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Episode #84 - Conversations at the Executive and Board Level with guest Caren Shiozaki

This week the guys (and "Skippy the Intern") are joined by special guest, Caren Shiozaki, to discuss cybersecurity considerations among executive teams and boards of directors. Caren shares her experience as a technology executive, insights at the leadership level, and emerging trends that are changing the thought process around cybersecurity and compliance.

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welcome to the Cyber Rants podcast
where we're all about sharing the forbidden secrets
and slightly embellish truths
about corporate cyber security programs
we're ranting
we're raving
and we're telling you the stuff that nobody talks about
on their fancy website and trade show giveaways
all to protect you from cybercriminals
and now here's your hosts
Mike Ratando
Zack Fuller
and Loro Chavez
hello and welcome to the Cyber Ants podcast
this is your co host
Zack Fuller
joined by Lara Chavez
and today we have a little bit of a different show
because Mike Ratando
our beloved news person newscaster is out
so we're going to do something else
we have Skippy the intern for the news
and before we dive into that
I'd like to thank special guests
Karen Shiozaki for joining us
Karen good to have you today
thanks for joining
thanks Zach
glad to be here
well hey let's dive in
I'm going to pass it over to Skippy
the intern for the news
followed by Laurel
Awesome thank you Zach
I appreciate it
this is Skippy the intern
standing in for Mike Rotundo
the great Mike Rotundo
so thank you so much for letting me
I've got one article I was given
I think the guys are trying to take it easy on me today
and I appreciate that
they're a good bunch
so the article reads
the refocusing cyber insurance with security validation
the rise of costs of data breaches
ransomware and other cyber attacks
lead to rising cyber insurance premiums
and more limited cyber insurance coverage
the cyber insurance situation increases risks
for organizations struggling to find coverage
or facing steep increases
state increases
some Aiken Group straws high
and fielded LP law firm clients
for example
reported a 3 fold increase in the insurance rates
and carriers are making a huge pullback
huge one on coverage limits
in the past 2 years
their cybersecurity practice co head Michelle Reed ads
the reduced coverage amount
can no longer shield policyholders from cyber losses
a 10 million dollar policy
can end up with a $150,000 limit on cyber frogs
the cyber insurance situation is concerning in the US
the Treasury Department
recently issued a request for public input
on a potentially
federal cyber insurance response program
the request is in addition to the assessment LED co
joined by the Federal Insurance Office
and the department of Homeland Securities
Cybersecurity and Infrastructure Security Agency
to determine
the extent to which risks to critical infrastructure
from catastrophic cyber insurance
and potential financial exposures
warrant a federal insurance response
this is a direct result of the evolution
of the nature of cyber attacks
that mirrors
the evolution
of digital environments
and the cryptocurrency crime facilitation effect
on the cybercriminal side
do it yourself
malware kits and malware as a service platforms
have removed the cybercrime barrier of entry
and made launching complex attacks affordable
for wannabe criminals
lacking tech
serving us like the professionals here
its silent sector
for them all
the cyber insurance coverage
used to cover only business interruptions
data recovery
and infrastructure change
today they are also expected to cover
cyber extortion costs
reputational risks
non compliance fines
and 3rd party liability risks
a growing field
as interconnectivity between organizations
keeps expanding
expanding okay
so I've insurance underriders
classical premium evaluation tools
or adherents to best practices
blah blah blah
blah blah blah
let's get down here
oh yes they're saying that continuous
security validation techniques
such as breach
and attack simulation
and attack surface management
and threat exposure assessments
that optimize security programs
minimize exposure
and provide quantified Kpis
that can be monitored over time
are game changes
switching from a defensive to a reactive perspective
of evaluating the insured party's threat exposure
implies moving forward
and assessing the actual damage attacks would cause
across the entire Mitar attack TTP matrix
well this is fantastic news really
this means that continual pin testing
and continual threat to sesming is the answer and that
that's my news article
thank you everyone
Laurel Road
do you have exploits for today
thank you Skippy
I appreciate that very much
Mike you're sorely missed
all right today for exploits
I do have a couple things to talk about
first if you're using the Aviva In Touch
Access Anywhere Secure Gateway
which is made by Aviva
for integrating network utilities into SCADA systems
so a very mechanical monitoring interface
there is a path traversal
that can lead to remote code execution as part of this
so if you're using any of the
the Access Anywhere Secure Gateway
doesn't sound very secure
but this is in release too
so make sure that you're checking these devices
and making sure that you're moving off of release too
