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Chinese cyber-espionage rising, says Verizon annual report

Espionage and systems weakness at small retailers highlighted

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Cyber-espionage originating from China has become a top source of data breach incidents, according to an annual report from Verizon. The report found Chinese spying and theft of sensitive corporate information, such as intellectual property, accounted for about 20% of the 621 data breach cases last year that Verizon analysed.

The data-breach victims are companies and government agencies around the world that are either Verizon's customers or case information was provided by the U.S. Secret Service and similar law-enforcement agencies in North America, Europe, Asia (though not China) or Latin America. Cyber-espionage from "threat actors in China" is hardly new, says Marc Spitler, senior analyst on Verizon's risk team, but because there are now better ways to track these cyberattacks, a clearer picture is emerging.

According to the report, virtually all (96%) of the data-breach incidents categorised as espionage involved China. And 95% of attacks tied to state-affiliated espionage employed phishing as a means of establishing a foothold in their victims' systems.

However, the majority of the incidents involve financial-related cybercrime, including payment-card theft and fraud committed by tampering with ATM machines.

One of the biggest problems stems from theft of payment card information from the merchants' Internet-facing point-of-sale devices, says Spitler, adding, "this is typically a small retailer."

When it comes to vulnerabilities that create risks, the main security failures are related to weak password authentication, processes and configuration, he says. The more advanced attacks that involve sophisticated malware or zero-day attacks occur but aren't as commonplace. That's perhaps because criminals find it easier to "pick the low-hanging fruit."

One question Verizon seeks to address in its annual report is whether a data breach of a company is caused by an outsider, an insider or a "partner," meaning a close business partner with access to a network or holding sensitive information related to another company. The breach might be malicious or accidental.

Accord to the report, "partner actors" constitute only 1% of breaches under review, while "internal actors" who are company insiders accounted for 14%. Those rogue employees were most often involved in the payment chain -- such as cashiers, waiters and bank tellers -- though in larger organisations the chances that systems administrators were the involved in some way in a data breach grows. But the "external actors -- the outsiders who had no trust or privileged access to the corporate network -- accounted for over 90% of the data breaches under review, whether it involved the roughly 80% involving financial crime or the 20% involving cyber-espionage.

In more than three-quarters of the cases, the country origin of the "threat actor" was discernible, according to the report, adding that "motive correlates very highly with country of origin."

"The majority of financially motivated incidents involved actors in either the U.S. or Eastern European countries (e.g., Romania, Bulgaria, and the Russian Federation). A whopping 96% of espionage cases were attributed to threat actors in China and the remaining 4% were unknown. That may mean that other threat groups perform their activities with greater stealth and subterfuge. But it could also mean that China is, in fact, the most active source of national and industrial espionage in the world today."


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