managed cyber risks
Poorly managed cyber risks can leave you open to a variety of cybercrimes, with consequences ranging from data disruption to economic destitution. In many cases, businesses will also find themselves in the middle of a public relations nightmare as they struggle to recover lost assets and prevent further theft.
Even a decade or so ago, the technical operations, systems and footprints of many large companies had become extremely costly and complex. Breakneck digitisation in the smartphone era has exacerbated matters, as companies have increasingly created ecosystems with a variety of new partners to help expand their reach and capture new, profitable growth.
They range from supply chain relationships across goods and services (including IT services) to partnerships for data, distribution, marketing and innovation. Even more recently, the business challenges of the COVID-19 pandemic have spurred faster adoption of digital solutions that rely on data, digital networks and devices that are most often operated by companies outside the organisation’s borders.
In today’s hyperconnected world, companies need to consider multiple areas of cyber risk throughout their ecosystem.
The technology architecture of many organisations, often made up of layers of legacy systems with multiple constraints on their flexibility, represents an ever expanding dimension of complexity.
By contrast, many “digital native” companies of more recent vintage have a simplicity advantage. These companies are built digital from the ground-up, using more recent generations of IT, standards and techniques meant to create increased interoperability across systems.
Legacy structures are often riddled with open seams and soft connections that can be exploited by attackers, whose capacity to infiltrate sprawling systems has grown.
The pressures on these legacy structures have intensified as companies have pushed their current IT to keep pace with the digital natives. Mergers often multiply risks, by connecting already complex networks of systems, which makes them exponentially more complex.
As a result, complexity has driven cyber risks and costs to dangerous new heights. The numbers of significant cyberattacks globally are increasing and include potentially devastating criminal “ransomware” attacks and nation-state activity targeting government agencies, defense and high-tech systems by, for example, breaching IT network-management software and other suppliers. Each major incident exposes thousands of users to risk, and can go undiscovered for months.