as these are probably open and accessible to
most of the public Internet
and maybe even indexable on sites like showdown
also if you're using the MS In switch
for power on and power off
intelligently through your phone app
this is a $99 device
if you're not familiar with this
it's called an MS NS Switch
it's an Internet based
smart power block
basically like
you've got all your computer stuff plugged into
now only you can control it with an app
and turn it off with an internet connection
so these have a remote code execution capability
that is out there right now with firmware 24 o 8
so make sure that you are
if you're using one of these devices to do any kind of
clutchy stuff with your Christmas lights this year
make sure that you're checking that out
because these are going to be openly indexed
on sites like Shodan
and they're going to provide an attack surface for all
of our Grinches that might occur this season
so with that
super excited
we have a guest today Zach
what we're going to be talking about
well we are going to be talking about some
of cybersecurity at the sea suite
at the board level
we are going to talk about
the collaboration between business units
we're gonna be talking
I'm probably
maybe dive into culture you know
I'm really excited to see where the conversation goes
so as you know
we don't script things on the Cyber Ants podcast
we like to dive in and get into the nitty gritty
see where the conversation leads us
so we have special guests here in Shiozaki
with us today
we are going to be
right back after a quick commercial break
and we'll dive in
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and we're back with the Cyber Ants podcast
Karen hey thank you for joining us today
it's great to have you
oh thanks Zach
and thanks Laura
thanks Skippy
I think Skippy did a great job
we should we should keep
all right for a while
we should probably pay him that
I don't know about that
that might be stretching it
we'll see what Mike thinks
maybe maybe in a few years but
but you gotta earn your keep right
but nonetheless
we have some interesting conversation today
I'm excited to see where it goes
Karen has over 20 years
as a business technology executive
holding executive level positions
from VP CIO
to from both fortune 500 companies
and mid market type organizations
so she's done a lot of things
seen a lot of things
across the US
Asia as well
so I'm excited to see
what we dive into today
Karen why don't we start off
a little bit
if you could share a little bit more in depth about
your background
kind of how you got into this world
and what you're up to today
yeah well let's see
how I got into this world
I actually did never intended a long
long time ago
to be MIT in fact
when I was starting my higher education journey
my mom and dad expected me to be a doctor
so I actually have a degree in genetics from
university of California at Berkeley
and you think O genetics
computers happens that time
it doesn't really
but after deciding that I didn't want to
be a doctor
and after my parents finished yelling at me
and I decided yeah
I didn't really want to live with my mom and dad
for the rest of my life
I had to figure out what I was going to do
that's what took me into computer programming
and so I went and joined a
I went to work for bank of America went through a
computer programming class that they were
they had and that's how I started my it journey
probably part way through that
I started specializing in mis reporting
and realized that if I spent
did a stint on the business side
that would actually make me a better mis person
and so that's what I did
so I've actually spent half of my career
pretty much on the business side
where you're sort of
straddling between technologies and the business
that suited me very well
eventually went over to work for American Express
to head up their data warehousing program globally
ended up in enterprise architecture
I really consider enterprise architecture my pedi group
if you will and more
specializing primarily in data and business
went on to become a CIO for a media company in Dallas
and went on to work in
as a CIO for a financial service company
in fact I'm now winding down my role of CIO
overseeing the lights out of that financial
services company
it was one of the top 10
largest bankruptcies in US history
so that's been kind of a wild ride as well
and I recently joined Fordium Partners
they're the leading provider
of sea level technology leadership
and I work with companies as an interim or fractional
that's chief ethics and compliance officer
I'm also engaged to work on strategic initiatives
whether it's like
to get the ball rolling or to be parachuted in
to rescue them and put them back on track
and finally
I can also provide board advisory on digital rest
well speaking of board advisory
I'd like to dive into that and get your perspective on
you know that that arena all together
have a handful of questions
you know but
but maybe we start out with what boards
are experiencing
what happens if they
they aren't paying attention to this
and for the sea suite as well
I mean I know
you know we all know of course
some organizations are much more proactive than others
be curious to hear your thoughts on what you've seen
if you've seen kind of both sides
or if you've worked with
what may be more proactive organizations or less
for that matter
what's your experience in that realm
well you know
