Hacking, malware breaches nearly doubled from 2014 to 2015, report says

Breaches caused by either hacking or malware nearly doubled in relative frequency over the past year – from 32% of all incidents in 2015 from 18% in 2014, according to specialist and data breach response insurer Beazley.

Earlier this week, the Beazley Breach Response (BBR) Services unit responded to 60% more data breaches in 2015 compared to 2014, with a concentration of incidents in the healthcare, financial services and higher education sectors. The Beazley Breach Insight 2016 report was based on the company’s response to more than 2,000 breaches in the past two years.

“We saw a significant rise in incidents caused by hacking or malware in the past year,” said Katherine Keefe, global head of BBR Services, in a press release. “This was especially noticeable in healthcare where the percentage of data breaches caused by hacking or malware more than doubled.”

According to the report, unintended disclosure of records – such as a misdirected email – accounted for 24% of all breaches in 2015, down from 32% in 2014. The loss of non-electronic physical records accounted for 16% of all breaches in 2015, unchanged from 2014, while the proportion of breaches involving third party vendors more than tripled over the same period, rising from 6% of breaches in 2014 to 18% of breaches in 2015.

Beazley’s data breach statistics are based on 777 incidents in 2014 and 1,249 in 2015.

Hacking or malware was the leading cause of data breaches in the healthcare industry in 2015, representing 27% of all breaches, more than physical loss at 20%. Hackers are increasingly employing ransomware to lock up an organization’s data, holding it until a ransom is paid in nearly untraceable Bitcoin, the statement said. Beazley pointed to the case of the Hollywood Presbyterian Medical Center in Los Angeles, which suffered a ransomware attack in February and paid the hackers 40 bitcoins, equivalent to approximately US$17,000. “The quickest and most efficient way to restore our systems and administrative functions was to pay the ransom and obtain the decryption key,” the hospital’s president and CEO, Allen Stefanek said at the time.

“This trend is borne out by Beazley’s data,” the statement added. “Breaches involving ransomware among Beazley clients more than doubled to 43 in 2015 and the trend appears to be accelerating in 2016. Based on figures for the first two months of the year, ransomware attacks are projected to increase by 250% in 2016.”

In the financial services sector, hacking or malware was up modestly to 27% of industry data breaches in 2015 versus 23% in 2014. Trojan programs continued to be a popular hacking device, according to Beazley’s data.

Higher education also experienced an increase in breaches due to hacking or malware, with these accounting for 35% of incidents in 2015, up from 26% in 2015. Colleges and universities are reporting increased “spear phishing” incidents in which hackers send personalized, legitimate-looking emails with harmful links or attachments. “The relatively open nature of campus IT systems, widespread use of social media by students and a lack of the restrictive controls common in many corporate settings make higher education institutions particularly vulnerable to data breaches,” Beazley said in the statement.

“Clearly, new malware programs, including ransomware, are having a big impact,” concluded Paul Nikhinson, privacy breach response services manager for BBR Services. “Healthcare is a big target for hackers because of the richness of medical records for identity theft and other crimes. In fact, a medical record is worth over 16 times more than a credit card record.”

Beazley plc is the parent company of specialist insurance businesses, with operations in the United States, Europe, Asia, Latin America, the Middle East and Australia.