This document summarizes a presentation on cybersecurity risks for manufacturing companies. It discusses how manufacturers face significant cyber threats, with over 1 million industrial control systems directly connected to the internet. Recent high-profile attacks like those on Target, a German steel mill, and Anthem resulted in hundreds of millions of dollars in costs. While companies may feel protected due to their size, manufacturers store valuable intellectual property and operational data that hackers seek. The presentation provides recommendations for prevention including network segmentation, access controls, training, and response planning.

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2. ARE YOU READY FOR
LIFT OFF?
OR IS IT FAILURE TO LAUNCH?
KC Mathews, CFA
Chief Investment Officer

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Insert real GDP growth slide
Economic Growth

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Drivers of Economic Growth

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Productivity
Manufacturing
Payrolls

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• Job Growth 
• US Consumer 
• Corporate Earnings 
• Interest Rates/Yield Curve /
• Inflation 
• Geopolitical Risks 
Scorecard of Broad Indicators
Current Read
2015 Broad Scorecard

7. Job Growth

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Unemployment Rate
Falling sharply

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Problematic
Marginally Employed

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Lending and Jobs
Lending leads job growth

11. U.S. Consumer

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Consumer Confidence
Approaching prior
cycle highs

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Oil Price
Supports consumer
spending

14. Corporate Earnings

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Business Optimism
Improving

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U.S. Dollar
Dollar strength

17. Interest Rates/
Yield Curve

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Lower for Longer
2014
2015
Inflation expectations low

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Contagion risk is “contained”
1. ECB accommodative policies
2. EU economy stronger
10 Year Yields

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US Yield Curve and Recessions
Usually inverts
before recession

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FOMC Dot Plot
Lower for Longer

22. Inflation

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Core Inflation (PCE)
Currently below
2% Fed Target

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Wage Pressure
Inflation on the horizon?

25. Geopolitical Risks

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Geopolitical Risks
A
B
D
C
GF
HE F
I
J

27. Equity Markets

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1986 1994
1999 2004
Rate Hike Cycles

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2015 -16 Forecast
2013 2014 2015 2016
GDP 1.5% 2.4% 2.5% 2.5 - 2.8%
S&P 500 32% 14% 3-6% 6-10%
10-yr Treasury 3.00% 2.17% 2.50% 2.75%
Fed Funds Rate 0.25% 0.25% 0.75% 1.50%
Unemployment 6.7% 6.0% 5.1% 4.8%
2015 Cautiously Optimistic

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31. Thank You

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WADE KERRIGAN, PARTNER
KRIS KAPPEL, PARTNER
DEBORAH JUHNKE, DIRECTOR OF INFORMATION GOVERNANCE CONSULTING
CHRISTOPHER BUDKE, SPECIAL INVESTIGATOR

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The World We Live In

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Cybersecurity is in large part
an “Anthropology Issue”
The U.S. Navy will graduate its first
class in 40 years in how to use the sextant
What will we do if our information
is not trustworthy?
Mike Rogers, former Chair,
House Intelligence Committee

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You are an IT Organization by Default
“If you went to bed last night as an industrial company, you’re going to
wake up this morning as a software and analytics company.”
Jeffery Immelt, Chairman & CEO, General Electric

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What is the Reach of Your Network?
Unknown Depth and Scope

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5 to 10 Times the Impact of the Internet*
*John Chambers, Executive Chairman, Cisco Systems
Forbes

38. Scope of the World Wide Web
The Internet
The “Deep Web”
“Darknet”
The Tor Network

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Massive Global Malicious Exploitation
“There are two types of big companies in the U.S., those that have been
hacked….and those who don’t know they have been hacked.”
James Comey, FBI Director

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Fairly Ugly Reality
 Malicious traffic is visible on 100% of corporate networks
Cisco, 2014 Annual Security Report
 93% of employees knowingly violate cyber security policies
Corporate Executive Board
 23% of cyber security incidents are purposely caused by insiders
Carnegie Mellon University 2013 State of U.S. Cybercrime Survey
 Average time to discovery of a cyber breach is now 205 days
Mandiant M-Trends Report 2015

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General Counsel Meeting

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Ready Corp.
• $500M annual revenue
• Manufacturing company
• Domestic & overseas import/export
• 2500 employees

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Exploration and Risk Assessment