over the past several years
everybody's been jumping on the digital transformation
bandwagon right
and that you kind of have to do that
in order to stay competitive
in the global economy that we're in
but digital risk
is the consequence of adopting the new technologies
that are involved in digital transformation
now I would say probably all really big
major companies at the board level
understand that they have a serious responsibility
to address digital risk
cybersecurity also
in particular
cybersecurity by the way
is a component of digital risk
but you get to some of the mid size companies
and their boards might not be as mature
or haven't really quite figured out how to
you know embrace their responsibility
relative to oversight of that kind of a risk
and I think they kind
they really
everybody needs to get on the ball
no matter the size of the company
you know there
the recent Global Risk Report
that the World Economic Forum just published is site
cybersecurity is one of the major factors
that's going to define the next decade you know
I'd say traditionally
cyber has been more of an operational concern
but now you're finding that it's equally important
to investors
want to understand
a firm's ability to deal with cybersecurity risks
and because investors now have their antenna up
I say so must the board strengthen
their understanding and oversight of digital risk
because if they take their eye off the ball
they're going to jeopardize their market cap
and they will
yeah absolutely
and of course
we see way too much
that happening in the news these days
for those people that are listening
that are maybe new to this topic
or don't have a
you know have a strong background
in various areas of technology
when we talk about digital risk
I'd love to expand a little bit on that
because I think
a lot of people go straight to cybersecurity
in their minds
that's certainly the area that we focus on
but there's so much more to it
isn't there yeah
so at the highest level
the definition of digital risk is the unexpected
unwanted outcomes
that stem from the digital aspects of the business
and the related technologies
and you know today
pretty much all your business is driven by technologies
and so it all has that digital component
now digital risk
there are 8 categories
that compose overall digital risk
and the first is cyber security right
that's the risk of the cyber attack
and I would say that today
this is the most critical and growing
digital risk that companies are going to face
the second is cloud
a lot during digital transformation
a lot of folks decided to start moving to the cloud
and there's a lot of
why do business functions are in the cloud today
the 3rd is your 3rd parties right
every company today works with some type of 1/3 party
whether it's a supplier
a vendor or a contractor
I mean but no matter the nature of your relationship
you likely have a huge dependency on your 3rd parties
to perform a number of your business functions
and probably
some of those business functions are pretty critical
to keeping your company going
you've got data privacy
that's another aspect of digital risk
that's the risk of being able to protect sensitive data
usually personally identifiable information
or PII as we call it
and you know
you have an obligation as a company
to the people that are trusting you
to keep their personal data secure
and I would say you know
a data breach is not only a huge financial burden
too many organs that you know
a lot of companies might not be able to recover from
but it's also a huge blow to your reputation
and sometimes even if you recover financially
you have a really hard time recovering your
a reputational debt
and from a data breach perspective
there are also legal ramifications like fines
or maybe you go to prism
the other aspect is process automation
I mean automating can sometimes have a negative
impact on business processes
and then there are also risk issues
such as compatibility problems with other technology
maybe have a lack of it resources
that is a huge risk for us right now
in the technology profession
governance issues etc
and then speaking about lack of resources
workforces is today
from CIO perspective a really big problem
we we don't um
well you know you've heard about the shortage we have
we can't fill our positions
across a number of technology functions
but also another risk from a workforce perspective is
let's face it
you know from a security perspective
yeah there's a technology issue but the
the people often tend to be a weak link as you all know
another digitalistic compliance
when you adopt a new technology
your company is at risk of not complying
with Reg requirements for business operations
data retention and other practices
so as new technology continues to emerge in our space
compliance requirements
are going to change as well
and then you've got
lastly but not least is resilience
so this risk has to do
with the availability of your business operations
it's mainly concerned with what a BCM
or business continuity management
and as we you know
as I mentioned
introducing new tech inherently poses risks
to operate in your business efficiently
so those are the 8 categories of digital risk
yeah there's
there's a lot
there's a lot to it
and sometimes I wonder
is it a shortage of people that we have
or is it that it's got so complex so fast
that there's no
no way we could possibly keep up with the workforce
