Management Information Systems:

Managing the Digital Firm

Sixteenth Edition

Chapter 7
Securing Information Systems

Copyright © 2020, 2018, 2016 Pearson Education, Inc. All Rights Reserved
Learning Objectives
8.1 Why are information systems vulnerable to destruction,
error, and abuse?
8.2 What is the business value of security and control?
8.3 What are the components of an organizational
framework for security and control?
8.4 What are the most important tools and technologies for
safeguarding information resources?
Hackers Target the U.S. Presidential
Election: What Happened? (1 of 2)
• Problem
– Weak network security
– Limited financial resources
• Solutions
– Malware detection technology
– Isolate systems and networks
– Prevent unauthorized access
Hackers Target the U.S. Presidential
Election: What Happened? (2 of 2)
• Hackers took advantage of uneven security and controls
and loose management structure to attack the Clinton
campaign
• Demonstrates vulnerabilities in information technology
systems
• Illustrates some of the reasons organizations need to pay
special attention to information system security
Why Systems are Vulnerable (1 of 2)
• Security
– Policies, procedures, and technical measures used to
prevent unauthorized access, alteration, theft, or
physical damage to information systems
• Controls
– Methods, policies, and organizational procedures that
ensure safety of organization’s assets; accuracy and
reliability of its accounting records; and operational
adherence to management standards
Why Systems are Vulnerable (2 of 2)
• Accessibility of networks
• Hardware problems (breakdowns, configuration errors,
damage from improper use or crime)
• Software problems (programming errors, installation
errors, unauthorized changes)
• Disasters
• Use of networks/computers outside of firm’s control
• Loss and theft of portable devices
Figure 8.1 Contemporary Security
Challenges and Vulnerabilities
Internet Vulnerabilities
• Network open to anyone
• Size of Internet means abuses can have wide impact
• Use of fixed Internet addresses with cable / DS L modems
creates fixed targets for hackers
• Unencrypted VO I P
• E-mail, P2P, I M
– Interception
– Attachments with malicious software
– Transmitting trade secrets
Wireless Security Challenges
• Radio frequency bands easy to scan
• SSI Ds (service set identifiers)
– Identify access points, broadcast multiple times, can be
identified by sniffer programs
• War driving
– Eavesdroppers drive by buildings and try to detect
SSI D and gain access to network and resources
– Once access point is breached, intruder can gain
access to networked drives and files
• Rogue access points
Figure 8.2 Wi-Fi Security Challenges
Malicious Software: Viruses, Worms,
Trojan Horses, and Spyware (1 of 2)
• Malware (malicious software)
• Viruses
• Worms
• Worms and viruses spread by
– Downloads and drive-by downloads
– E-mail, I M attachments
• Mobile device malware
• Social network malware
Malicious Software: Viruses, Worms,
Trojan Horses, and Spyware (2 of 2)
• Trojan horse
• SQ L injection attacks
• Ransomware
• Spyware
– Key loggers
– Other types
 Reset browser home page
 Redirect search requests
 Slow computer performance by taking up memory
Malware Features & Types
• Infectious:
– Viruses, worms

• Concealment:
– Trojan horses, logic bombs, rootkits

• Malware for stealing information:

– Spyware, keyloggers, screen scrapers

• Malware for profit:

– Dialers, scarewares, ransomware

• Malware as platform for other attacks

– Botnets, backdoors (trapdoors)

• Many malwares have characteristics of multiple types

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Trojan Horse
• Software that appears to perform Example: Attacker:
a desirable function for the user Place the following file
prior to run or install, but cp /bin/sh /tmp/.xxsh
(perhaps in addition to the chmod u+s,o+x /tmp/.xxsh
expected function) steals rm ./ls
information or harms the system. ls $*
• User tricked into executing
Trojan horse as /homes/victim/ls
– Expects (and sees) overt and
expected behavior • Victim
– Covertly perform malicious acts ls
with user’s authorization

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Trapdoor or Backdoor
• Secret entry point into a system
– Specific user identifier or password that circumvents normal
security procedures.

• Commonly used by developers

– Could be included in a compiler.

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Logic Bomb
• Embedded in legitimate programs
• Activated when specified conditions met
– E.g., presence/absence of some file; Particular date/time or
particular user
• When triggered, typically damages system
– Modify/delete files/disks

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 Example of Logic Bomb
• In 1982, the Trans-Siberian Pipeline incident occurred.
A KGB operative was to steal the plans for a
sophisticated control system and its software from a
Canadian firm, for use on their Siberian pipeline. The
CIA was tipped off by documents in the Farewell
Dossier and had the company insert a logic bomb in
the program for sabotage purposes. This eventually
resulted in "the most monumental non-nuclear
explosion and fire ever seen from space“.

