With millions of workers continuing to work from home for the foreseeable future, businesses need to prioritize cybersecurity. Remote working helps keep employees safe from COVID-19, but it also makes them even more vulnerable to cyberattacks. According to the FBI, cyberattacks have skyrocketed since the spring, with ransomware, malware, and phishing emails all on the rise. 

IRS Guidance Highlights Important of Basic Cyber Protections

The Internal Revenue Service (IRS), along with its Security Summit partners, recently issued a series of alerts warning tax preparers to take steps to protect tax data while teleworking. While the IRS five-part series, called Working Virtually: Protecting Tax Data at Home and at Work, is directed to tax professionals, it is applicable to businesses in all industries.

The IRS guidance highlights the importance of the “Security Six,” basic steps that businesses should take whether workers are off-site or in the office. Below is a brief overview:

1. Anti-virus software: Although details may vary between commercial products, anti-virus software scans computer files or memory for certain patterns that may indicate the presence of malicious software (also called malware). Anti-virus software (sometimes more broadly referred to as anti-malware software) looks for patterns based on the signatures or definitions of known malware from cybercriminals. Anti-virus vendors find new issues and malware daily, so it is important that people have the latest updates installed on their computer.

2. Firewalls: Firewalls provide protection against outside attackers by shielding a computer or network from malicious or unnecessary web traffic and preventing malicious software from accessing systems. Firewalls can be configured to block data from certain suspicious locations or applications while allowing relevant and necessary data to pass through. However, they do not guarantee that a computer will not be attacked. Firewalls primarily help protect against malicious traffic, not against malicious programs (malware), and may not protect the device if the user accidentally installs malware. However, using a firewall in conjunction with other protective measures (such as anti-virus software and safe computing practices) will strengthen resistance to attacks.

3. Two-factor authentication: Two-factor authentication boosts cybersecurity by adding an extra layer of protection beyond a password. Often two-factor authentication means the returning user must enter credentials (username and password) plus another step, such as entering a security code sent via text to a mobile phone. The premise is that a cybercriminal may be able to steal the username and password but it's highly unlikely they also would have a user's mobile phone to receive a security code and complete the process.

4. Backup software/services: Critical files on computers should routinely be backed up to external sources. This means a copy of the file is made and stored either online as part of a cloud storage service or similar product. Alternatively, a copy of the file is made to an external disk, such as an external hard drive with multiple terabytes of storage capacity. Businesses should ensure that taxpayer data that is backed up also is encrypted.

5. Drive encryption: Given the sensitive client data maintained on tax practitioners' computers, users should consider drive encryption software for full-disk encryption. Drive encryption, or disk encryption, transforms data on the computer into unreadable files for an unauthorized person accessing the computer to obtain data. Drive encryption may come as a stand-alone security software product. It may also include encryption for removable media, such as a thumb drive and its data.

6. Virtual Private Network: If employees connect to unknown networks or work from home, businesses should establish an encrypted Virtual Private Network (VPN) to allow for a more secure connection. A VPN provides a secure, encrypted tunnel to transmit data between a remote user via the Internet and the company network.

Additional Steps Businesses Should Be Taking to Protect Data

While the Security Six address important technical vulnerabilities, it is important for businesses to also address the human element. As we discussed in a recent article, employees play a critical initial role in thwarting a cyberattack. At the same time, their missteps can also lead to significant liability.

Given the significant uptick in cyberattacks, businesses should also evaluate whether they have adequate insurance coverage should a data breach occur. While cyber insurance was once reserved for billion-dollar companies operating in high-risk industries, businesses of all sizes are increasingly looking to cyber insurance to cover losses linked to data breaches and other cyber threats.  As many companies have learned the hard way, traditional insurance policies for general liability or basic business interruption coverage may not fully cover cyber-related losses in the absence of a special endorsement. In other cases, the policy may contain an exclusion that precludes coverage altogether. Coverage may also be limited or unavailable when incidents are attributed to third-party vendors.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Maryam Meseha, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.