right just because the
the complexity of these things
and the various disciplines have
is have fractured out into so many little niche areas
that it's hard
I mean I think it's going to be hard to keep up with
I don't know
who cares to hear your thoughts
I don't know if there's going to ever be an easy answer
to keep up with
keep the workforce
in pace with the growth and technology
what do you think
I think it's going to be
I think we're
as we're going into this new era of technology
I think it's going to be a constant struggle
you know in terms of workforce culture also
the pandemic really shifted that
put it on its head
we can no longer operate
as leaders of technology organizations
we can't operate like we did prior to the pandemic
one other thing I would say
especially relative to cybersecurity and the shortages
of skilled sapper or cybersecurity positions
one of my personal pet peeves is
I think we go about the wrong way
trying to find cyber professionals
you know you've got entry level positions
but your job description is stating
that you've got to have at least a bachelor's degree in
like 5 different certifications
how many entry level people are going to have that
and want to
want to come in at that entry level salary
if they have that
you know I think we also maybe overlook
trying to cross train people
that are already within our organization
and already know our company and our business
I you know I think for me
I don't care how many certifications you have in cyber
I want to know if you have street smarts
I think that's the strongest thing I could bring in
yeah absolutely
I mean I think
and I think that's true
I'm under the same opinion in any
any hiring position
attitude right
first because
because that drives beliefs
drives action
drives people's ability to be able to learn new skills
and be resilient as individuals
so that's that's a big piece
yeah and it's interesting because you
there is way too much of that
I think there's a disconnect between all the job
boast scenes out there
like you see the memes online
or the snippets of you know
they're looking for somebody with 15 years of Cougar
Netties experience
and you know
it's just kind of wild
what the requests are out there for
for some of these things that
don't really make a lot of sense for most positions
and hiring within
moving people up
I mean that makes tremendous amount of sense
you're helping them in their careers
you're growing the workforce
you know you're giving them a path of progress
and a way to excel and
and feel more and more confident in different areas
so I think that's outstanding
Karen makes a good point about
the workforce changing now
because what's sad is that us technologists have known
that we've had the capability to do the remote work
for almost 20 years
and it's always been this kind of a battle between the
you know the corporate leadership and
and having to have that
we call it a butt in a seat mentality right
having people filling desks for floor space
mentality over
you know putting the mind in an imaginative
comfortable place to get the job done
right almost like a you know
you see these movies about riders going to these places
right where they write books
and that's kind of the same thing
right I mean
I think the more comfortable people are
and I think we're finding that out
and I think we found out of the pandemic that
despite being a remote workforce
you could still achieve great
great things
because people you know
had the incentive to not be drained by the commute
and the other parts of it right
they could focus on the actual work in the projects
so I think we're seeing that today
which is excellent
but there is a
there's a huge
there's a huge knowledge gap
and Zach and the team and I
we talk about this all the time
are you seeing that as well Karen
that in cyber security
and another risk based compliance
places like that is there
is that service like
hard to get staffing for still
well definitely in cybersecurity it's hard to
it's there are so many positions out there
and so few people to fill them
yeah and you know
you think about other
think other disciplines of technology
yeah I'd say probably some
some of the other disciplines
maybe not as much as in cyber
generally across the board there is
everybody's still struggling to feel
any sort of technology position
and then once you land them
you got to make them stay
because as you know
the onboarding new person is quite expensive
and so you don't want to have that turnover
and so it's
yeah it is a struggle
but I do think those of us that are adopting
the mindset that you can do completely remote
or you can find people that want to do
some sort of hybrid arrangement
that is a sticking point for them to say sure
love to work for your company
I'd also have to say that
because if we are willing to go remote
with remote workforce
that helps us
it broadens the talent whole considerably
instead of me having to sit in one geographic region
and just limited to the folks in that region
because as you say
we're expecting them to
kind of roll into the office every day
can have somebody
you know 300 miles away from me
and they're still doing a good job
that's cool
yeah I love the technology world for that
you know it's
it it is kind of a
it removes a lot of barriers
that used to be barriers for good people in in
but in maybe in remote areas or different places
