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States to Require Companies to Report Cyber Attacks

Across the nation, state lawmakers have enacted laws that require companies to report cyber attacks to the state to gain a better understanding of how to protect data in the future. But one size does not fit all when it comes to cybersecurity.

(TNS) — After his local library had to shut down because of a ransomware attack, Indiana state Rep. Mike Karickhoff realized the state didn’t know much about the frequency of such security breaches.

Spurred by similar crimes across Indiana last year, he decided to author a bill requiring all public agencies to report cyber attacks to the state.

“It’s like neighborhood watch,” said Karickhoff, a Republican. “If your subdivision starts having burglaries, you tell everyone in the area you’re having these burglaries. That’s how the alarm bell goes off.”

His measure passed both chambers unanimously, and Republican Gov. Eric Holcomb signed it into law in April.

“This was not a red or blue thing,” Karickhoff said. “Everyone understood that this could do great harm quickly and it’s nobody’s fault if they’re taking security measures and they still fall short.”

Despite the magnitude of the problem, most states don’t have such statutory requirements, so they can’t always warn other agencies that might be hit or help bolster their defenses. But that’s starting to change.

This year, North Dakota also enacted a law requiring government entities to report to the state all cyber attacks, including ransomware (in which computer systems are hijacked until agencies pay a ransom or restore them on their own). West Virginia did the same, but its law specifies that they must be “qualified” cybersecurity incidents, such as those that substantially affect the ability of an agency to conduct business.

And in Washington state, legislators passed a measure that requires all state agencies to report a major cybersecurity incident to the state office of cybersecurity.

“It’s a new thing. There’s a realization that this reporting is very beneficial in terms of understanding what’s happening,” said Pam Greenberg, a senior fellow at the National Conference of State Legislatures. “It’s a growing acknowledgement of the problem and doing something to address it.”

All 50 states already have security breach notification laws that require businesses to report a data breach to consumers whose personal information was compromised, according to Greenberg. Many states also require government entities to do the same, as well as report such breaches to the attorney general’s office or state information technology office.

But ransomware and other cyber attacks don’t always involve a release of personal information, she pointed out, so they may not have to be reported.

Ransomware attacks can be devastating — and costly. In Baltimore, for example, hackers crippled thousands of computers in 2019, demanding ransom, which city officials refused to pay. It wound up costing the city at least $18 million — a combination of lost or delayed revenue and the expense of restoring systems.

Indiana cybersecurity officials say the state’s new reporting law has been working well since it went into effect July 1. So far, the state technology office has received 73 reports from governments, according to Tad Stahl, director of the Indiana Information Sharing and Analysis Center. Five involved ransomware, 36 involved compromised email and the rest were other types of cyber attacks.

The law requires that every government entity appoint a contact person responsible for reporting a cyber attack and notify the state IT office who that person is. So far, about 500 people have signed up, Stahl said.

“It’s extremely helpful information to know, both for what it confirms that you suspect as well as what you didn’t know,” Stahl said.

In North Dakota, Michael Gregg, chief information security officer for the state’s IT department, said the new reporting law that took effect in August will help bolster state-local government relationships.

“The big thing is it gives us another avenue to go out and communicate with these entities and better partner with them and provide them the resources they may not have,” Gregg said. “We also can go back and figure out what lessons have been learned.”

At least one other state has paved the way: In North Carolina, cyber criminals have struck nearly two dozen local governments, school districts and public colleges with ransomware attacks since the beginning of 2020.

North Carolina cybersecurity officials only know that — and who got hit and how — because a 2019 state law requires that all public agencies report such incidents to the state.

No one has complete data showing how many state and local governments are victimized in ransomware attacks.

“When we go up to Capitol Hill, we get asked all the time, ‘What are the numbers?’ It’s hard to say, because no one keeps stats and sometimes it isn’t reported,” said Meredith Ward, policy and research director at the National Association of State Chief Information Officers.

In the group’s annual survey last month, state chief information officers overwhelmingly named ransomware as their top cybersecurity concern.

If reporting were required in all 50 states, it would allow state cybersecurity officials to offer locals assistance with training and other resources, Ward said.

“Cybersecurity is an all-hands-on-deck, team sport,” she said. “We tend to have these siloes in government, and cybersecurity is one of those issues where that cannot remain the norm. It’s too big of an issue, too big of a risk.”

Sometimes, agencies that have been victimized don’t divulge breaches because their cyber insurance company tells them not to, she said. And sometimes they are just ashamed.

“There seems to be embarrassment that they were caught with their pants down,” said Alan Shark, executive director of the Public Technology Institute, a Washington, D.C.-based nonprofit that provides consulting services to local government information technology executives.

“Governments love to talk about transparency and open government, but there’s this knee-jerk reaction to withhold as much as you can because they’re afraid this will tarnish their image and make people feel unsure about the leadership of the organization.”

Shark said he is “befuddled” about why states aren’t requiring all government entities to report these incidents.

“Mandatory reporting could lead to better security training and monitoring and the state could provide more proactive measures to help. This is a no-brainer.”

Shark pointed to a major ransomware attack in Texas in 2019, when nearly two dozen cities were targeted around the same time. Texas state officials developed teams to assist those governments, which didn’t know of the other attacks, and helped restore their systems.

“I think all public institutions, including K-12, public hospitals and mosquito districts should report ransomware,” Shark said. “The implications are enormous across the board, and this should be addressed.”

Local governments may bristle at being forced to send such information to the state, experts say.

“This can be a very touchy subject because of home rule in states and localities. Stepping on toes,” said Ward, of the IT officials’ group. “Some local governments are thinking it can be seen as opening that door. If I have to report that to you, what comes next? It’s a Big Brother type of mentality.”

In Indiana, James Haley, the city of Fort Wayne’s chief information officer, called the new mandatory reporting law “reasonable.” He said it’s similar to the type of reporting his office would do anyway to inform local elected officials and senior staff of a cyber incident.

“I believe the collected information could be useful if the people gathering it summarize and distribute it effectively,” Haley wrote in an email to Stateline.

Kent Kroft, chief information officer for Tippecanoe County government in Lafayette, Indiana, acknowledged that many local IT leaders across the state worried about Big Brother when they first learned of the proposed legislation.

“There was definite concern that it would be too heavy handed, that state IT was going to come in and tell you how to do things,” Kroft said. “Being in IT we always have that paranoia anyway.”

But after many discussions among county leaders, state officials and legislators, Kroft said it became apparent that it was a good idea for the state to be able to figure out what was happening with cyber attacks, whether other entities should be alerted and how state officials could offer communities help, if they needed it.

But that’s not all that needs to be done when it comes to cybersecurity, he added.

“There’s a long way to go educating state elected officials on the importance of this and putting some funding behind it,” he said.

©2021 The Pew Charitable Trusts. Distributed by Tribune Content Agency, LLC.
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