Topic 10: Malware

CS526 17
Spyware
• Malware that collects little bits of information at a time
about users without their knowledge
– Keyloggers: stealthly tracking and logging key strokes
– Screen scrapers: stealthly reading data from a computer
display
– May also tracking browsing habit
– May also re-direct browsing and display ads

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Scareware
• Malware that scares victims into take actions that ultimately
end up compromising our own security.
– E.g., paying for and installing fake anti-virus products

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Topic 10: Malware
CS526 20
Ransomware
• Holds a computer system, or the data it contains, hostage
against its user by demanding a ransom.
– Disable an essential system service or lock the display at system
startup
– Encrypt some of the user's personal files, originally referred to as
cryptoviruses, cryptotrojans or cryptoworms

• Victim user has to

– enter a code obtainable only after wiring payment to the attacker
or sending an SMS message
– buy a decryption or removal tool

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Virus
• Attach itself to a host (often a program) and replicate itself

• Self-replicating code
– Self-replicating Trojan horses
– Alters normal code with “infected” version

• Operates when infected code executed

If spread condition then
For target files
if not infected then alter to include virus
Perform malicious action
Execute normal program
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 Worm
• Self-replicating malware that does not require a host
program
• Propagates a fully working version of itself to other machines
• Carries a payload performing hidden tasks
– Backdoors, spam relays, DDoS agents; …
• Phases
– Probing  Exploitation  Replication  Payload

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General Worm Trends
• Speed of spreading
– Slow to fast to stealthy
• Vector of infection
– Single to varied
– Exploiting software vulnerabilities to exploiting human
vulnerabilities
• Payloads
– From “no malicious payloads beyond spreading” to botnets,
spywares, and physical systems

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Hackers and Computer Crime (1 of 3)
• Hackers v s. crackers
• Activities include:
– System intrusion
– System damage
– Cybervandalism
 Intentional disruption, defacement, destruction of
website or corporate information system
• Spoofing and sniffing
Hackers and Computer Crime (2 of 3)
• Denial-of-service attacks (Do S)
• Distributed denial-of-service attacks (DDo S)
• Botnets
• Spam
• Computer crime
– Computer may be target of crime
– Computer may be instrument of crime
Hackers and Computer Crime (3 of 3)
• Identity theft
– Phishing
– Evil twins
– Pharming
• Click fraud
• Cyberterrorism
• Cyberwarfare
Internal Threats: Employees
• Security threats often originate inside an organization
• Inside knowledge
• Sloppy security procedures
– User lack of knowledge
• Social engineering
• Both end users and information systems specialists are
sources of risk
Software Vulnerability
• Commercial software contains flaws that create security
vulnerabilities
– Bugs (program code defects)
– Zero defects cannot be achieved
– Flaws can open networks to intruders
• Zero-day vulnerabilities
• Patches
– Small pieces of software to repair flaws
– Patch management
What is the Business Value of
Security and Control?
• Failed computer systems can lead to significant or total
loss of business function
• Firms now are more vulnerable than ever
– Confidential personal and financial data
– Trade secrets, new products, strategies
• A security breach may cut into a firm’s market value almost
immediately
• Inadequate security and controls also bring forth issues of
liability
Interactive Session: Technology:
Meltdown and Spectre Haunt the
World’s Computers
• Class discussion
– How dangerous are Spectre and Meltdown? Explain
your answer.
– Compare the threats of Spectre and Meltdown to cloud
computing centers, corporate data centers, and
individual computer and smartphone users.
– How would you protect against Spectre and Meltdown
if you were running a public cloud computing center, if
you ran a corporate data center, and if you were an
individual computer user?
Legal and Regulatory Requirements
for Electronic Records Management
• HI PA A
– Medical security and privacy rules and procedures
• Gramm-Leach-Bliley Act
– Requires financial institutions to ensure the security
and confidentiality of customer data
• Sarbanes-Oxley Act
– Imposes responsibility on companies and their
management to safeguard the accuracy and integrity of
financial information that is used internally and
released externally
Electronic Evidence and Computer
Forensics
• Electronic evidence
– Evidence for white collar crimes often in digital form
– Proper control of data can save time and money when
responding to legal discovery request
• Computer forensics
– Scientific collection, examination, authentication,
preservation, and analysis of data from computer
storage media for use as evidence in court of law
– Recovery of ambient data
Information Systems Controls
• May be automated or manual
• General controls
– Govern design, security, and use of computer
programs and security of data files in general
throughout organization
– Software controls, hardware controls, computer
operations controls, data security controls, system
development controls, administrative controls,
• Application controls
– Controls unique to each computerized application
– Input controls, processing controls, output controls
Risk Assessment
• Determines level of risk to firm if specific activity or process
is not properly controlled
– Types of threat
– Probability of occurrence during year
– Potential losses, value of threat
– Expected annual loss
Table 8.5 Online Order Processing
Risk Assessment
Exposure Probability of Loss Range Expected Annual
Occurrence (Average) ($) Loss ($)
Power failure 30% $5,000 − $200,000 $30,750
($102,500)
Embezzlement 5% $1,000 − $50,000 $1,275
($25,500)
User error 98% $200 − $40,000 $19,698
($20,100)
Security Policy
• Ranks information risks, identifies security goals and
mechanisms for achieving these goals
• Drives other policies
• Acceptable use policy (AU P)
– Defines acceptable uses of firm’s information resources
and computing equipment
• Identity management
– Identifying valid users
– Controlling access
Figure 8.3 Access Rules for a
Personnel System
Disaster Recovery Planning and
Business Continuity Planning
• Disaster recovery planning
– Devises plans for restoration of disrupted services
• Business continuity planning
– Focuses on restoring business operations after disaster
• Both types of plans needed to identify firm’s most critical
systems
– Business impact analysis to determine impact of an outage
– Management must determine which systems restored first
The Role of Auditing
• Information systems audit
– Examines firm’s overall security environment as well as
controls governing individual information systems
• Security audits
– Review technologies, procedures, documentation,
training, and personnel
– May even simulate disaster to test responses
• List and rank control weaknesses and the probability of
occurrence
• Assess financial and organizational impact of each threat
Figure 8.4 Sample Auditor’s List of
Control Weaknesses
Tools and Technologies for
Safeguarding Information Systems
(1 of 3)