where they didn't quite have the opportunity
you know if they weren't living in Silicon Valley
or Austin or New York or something like that
they weren't seeing the
the abundance of roles and things available
and now that's all changed
it's all out the windows
so I think I think
you know that's one of the silver linings
I guess that have come out of the pandemic
you know that
the fact that people are now more open to that
so I do see some organizations still
that are still pretty closed off to it
that are going
reverting back
but they're gonna have a hard time keeping up
so they're not gonna get quite the level of talent
that they could
and if they were to adopt a shifted mindset
well you know
and speaking about the workforce today
another challenge we face is
we have a multi generational workforce
I mean for the first time
we have 5 generations working in the same place
and you know
boomers probably constitute majority of them right now
but they're aging out
and I'm concerned about that pipeline
of the younger talent coming in
and particularly for our Jim Ziers
they want that flexibility
and they'll go to the companies that can accommodate
their quests for having equity in their work and life
personas and
you know respect for their personal time and what
their personal achievements
what they want to have
so you know
if you're gonna stick to an old model
where you're going to insist
100% of people in the office
hundred percent of the time
I think you're gonna find that's a challenge
you're not gonna attract the next generation of talent
I'd love to switch gears slightly
and hear about your perspective
as VP in various companies
CIO and such
when you obviously understand
the importance of cyber security and digital risk
but not every organization is like that
it seems that some companies are still siloed
the kind of the CIO and it department
maybe a bit disconnected
operationally and just relationally
from the cyber security team or risk management team
what would your advice be for really building cohesion
so that the 2 aren't necessarily threatened
by each other
budding heads
but really working together in the best possible way
I think well
my approach has always been
remember I told you that earlier in my career
I realized I love doing mics programming
but it dawned to me that if I actually
did a stint on the business side
for the people that I was writing news reports for
that it might make me a better mis person
and so to the extent that you can take
yes you are a technologist
but if you could take
and if you can understand
the business and appreciate what your business partners
are going through
and how your work either helps or hinders them
I think that goes a long way
I mean I know I like to describe myself as a
as a Sea Suite executive
who just happens to be a specialist in the business
of technologies
I don't come in and say
Hey I'm a tech geek
because I probably would have never made it to CIO
if that was the case for me
my my direct reports for sure
it's like you have to take that business mindset
you know and
when you look at cybersecurity in particular
there are still a lot of
different people that might think that's it's problem
it's not it's everybody's problem
especially when you get to C suite and board level
it's most definitely your problem as well
it's not just a CTO
CSO or Cios problem
and I think a lot of
having to get that buy in from the business side
is you've got to talk about
the risks and implications from a business perspective
you have to make sure you quantify
what the hit to the bottom line will be
or the hit to business operations will be
and when if we were to experience a breach or an outage
it makes perfect sense
I I like that
that thought process
go go ahead lorries
sorry to catch up
yeah I know
Karen question for you
so we we experience a lot of organizations
that are right at the forefront of making a decision on
you know how to handle their
their digital risk management
budget always
is always a very top of mind for the leadership
what would you say to leadership out there
that's kind of in this beginning stage process of like
how much do I dedicate
you know we see a lot of organizations trying to just
kind of do a bare minimum
as an example
they may have 14 exposed Web applications
all of equal risk
but they only want to look at one
to try to cut costs on a budget
and then also to suffice
a compliance requirement of an annual pin test
so what would you
how would you
counsel those leaders that are kind of right in that
in that spot today
do you have any words
of wisdom should share
I would say
you know first again
going back to the risk analysis
go back that risk analysis from a business perspective
if if that app or whatever it is you're looking at
what is the cost to your business
what is the impact to your business
should that go down
what if you don't have that particular function working
for X number of days
how much are you losing per day
in not having that business functionality running
and then try and figure out
then you can triage what's most important to fix
you know the other thing too
is a lot of times
when you look at these particular digital risks
they may not be
you can't necessarily look at all of them in isolation
they are going to be intertwined in many ways
and that compounds the financial impact of the risk
should one or more of those digital risks happen
you know especially like
