Cyber Security Governance and Leadership: An Analysis of Latitude Financial Breach

CIS6709

Cyber Security Governance and Leadership

Assessment 2

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Abstract

The financial loss occurred in Latitude Financial, one of the biggest breaches that occurred in Australia, and demonstrated critical vulnerabilities in data management and cyber security. This research employs the NIST Cybersecurity Framework to critically assess the breach majoring on the company’s shortcomings in achieving the five functions of Identifying, Protecting, Detecting, Responding, and Recovering from the event. This paper reviews some of the cyber security governance challenges uncovered such as inadequate data retention standards and relatively low third-party risk management. The research also investigates whether greater levels of strategic cyber security planning and the recruitment of highly trained cyber security staff might have lessened the effects of the breach and generally improved the global readiness for future attacks.

List of Figures

Introduction

This case of Latitude Financial is one of the largest in Australia and highlights potential security shortcomings of the business when it comes to data security. This breach exposed the lack of proper governance to both identify, protect against, detect, respond to, as well as, recover from cyber threats. In this research on Latitude’s breach, this author uses the NIST Cybersecurity Framework to elaborate on the gaps in its cybersecurity plan and problematic governance factors. Some main shortcomings were: poor retention of information, weak monitoring of third-party suppliers, and the shortage of qualified IT security staff. It was not only the loss of customers’ personal information but also the lack of proper strategic directions in protecting organizations’ systems. This research is an attempt to identify weaknesses in Latitude’s cyber-security plan to show how better planning and recruitment of experienced personnel would have helped to lessen the effects of the breach and strengthen the outlook for the organization. Finally, this research reflects the need for enriching the existing comprehensive cybersecurity framework with proper implementation of governance and risk management strategies to increase organizational resistance to growing cyber threats.

Analysis Based on the NIST Cybersecurity Framework

The NIST Cybersecurity Framework is an ideal tool for understanding how the situation can be controlled and how cyber threats are handled (Alshar'e, 2023). It outlines five key functions which include the following five elements Identify, Protect, Detect, Respond, and Recover. They assist in measuring the efficacy of an organization’s security situation. These functions are going to be used to identify the weaknesses in Latitude Financial’s cybersecurity measures and response mechanisms during the breach.

Figure 1: NIST Cybersecurity Framework

(Spektor, 2024)

Identify

In the first function, Identify, the purpose is to categorize risk and treatment of assets, governance, and data. Concerning Longitude Financial, the lack of sufficient segregation of duty, and inadequate legacy data identification exposed the firm to such massive loss. Documents dating back to 2005 were leaked showing that poor data retention and classification policies existed. This old information was not processed properly, which indicates a complete lack of proper asset management. Data classification would have barred sensitive information like driver’s licenses and passport numbers from being stored in no secure manner or kept for an unreasonable amount of time. About governance, poor IT infrastructure, and major issues regarding the lack of clear IT policy on data deletion, Latitude’s problems were again exposed. The absence of sound guidelines on how to retain/destroy old records puts customer information at risk out in the open. Better governance structures could have helped to manage the companies’ exposure by insisting on compliance with data retention policies, whereby financial service firms are supposed to retain records for only seven years.

Protect

Protect function focuses on the protection of information and has to do with control of the elements of a network (Borky et al., 2019). Latitude Financial’s breach revealed very weak standards in the company’s data protection and permission management. The attackers targeted internal vulnerabilities but also third-party ones, for example, DXC Technology, an outsourcing provider Latitude used in the United States. Irrespective of the technology used, weak encryption and weak access controls gave the intruders full and free access to millions of personal records. Further, Latitude depended on outsourced services to manage its online operations, while being careless about security measures entirely – that was part of the problem.

One big weakness was the fact that it wholly depended on older methods of handling some of its operations. These systems were not developed with today’s security measures in mind, and as such, are being targeted by hackers. Perhaps the costs of upgrading or decommissioning these systems might have been incurred to lessen the risk.

