Autos Behind Banks, Tech in Cybersecurity Investment

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By Daniel R. Stoller

July 26 — Companies respond to cybersecurity breaches differently depending on the industry, according to a KPMG LLP report released July 26.

According to the report, 81 percent of companies that responded to a KPMG survey said they had faced a data breach in the last two years.

Although retail (89 percent) and automotive companies (85 percent) were the most likely to report they had data breaches, the same sectors reported the lowest level of cybersecurity investment—retail 45 percent and automotive 32 percent. Banks (66 percent) and tech companies (62 percent) were most likely to invest in cybersecurity.

It isn't “surprising that banks are ahead of the cybersecurity curve, because they have always been ahead of the security curve,” Steven L. Caponi, a corporate and cybersecurity partner at K&L Gates in Wilmington, Del., told Bloomberg BNA July 26. Banks and financial institutions “know they now have greater exposure” to digital robberies rather than “old fashion bank robberies,” he said.

In the “digital age you would be foolish to run into a bank and yell ‘this is a stick up' ,” Caponi said.

Jeewon Kim Serrato, co-head of the global privacy and data protection group at Shearman & Sterling LLP in Washington, acknowledged that banks are at the head of the pack when it comes to cybersecurity, but the auto industry is turning the corner to cybersecurity maturity. The auto industry is beginning to understand the importance for “the legal teams to be working together with the information security teams to design a cybersecurity program that is comprehensive and effective” for their industry, Serrato told Bloomberg BNA July 26.

Wade Newton, director of communications for the Alliance of Automobile Manufacturers (AAM), told Bloomberg BNA July 26 that “automakers have worked to adopt a multi-dimensional approach to security.” Although he couldn't comment on the specifics of the report, he said that the auto industry is “working to keep pace with the dynamic nature of cyber threats by incorporating security by design, developing internal expertise, and cultivating partnerships—both procedural and operational—with organizations specializing in” cybersecurity.

A Toyota Motor Corp. spokeswoman told Bloomberg BNA July 26 that the issue is not limited to just one company and referred to the AAM. Ford Motor Co., General Motors Co., Honda Motor Co. didn't immediately respond to Bloomberg BNA's request for comments on the report.

Cybersecurity Maturity

Cybersecurity maturity on the board—that is, having individuals with cybersecurity experience there—may play a role in data breach response rates and cybersecurity investment. The report found that 85 percent of banks and technology companies have hired a chief information security officer (CISO). The retail and automotive industries fell to the back of the pack with 58 percent and 45 percent of respondents saying they have hired an executive who handles cybersecurity preparedness.

Caponi said that “hiring a CISO, installing the latest firewall, requiring new passwords, etc. are necessary steps to good cybersecurity.” Having a board that has cybersecurity knowledge may help with “evaluating business practices to know what data you collect and why, examining contracts and vendor agreements to understand contractual obligations in the event data breach and complying with your statutory obligations,” he said.

Serrato said that the auto industry is “beginning to understand that hiring CISOs is a worthwhile investment.” The CISO is there to protect and oversee “not only the physical security of the drivers and passengers from potential cyberattacks but also the data the smart cars and connected devices are collecting and processing in-vehicle,” she said.

Greg Bell, global information protection and security lead partner at KPMG, said in a statement that “there is a cyber-awareness maturity curve for industries that have been providing Internet-enabled products and services for longer periods of time, versus relatively new products like personalized shopping and connected cars,” he said.

Auto Industry Cybersecurity Standards

The auto industry hasn't been without cybersecurity coalitions and industry frameworks.

In 2015, the auto industry established “an Automotive Information Sharing and Analysis Center (Auto-ISAC) to facilitate the exchange of important threat information—and countermeasures—in real time,” Newton said. “The ISAC is another essential layer of cyber protections in addition to what individual automakers are already doing,” he said.

On July 21, the Auto-ISAC released a five-step cybersecurity framework, which includes: vehicle security by design, risk assessment and management by design, threat detection and protection, incident response and collaboration and engagement with appropriate third parties.

The KPMG report was based on the responses of 403 chief information officers, chief information security officers and chief technology officers residing in the U.S.

To contact the reporter on this story: Daniel R. Stoller in Washington at

To contact the editor responsible for this story: Donald G. Aplin at

For More Information

The KPMG report is available at

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