in a data breach
I I like to quote
you know every year
the Panama Institute comes out with
that cost of data breach
was it I think the latest reports
it was like
4.3 million
that's that's like
the highest it's been
since they start doing that report
and you talk to people say
think about this
you know if you had to recover from a data breach
it's gonna cost you millions of dollars
we're suspending
you know 5 figures to create
to fix the problem
now and avoid having that data breach
the other thing I would say is
and this is
probably starting to be driven home more with boards
and is the liability
the personal liability that you could face
and I'm going to caveat I am not a lawyer
so my opinions are coming from my own experience
having worked with many lawyers over recent years
because of the bankruptcy
and all the litigation we've involved with
but a question that I get asked is
can a director
be held personally liable for a cyber breach
and in theory it's yes
in some circumstances
and to date
there's not been any incident of an individual director
that's been held liable for Siren Reach
but lawsuits pursuing this have been filed
and in my personal opinion
I think it's only a matter of time before one of those
lawsuits is successful in Stigs
and you know
you thought
in terms of legal liability
I think the most
recent one that's been visible in use is
an executive
I think was Uber's former CSO
was found guilty of obstruction of justice
and concealing of a felony
in connection with his role in a 2016 data breach
and this case is significant because
it's the first criminal conviction of an executive
for obstructing a regulatory investigation
of cyber security
and concealing a cyber incident from the regulators
and I think that was kind of an extreme case
and that in general
I think Sea Suite and board should understand that
in case of the breaches
they may become key witnesses
and their communications are likely to be key exhibits
that either win or lose a case for the company
and they should also understand in advance that
the principles of legal privilege
that can or can't apply
in their cases
and the circumstances that drive that
but then that also
knowing that you face that potential liability
it should make you think twice about
do you want to really skimp on supporting
bolstering your cyber defenses
yeah well that's nerve wracking to think about but yeah
and when I think about
what you mentioned about directors just
having to fight a lawsuit to begin with
I mean nobody wins in a lawsuit
really you know
I mean it's
it's just either way
you know even if you come out of it intact
you're gonna dump a bunch of money down the drain
just dealing with it
so that's you know there is a
there's a personal tone so you can see
do you know there
it's extremely stressful to be subpoenaed
or have to be put on the stand and
knowing that somebody's coming through all your emails
to figure out what you knew and when you knew it
right it's very stressful
absolutely yeah
better better not to deal with it
but but yeah
it seems that there's people are
are shifting their mindsets
really putting this
cyber security and compliance front and center
and we've definitely seen a lot more
proactive organizations reach out than before
a lot of times
it's been very
previous years
it's been more about hey
we have this compliant requirement
or this compliance requirement we have to meet
now we're starting to see more companies that genuinely
want to know where they stand
how they're doing
get in front of this stuff
well they can so that's
I'm excited to see that shift in mindset
and really appreciate the insight that you've shared
are there some top recommendations
you would leave the audience with before we jump off
any final words of wisdom before we close it out
yeah sure so
I know we had discussed about
from the board perspective
so these are the top 3 recommended
actions I would have for the boards
I'd say first and foremost
ensure that you have cyber expertise on your board
if you don't already
and the second is
make sure that
you have a board committee
that has responsibility for addressing digital risk
and this can either be a standalone committee
that you set up
or you can roll that responsibility
into an appropriate existing committee
and the 3rd is
the board as a whole should regularly deliberate
existing cyber threats
assess potential cyber threats
and the protections that you might need to take
and then make sure you document those discussions
because even the board would benefit
from having their own form of an incident response plan
before crisis occurs
right and just like our operational IR plans
is going to help them better respond
and minimize the impact
the cyber incident should want to occur
that makes perfect sense
I love that idea of having they have their own
their own plan own approach
they're ready to go in that event
I think that's
that's overlooked in large part so excellent
well hey thank you so much Karen for joining us
it's been been great to have you
borrow any final questions comments words of wisdom
no no Karen
thank you again so much
it's been an absolute pleasure for having you
and I hope that these words echo into the eternity
into the ears of those who may come forward
needing this information
so thank you
thanks for having me
it's been a pleasure
thanks Karen
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