Detect

Detect centers on the extent to which the organization can quickly identify nonstandard events. In this case, however, although Latitude identified malicious activity within its network, the long latency of identifying the breach claims fatal issues in the company’s surveillance and identification. This delay enabled attackers to attack and also dump a lot of data into the systems. Latitude’s detection timeline of the incident underestimating the severity of the breach at first but then realizing how immense it was points to the problem with current IDS solutions as well as the lack of sufficiently active threat hunting.

Respond

The Response function involves capability and mechanism in containing, mitigating, and recovering from a breach when it has been identified (Rohan et al., 2023). In its response, Latitude had to power down systems to stop the leakage of data, which is common for containing breaches. Still, the slow reporting of the incident claiming that fewer documents were compromised was in reality a sign of an ineffective incident response policy. Some customers’ feedback showed that was very frustrating and unhelpful to be informed about the hack attack without clear information on what went wrong. NIST’s response recommendations include early and accurate communication, or latent factors, which Latitude did not handle well.

Recover

The last one is the Recover function which directly relates to recovery of systems as well as ongoing improvement. Latitude went on to involve itself in customer reimbursement in the acquisition of stolen identity documents as it steadily commenced the repair of its damaged systems. That said, these steps need to be done but the experience clearly shows that the company is not ready for such a breach in the context of business continuity planning. EDEN recognized the requirement of a sound recovery plan that extends further than merely technical restoration but also ensures customers with their services and policies. Latitude’s response showed how important it is to study such cases to avoid such problems in the following time through effectiveness and better responding regimens.

Cyber Security Governance Principles and the Latitude Case

Cybersecurity governance encompasses the controls and arrangements used for guiding the safe exploitation of cyberspace in light of predefined organizational goals and escalating regulations (Ngwenya, 2021). Consequently, in the Latitude Financial breach, weak structures in governance played a great role in determining the extent of the attack.

Figure 2: Cybersecurity Principle

(Mittal, 2023)

Data Governance Failures

The breach at Latitude exposes a big weakness within organizations, especially in handling archiving and deletion of data. Personal details such as driver’s licenses and/or passport numbers, were stored in Latitude’s database since 2005, which the Privacy Act 1988 did not allow a company to retain for more than two years. In other industries, records must be kept for as little as seven years however, not purging this outdated information puts millions of customers at unnecessary risk.

Good data management should therefore involve regular data reviewing, and categorization, followed by stringent data management and disposal standards. If Latitude had proper governance structures in place, they would have cleared this legacy data from the system in good time reducing the scope of the breach. Additionally, the breach will remain a concern concerning how often Latitude conducted data risk assessments to discover affirmed risks connected to legacy data and systems. The lack of these access governance measures meant that the extent of the breach’s footprint was larger than would have been experienced had the proper access controls been in place.

Accountability and Oversight

Third-party risk management and oversight is another critical area in which a failure of governance was highlighted. Latitude might have contracted its US-based outsourcing service provider DXC Technology to fix the breach after the attackers probably used Latitude’s connection to penetrate its system. The question that arises from this episode is how Latitude managed access to its data by external sellers. To effectively govern an organization's cybersecurity the internal controls must also extend to third-party service providers making the providers meet the security controls as well (Boggavarapu, 2021).

In this regard, the governance aspect of Latitude’s operation exposes issues in DXC Technology that raised third-party risk management red flags. The failure to implement strict regulations for vendors probably helped the attackers infiltrate the network to acquire the data. Better practices of governance would have required Strict security assessment of the company’s systems, Constant supervising of third-party access, Accurate reporting, and clear responsibilities of individuals to enforce internal and external compliance to security standards.

Regulatory Compliance and Privacy Laws

Latitude may also have breached Australian privacy laws in retaining personal records for a period longer than was permissible. PART IV of the Privacy Act 1988 states that personal information held by an organization needs to be disposed of securely if it is no longer relevant to the business. Latitude has not complied with these legal requirements and this shows governance failure in meeting the legal requirements of privacy. Storing data that belongs to outdated systems with no proper business requirement other than to continue to store it also poses a threat to security while at the same time exposing organizations to major legal risks.