• Identity management software

– Automates keeping track of all users and privileges
– Authenticates users, protecting identities, controlling access
• Authentication
– Password systems
– Tokens
– Smart cards
– Biometric authentication
– Two-factor authentication
Tools and Technologies for
Safeguarding Information Systems
(2 of 3)

• Firewall
– Combination of hardware and software that prevents
unauthorized users from accessing private networks
– Packet filtering
– Stateful inspection
– Network address translation (NA T)
– Application proxy filtering
Figure 8.5 A Corporate Firewall
Tools and Technologies for
Safeguarding Information Systems
(3 of 3)

• Intrusion detection system

– Monitors hot spots on corporate networks to detect and
deter intruders
• Antivirus and antispyware software
– Checks computers for presence of malware and can
often eliminate it as well
– Requires continual updating
• Unified threat management (UT M) systems
Securing Wireless Networks
• W E P security
– Static encryption keys are relatively easy to crack
– Improved if used in conjunction with VP N
• W PA 2 specification
– Replaces W E P with stronger standards
– Continually changing, longer encryption keys
Encryption and Public Key
Infrastructure (1 of 3)
• Encryption
– Transforming text or data into cipher text that cannot be
read by unintended recipients
– Two methods for encryption on networks
 Secure Sockets Layer (SS L) and successor
Transport Layer Security (TL S)
 Secure Hypertext Transfer Protocol (S-HTT P)
Encryption and Public Key
Infrastructure (2 of 3)
• Two methods of encryption of messages
– Symmetric key encryption
 Sender and receiver use single, shared key
– Public key encryption
 Uses two, mathematically related keys: public key
and private key
 Sender encrypts message with recipient’s public key
 Recipient decrypts with private key
Figure 8.6 Public Key Encryption
Encryption and Public Key
Infrastructure (3 of 3)
• Digital certificate
– Data file used to establish the identity of users and electronic
assets for protection of online transactions
– Uses a trusted third party, certification authority (C A), to validate a
user's identity
– C A verifies user’s identity, stores information in C A server, which
generates encrypted digital certificate containing owner I D
information and copy of owner’s public key
• Public key infrastructure (PK I)
– Use of public key cryptography working with certificate authority
– Widely used in e-commerce
Figure 8.7 Digital Certificates
Ensuring System Availability
• Online transaction processing requires 100% availability
• Fault-tolerant computer systems
– Contain redundant hardware, software, and power
supply components that create an environment that
provides continuous, uninterrupted service
• Deep packet inspection
• Security outsourcing
– Managed security service providers (M SSP s)
Security Issues for Cloud Computing
and the Mobile Digital Platform (1 of 2)
• Security in the cloud
– Responsibility for security resides with company
owning the data
– Firms must ensure providers provide adequate
protection:
 Where data are stored
 Meeting corporate requirements, legal privacy laws
 Segregation of data from other clients
 Audits and security certifications
– Service level agreements (SLA s)
Security Issues for Cloud Computing
and the Mobile Digital Platform (2 of 2)
• Securing mobile platforms
– Security policies should include and cover any special
requirements for mobile devices
 Guidelines for use of platforms and applications
– Mobile device management tools
 Authorization
 Inventory records
 Control updates
 Lock down/erase lost devices
 Encryption
– Software for segregating corporate data on devices
Ensuring Software Quality
• Software metrics: Objective assessments of system in
form of quantified measurements
– Number of transactions
– Online response time
– Payroll checks printed per hour
– Known bugs per hundred lines of code
• Early and regular testing
• Walkthrough: Review of specification or design document
by small group of qualified people
• Debugging: Process by which errors are eliminated
Interactive Session: Organizations:
How Secure Is the Cloud?
• Class discussion
– What kinds of security problems does cloud computing
pose? How serious are they? Explain your answer.
– What management, organization, and technology
factors are responsible for cloud security problems? To
what extent is cloud security a management issue?
– What steps can organizations take to make their cloud-
based systems more secure?
– Should companies use the public cloud to run their
mission-critical systems? Why or why not?