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Security
Legal
Forensic
Law Enforcement
Regulators
Insurance Coverage
Public Relations
Stakeholders
Notifications
Personnel Management
10 Activity
Channels for
Breach Response

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Security Issues in
Third-party
Contracting

46. Next Steps
Understand what you have
Examine your risks
Plan for the inevitable breach
Ensure third-party contractors comply

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1 in 3. That’s the odds of a manufacturing
company being targeted for a cyber attack.
*Symantec 2014 Internet security threat report

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Agenda
• Introduction
• Types of attacks
• Recent Attacks
• A false sense of security
• Vulnerabilities
• Prevention/Mitigation

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Introduction
Cyber attacks cost companies
$400 billion every year across the
globe.
* Fortune January 23, 2015

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What is Cybersecurity?
Cybersecurity is the body of technologies,
processes and practices designed to protect
networks, computers, programs and data
from attack, damage or unauthorized
access.

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Types of Attacks

53. Types of Attacks
(Motivations)

54. Types of Attacks

55. Types of Attacks
* Verizon 2015 data breach investigations report

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Recent Attacks

57. Recent Attacks

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Recent Attacks
• Target Breach
– Cost to Target > $500 million
– Gained access via vendor
– Email Phishing attack used

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Recent Attacks
• German Steel Mill
– Blast furnace lockdown and takeover causing
significant damage
– Targeted control systems
within facility
– Email Phishing attack
used

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Recent Attacks
– 80 million records compromised, included Social Security
Numbers, address, name, date of birth and much more.
– Email Phishing attack used to obtain credentials for
administrator accounts.
– Records not encrypted within the database.
– Cost to Anthem so far well over $100 million just to notify
customers.

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Recent Attacks
• Office of Personnel Management (OPM)
– 21.5 million records compromised, included Social
Security Numbers and other sensitive information.
– Stolen credentials allowed hackers to install
malware.
– Evidence possibly points to a state sponsored
attack.

62. Think Kansas City is safe?

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A false sense of security
• I am too small to be attacked. The smaller the business
is, the easier it is to hack. Smaller companies might not
have the technological sophistication and have become
prime targets.

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A false sense of security
• Why would someone attack our ERP, CRM, SCM or HR
systems?
– Because of the Information they store - Manufacturing
recipes, HR data, credit cards, financial results, etc.
• As holders of the world’s leading intellectual property,
including designs, patents, and trade secrets,
manufacturers are consistently targeted by cyber
thieves.

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Risk of Falling for Social
Engineering Attack
60%
44%
38%
33% 32%
23%
New employees
Contractors
Executive assistants
Human resources
Business leaders
IT personnel

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Vulnerabilities

67. Vulnerabilities
• > 325 Industrial Control
System (ICS) cyber incidents
in 2014.
• Ranged from significant
discharges to significant
equipment damage to
even deaths.
• Very few ICS specific cyber
security technologies,
trainings and policies.
• > 1,000,000 ICS devices
directly connected to the
internet ( as of 2013)

68. Vulnerabilities

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Prevention/Mitigation
• Don’t let an attack drive change
• Vendor Security
• Business Continuity and Disaster
Preparedness
• Cyber Liability Insurance
• Network Vulnerability Assessments

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Prevention/Mitigation
1. Maintain an accurate inventory of control system devices and
eliminate any exposure of the equipment to external networks.
2. Implement network segmentation and apply firewalls.
3. Use secure remote access methods.
4. Establish role-based access controls and implement system logging.

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Prevention/Mitigation
5. Use only strong passwords, change default passwords, and
consider other access controls.
6. Maintain awareness of vulnerabilities and implement
necessary patches and updates.
7. Develop and enforce policies on mobile devices.

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Prevention/Mitigation
8. Implement an employee cybersecurity training program
9. Involve executives in cybersecurity.
10. Implement measures for detecting compromises and develop
a cybersecurity incident response plan.

73. Prevention/Mitigation

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Next Steps
• Valuable resources
– The Industrial Control Systems Cyber
Emergency Response Team (ICS-CERT)
• https://ics-cert.us-cert.gov/
– NIST - Computer Security Resource Center
(CSRC)
• http://csrc.nist.gov/

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Questions?
Michael Hannan, CISA
Manager – CBIZ MHM, LLC
700 W. 47th Street, Suite 1100
Kansas City, MO 64112
Direct: (816) 945-5668
Email: mhannan@cbiz.com