Better governance policies would have guaranteed that Latitude’s data management policies were in line with the legal and regulatory provisions. Privacy policies concerning the retention of data must be revisited, concerning the laws at least once every year. In addition, the breach shows that there should be well-articulated policies that protect data to support governance frameworks enshrined in the law to enhance legal compliance as well as prove to organizations that it is important to put measures that will stop unnecessary storage of data.

Cyber Security Planning and Its Role in the Breach

Figure 3: Cyber Security Planning

(Nchumbeni, 2024)

Table 1 Aspects and descriptions

Aspect	Description
Inadequate Incident Preparedness	- Lack of Comprehensive Plans: Latitude's breach response and system restoration plans were inadequate, revealing significant gaps in their cybersecurity preparedness. The organization did not have a clear, well-documented incident response plan, which is critical for effective management during a cyber incident. - Delayed Public Announcement: The company’s failure to promptly communicate the breach's full extent to the public and affected customers further highlights deficiencies in its incident response strategy (Knight, and Nurse, 2020). To improve stakeholder relations with customers and regulatory authorities, an effective plan needs to allow for the dissemination of the message at the right time manage damage control, and the rebuilding of trust. - Need for Drills and Simulations: A proper incident response plan to be effective must include a set of tests and exercises so that all employees are aware of their responsibilities during an actual cybersecurity incident. They show how well pre-briefing can assist in ensuring that no confusion could come along with a certain disaster. This means that organizations have to dedicate their resources to these drills to improve their ability to overcome cyber threats.
Data Lifecycle Management	- Outdated Data Exposure: The breach showed that Latitude was retaining tens of millions of expired records, containing ordinary driver’s licenses and passport numbers that were over a decade old in many cases. This means they have not put enough mechanisms in trying to ensure that they are protecting the data that they collect. - Robust Data Management Plan Required: When it comes to data management, a proper and analyzed approach includes specific rules or regulating policies for data handling which comprise the data archiving policy, the data classification policy, as well as the data disposal policy. Leaders within an organization can also integrate data retention and disposal policies within their companies to ensure that outdated data is not stored in the organization’s database. - Importance of Regular Audits: Adopting the DMP would entail the routine checking of data to remove any data that is no longer useful. This practice prevents as much data as possible from being leaked or stolen from the database and reduces the overall possibility of catastrophic breaches.
Risk Assessment and Mitigation Strategies	- Lack of Risk Assessments: Latitude was not able to conduct adequate risk assessments concerning its legacy systems and third-party vendors to decrease compromising risks. As stated earlier, appropriate cybersecurity planning should use a proactive strategy to assess vulnerability points in IT systems. - Focus on Third-Party Risk Management: The use of outsourced vendors including DXC Technology also goes to show that there is a critical need for sound third-party risk management. As a result of LM392, organizations need to screen vendors and enforce security standards that are then audited frequently. - Anticipation of Potential Vulnerabilities: A strong planning activity would entail the evaluation of planning risks including those of non-current systems and third parties. This active approach could stop not only those attacks that could be predicted and might be avoided with better protection of the company’s systems.

Role of Cyber Security Talent in Preventing Future Breaches

In preventing such breaches in the future, hiring the right talent to manage and secure such cyber systems is also a major factor. The case of Latitude reveals several aspects where the presence of skilled personnel can bring a real improvement:

Skilled Security Personnel

The breach analysis shows that Latitude could have failed to have competent human resources or an outside agreement to ensure that it would be able to detect the different attacks on the compartmented networks.

• Insufficient In-House Expertise: The fact that there are no more or less sophisticated patterns regarding the detection and response to threats can indicate that the organization’s cybersecurity team may not have had the proper skills and knowledge to effectively address these risks. The lack of professional experts to oversee the flow of traffic across the network for conspicuous activities makes the company prone to an attack.

