Cybersecurity Risks and IT Audit Controls

Introduction

In the previous blog post, we discussed cloud computing audit challenges. Now we will explore cybersecurity risks - the threats that organizations face every day. 

This blog post examines the major cybersecurity risks confronting modern organizations and explores how IT audit controls help protect against these threats. By understanding the threat landscape and the control frameworks that address these risks, we can better appreciate the critical role IT auditors play in maintaining organizational security

Understanding Cybersecurity Risks

A cybersecurity risk is any threat that uses technology to harm an organization. This includes stealing information, disrupting operations, stealing money, or damaging reputation.

Alarming Statistics:

- A cyber-attack happens every 39 seconds globally

- Average data breach costs $4.45 million

- 95% of breaches are caused by human error

Major Categories of Cybersecurity Risks

Risk 1: Phishing and social Engineering Attacks

What It Is: Fake emails or messages that trick people into giving passwords or clicking dangerous links.

How It Works: You receive an email that looks like it's from your bank saying, "Your account will be closed unless you verify your password." You click the link, enter your password on a fake website, and criminals steal it.

so, What Auditors Check:

- Regular security awareness training

- Email filters to block suspicious messages

- Process for reporting suspicious emails

Real Example: Twitter was hacked in 2020 when attackers tricked employees into giving access. They took over accounts of Barack Obama and Elon Musk.

I've seen companies do "fake phishing tests" where they send employees fake phishing emails to see who clicks. The people who fail get extra training. Smart, right?

figure: How does phishing attack working

Risk 2: Ransomware

What It Is: Malicious software that locks all your files and demands payment to unlock them.

IT Audit controls for Ransomware:

- Regular, tested backups

- Endpoint protection software

- Quick security patch application

Real Example: The 2021 Colonial Pipeline ransomware attack illustrates the real-world impact of these threats. The attack forced a shutdown of the pipeline supplying 45% of the U.S. East Coast's fuel, causing widespread shortages. Colonial Pipeline paid $4.4 million in ransom, though much of this was later recovered by law enforcement.

figure: How does Ransomware attack works

Risk 3: Data Breaches

Data breaches involve Unauthorized access to sensitive data, resulting in information being stolen.

Why It's Dangerous: Huge fines from regulators, loss of customer trust, legal problems, and competitive disadvantage.

What are the IT Audit controls for data protection:

- Data encryption (stored and transmitted)

- Access controls limiting who can view data

- Data loss prevention tools

Real world Example: Equifax breach in 2017 affected 147 million people. The company paid over $700 million because they didn't apply a security patch.

Risk 4: Weak Passwords

What It Is: Using simple passwords like "123456" or not having proper verification.

What IT Auditors should Check:

- Password complexity requirements

- Multi-factor authentication for critical systems

- No default passwords on systems

Real world Example: Colonial Pipeline was breached partly because an old account used only a password without multi-factor authentication.

IT Audit Control Framework

figure: IT Audit control Framework controls

IT auditors are like security inspectors. They find the weak spots BEFORE hackers do.

Imagine a security guard who goes around testing if doors are locked, if alarms work, if cameras are recording. That's basically what IT auditors do, but for computer systems.

They Make sure companies aren't just SAYING they have security - they actually DO.

Example: A company says, "we use encryptions for all sensitive data."

The auditor says, "prove it" and actually checks.

The Controls are organized into three types

• Preventive Controls - Stop attacks before they happen
• Detective Controls - Identify when attacks happen
• Corrective Controls - Help respond to and recover from attacks

Real Talk: The Cost of Getting Hacked

Let's talk money for a second because that makes it REAL:

- Average cost of a data breach: $4.45 million

- Average time to detect a breach: 277 days (that's 9 MONTHS!)

- Financial services get hit the hardest: Average $5.9 million per breach

But it's not just money:

- Your reputation is destroyed (would YOU trust a bank that got hacked?)

- Customers leave

- You get sued

- Regulators fine you

- Your stock price tanks

Equifax is the perfect horror story:

- 147 million people's data stolen

- Over $1.4 BILLION total cost

- CEO had to resign

- Company reputation permanently damaged

And the worst part? It could have been prevented. They just didn't apply a security patch.

Key IT Audit Control Areas

1. Access Management

Ensure only authorized people access systems. Use multi-factor authentication, regular access reviews, and least privilege.

2. Data Protection

Encrypt sensitive data, classify data properly, use data loss prevention tools, and have secure backup procedures.

3. Security Monitoring

Monitor security 24/7, use SIEM systems, have incident response plans, and test them regularly.

Conclusion

Cybersecurity risks are real and growing. But IT audit controls provide protection through preventive, detective, and corrective measures. By regularly auditing these controls, organizations can identify weaknesses before attackers exploit them, ensure security investments work properly, and maintain customer trust. However, cybersecurity requires constant effort. New threats emerge daily. IT auditors play a crucial role by providing independent verification that security controls are working effectively.

In the next blog post, we will explore IT Audit in Banking and Financial Systems and how it prevents data breaches.

Video Explanation: