The Future of Cybersecurity Regulation

Each time a big cyberattack happens – including the most recent revelation with Equifax – there are calls for government action, followed by industry hand-wringing over what that really means: More regulation, including potentially onerous rules that expose companies to big financial penalties without addressing underlying threats and nefarious actors.

The government has one big advantage over private organizations when it comes to cyber crime – it doesn’t face the potential backlash from shareholders after a breach. Private sector organizations are often reticent about disclosing hacks to the government out of fear they will be the targets of enforcement action them selves.

A CDC for cybersecurity?

This tension prompts a question: What if there were another role for government? One focused on inoculation and prevention. A Centers for Disease Control for cybersecurity, focused on gathering information and disseminating advice?

The idea of a cybersecurity CDC has been around for years, promoted by experts like Peter Singer of the New America Foundation. The U.S. Computer Emergency Readiness Team (US-CERT) housed within the Department of Homeland Security, fulfills some of these roles, tracking computer virus outbreaks and offering practical advice on cybersecurity. Most recently, the Cyber Readiness Institute was launched to facilitate improved cybersecurity across value chains, with a particular emphasis on support for small and medium-sized enterprises.

“Government involvement is necessary, but it’s not enough to prevent the spread of cyberattacks.”

But the government can only do so much. Hackers, like diseases, are constantly evolving to circumvent the latest security measures. Government can disseminate information about threats and shut down known violators, hopefully before they launch their next attack. What the government cannot do is prevent the emergence of new hackers – some motivated by the potential for financial gain, others with murkier goals – who are constantly moving in to replace the ones who’ve been removed from the field.

So government involvement is necessary, but it’s not enough to prevent the spread of cyberattacks. Companies should feel safe sharing information with law enforcement and organizations like US-CERT without fear of penalties, and the government plays a valuable role in collecting and sharing that information widely.

Demanding compliance to do business

Private enforcement is just as important. Our economy is based on interconnected value chains that are increasingly reliant on computer links and real time communications, all of which are vulnerable to cyberattacks. In order for this system to work, private companies need to borrow a page from the government and demand cybersecurity measures, and the necessary compliance regime to enforce them, across the entire ecosystem of interconnected vendors and customers. This is a task that must be overseen from the board on down: According to NAVEX Global’s 2017 Ethics & Compliance Training Benchmark Report, only a quarter of organizations include specific training on cybersecurity to directors.

For guidance, private sector organizations might look at recommendations contained in the December 2016 report from the President’s Commission on Enhancing National Cybersecurity.  More recently, President Trump’s May 11 cybersecurity executive order, mandates a broad set of cybersecurity measures across the entire federal system – and holds agency chiefs accountable, not only for implementing the protocol but showing a trajectory of improvement. Private organizations have the power to implement similar measures with economic incentives: If you want to do business with us, you need to demonstrate compliance with cybersecurity protocols.

Practical measures that every private organization should require across the entire network of customers and vendors include:

• Employee training in cybersecurity protective measures
• An incident response system you have tested
• Monitoring and detection capabilities
• Backup and recovery plans (in case primary systems are locked via ransomware or similar attacks)

The government has a big role to play in cybersecurity, including the collection and dissemination of threats that affect all the participants in the economy. But the government’s main role is law enforcement: Identifying the bad actors and eliminating them.

Private companies, on the other hand, must think more like epidemiologists: To survive, they need to build disease-resistant organizations that can interact with each other without spreading infections that can take them all down.