• Need for Specialized Roles: Recruitment of staff should be done with close attention being paid to fields relating to threat identification, response to incidents, and security operations (Vielberth et al., 2020). These positions can set up and sustain valid security techniques that can interpret and prevent escalating threats. The best approach to minimizing such a probability in the future is to staff an organization with skilled professionals in cybersecurity.

• Integration of External Resources: Besides having an internal team, Latitude should involve other security professional advisors or outsourced MSSPs. External resources can supplement the monitoring, threat intelligence, and work of your incident response team, and provide up-to-date security plans and support.

Hiring for Governance and Risk Management

The problems in the Be Latituded are governance issues that could have been solved by hiring talent with the right experience in data governance, data, and third-party privacy.

• Strategic Roles in Cybersecurity: There is an option to improve governance with the help of establishing the figure of a chief information security officer, or other equivalents who would be in charge of cybersecurity management and planning. This position should concentrate on policy, procedure, and compliance solutions that are reasonably acceptable to the risk profile of the organization as well as regulatory frameworks.

• Third-Party Risk Management: The inexperienced resources should have experienced persons who can assess or even monitor the risks that come from the third-party vendors. Since most of the technology insiders are from external vendors like DXC Technology, hence, there will be a need to have a competent team or person that will assess the third parties to ensure that they have met the standard required on cybersecurity.

Continuous Training and Development

Immersive training on the digital NIST Cybersecurity Framework, and practices for corporate governance, information management, risk management, and incident management could help the company’s defense against the next attack.

• Ongoing Training Programs: Continuing education as a concept makes it possible to educate employees on the emerging threats in the organization and general cybersecurity. This could be in the form of work-shop sessions, computer aid courses, and or simulation exercises that are based on real-life terrorist incidences.

• Adoption of Best Practices: Awareness should be made more elaborate to incorporate the company’s culture concerning cybersecurity, special attention should be given to data protection, reporting of events that may have negative impacts on the cybersecurity of a company, ways to conduct themselves following policies should also be included in the training. Training the staff on the NIST Cybersecurity Framework will help the staff appreciate that everyone is responsible for the entire cybersecurity agenda and should be more conscious of potential risks (Barrett et al, 2020).

• Feedback and Improvement: Communication of training sessions’ outcomes also facilitates training content updates and fills in any knowledge deficit. Maybe general tests, quizzes, or surveys can show where and when correction is needed to make sure the workers are strong and capable enough for job demands that contain cybersecurity threats.

In these areas, Latitude can improve its security situation and be more equipped to stop an attack in the future. There is an urgent need to move up skilled personnel, good governance as well as constant training to set up an effective and efficient cybersecurity system.

Conclusion

The Latitude Financial group data breach remains a model case of poor cybersecurity governance, failure in risk management, and the lack or incompetence of personnel to properly protect the data. The breach which involved millions of outdated records, speaks volumes of the calamity that results from poor record management procedures accompanied by poor protection mechanisms. Applying criticality analysis based on the NIST Cybersecurity Framework, it is possible to describe the critical gaps in the organization’s work that were revealed after the breach, such as Latitude’s inability to identify the threats, to protect the organization’s assets, to detect the breach, to respond to the breach and, at the same time, to provide adequate recovery capabilities the weakness of data retention policies, which played an important role in the leakage case.

To avoid such occurrences in the future, it is recommended that organizations conducting Latitude adopt systematic security management, particularly risk evaluation, strong data management measures for the data life cycle, and incident handling measures. Moreover, the use of qualified staff in the field of cybersecurity is important to maintain the constant monitoring of the network and prevention of attacks. In the case of the employee, ongoing training and development programs will ensure that every employee will be aware of his status and responsibility within the flow of cybersecurity. The outcomes of this Latitude breach are an understanding of the governance strategy that was intended to be implemented to protect sensitive data from potentially risky threats and, at the same time, to contribute to considering approaches to managing and entrusting various forms of threats. This means that those organizations wanting to protect customers’ data as well as continue to enjoy their loyalty must start making investments in these areas because technology is steadily demystifying the environment.

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