Management Information Systems:

Managing the Digital Firm

Fifteenth edition

Chapter 8
Securing Information
Systems

Copyright © 2018 Pearson Education Ltd.

Learning Objectives
• 8-1 Why are information systems vulnerable to destruction, error, and abuse?

• 8-2 What is the business value of security and control?

• 8-3 What are the components of an organizational framework for security and control?

• 8-4 What are the most important tools and technologies for safeguarding information
resources?

Copyright © 2018 Pearson Education Ltd.

Video Cases
• Case 1: Stuxnet and Cyberwarfare
• Case 2: Cyberespionage: The Chinese Threat
• Instructional Video 1: Sony PlayStation Hacked;
Data Stolen from 77 Million Users
• Instructional Video 2: Meet the Hackers:
Anonymous Statement on Hacking Sony

Copyright © 2018 Pearson Education Ltd.

Hackers Attack Singapore’s Telecom
Infrastructure (1 of 2)
• Problem
– DDoS attack against everyday devices
– Related to malware Mirai, which is freely available

• Solutions
– Cyber-hygiene practices to secure devices
– New national cyber-security strategy
– New Cybersecurity Act

Copyright © 2018 Pearson Education Ltd.

Hackers Attack Singapore’s Telecom
Infrastructure (2 of 2)
• Hackers targeted one of Singapore’s major
telecom companies with a massive DDoS attack
• Demonstrates vulnerabilities in information
technology systems
• Illustrates the some of the reasons governments
and firms need to pay special attention to
information system security

Copyright © 2018 Pearson Education Ltd.

Why Systems Are Vulnerable (1 of 2)
• Security
– Policies, procedures, and technical measures used to prevent
unauthorized access, alteration, theft, or physical damage to
information systems

• Controls
– Methods, policies, and organizational procedures that ensure
safety of organization’s assets; accuracy and reliability of its
accounting records; and operational adherence to management
standards

Copyright © 2018 Pearson Education Ltd.

Why Systems Are Vulnerable (2 of 2)
• Accessibility of networks
• Hardware problems (breakdowns, configuration errors,
damage from improper use or crime)
• Software problems (programming errors, installation
errors, unauthorized changes)
• Disasters
• Use of networks/computers outside of firm’s control
• Loss and theft of portable devices

Copyright © 2018 Pearson Education Ltd.

Figure 8.1: Contemporary Security
Challenges and Vulnerabilities

Copyright © 2018 Pearson Education Ltd.

Internet Vulnerabilities
– Network open to anyone
– Size of Internet means abuses can have wide impact
– Use of fixed Internet addresses with cable / DSL modems
creates fixed targets for hackers
– Unencrypted VOIP
– E-mail, P2P, IM
• Interception
• Attachments with malicious software
• Transmitting trade secrets

Copyright © 2018 Pearson Education Ltd.

Wireless Security Challenges
• Radio frequency bands easy to scan
• SSIDs (service set identifiers)
– Identify access points, broadcast multiple times, can be identified
by sniffer programs

• War driving
– Eavesdroppers drive by buildings and try to detect SSID and gain
access to network and resources
– Once access point is breached, intruder can gain access to
networked drives and files

• Rogue access points

Copyright © 2018 Pearson Education Ltd.
Figure 8.2: Wi-Fi Security Challenges

Copyright © 2018 Pearson Education Ltd.

Malicious Software: Viruses, Worms, Trojan
Horses, and Spyware (1 of 2)
• Malware (malicious software)
• Viruses
Malicious software programs are referred to as malware and include a variety of
threats, such as computer viruses, worms, and Trojan horses.
• Worms
• Worms and viruses spread by
– Downloads and drive-by downloads
– E-mail, IM attachments

• Mobile device malware

Hackers can do to a smartphone just about anything they can do to any Internet device
• Social network malware

Copyright © 2018 Pearson Education Ltd.

Malicious Software: Viruses, Worms, Trojan
Horses, and Spyware (2 of 2)
A Trojan horse is a software program that appears to be benign but then
does something other than expected. The Trojan horse is not itself a virus
• Trojan horse because it does not replicate, but it is often a way for viruses or other
malicious code to be introduced into a computer system.
• SQL injection attacks
• Ransomware
• Spyware
– Key loggers
– Other types
 Reset browser home page
 Redirect search requests
 Slow computer performance by taking up memory

Copyright © 2018 Pearson Education Ltd.

Hackers and Computer Crime (1 of 3)
• Hackers vs. crackers
• Activities include:
– System intrusion
– System damage
– Cybervandalism
 Intentional disruption, defacement, destruction of website or corporate
information system

• Spoofing and sniffing

Copyright © 2018 Pearson Education Ltd.

Hackers and Computer Crime (2 of 3)
• Denial-of-service attacks (DoS)
• Distributed denial-of-service attacks (DDoS)
• Botnets
• Spam
• Computer crime
– Computer may be target of crime
– Computer may be instrument of crime

Copyright © 2018 Pearson Education Ltd.

Hackers and Computer Crime (3 of 3)
• Identity theft
– Phishing
– Evil twins
– Pharming

• Click fraud
• Cyberterrorism
• Cyberwarfare

Copyright © 2018 Pearson Education Ltd.

Internal Threats: Employees
– Security threats often originate inside an
organization Employees have access to privileged information, and in the presence of sloppy
internal security procedures, they are often able to roam throughout an
organization’s systems without leaving a trace.
– Inside knowledge
– Sloppy security procedures
• User lack of knowledge Malicious intruders seeking system access sometimes trick
employees into revealing their passwords by pretending to be
– Social engineering legitimate members of the company in need of information. This
practice is called social engineering.

– Both end users and information systems

specialists are sources of risk

Copyright © 2018 Pearson Education Ltd.

Software Vulnerability
• Commercial software contains flaws that create
security vulnerabilities
– Bugs (program code defects)
– Zero defects cannot be achieved because complete testing is not
possible with large programs
– Flaws can open networks to intruders

• Patches
– Small pieces of software to repair flaws
– Exploits often created faster than patches can be released and
implemented

Copyright © 2018 Pearson Education Ltd.

What Is the Business Value of Security and
Control?
• Failed computer systems can lead to significant or
total loss of business function
• Firms now are more vulnerable than ever
– Confidential personal and financial data
– Trade secrets, new products, strategies

• A security breach may cut into a firm’s market

value almost immediately
• Inadequate security and controls also bring forth
issues of liability

Copyright © 2018 Pearson Education Ltd.

Legal and Regulatory Requirements for
Electronic Records Management
• HIPAA
– Medical security and privacy rules and procedures

• Gramm-Leach-Bliley Act
– Requires financial institutions to ensure the security and
confidentiality of customer data

• Sarbanes-Oxley Act
– Imposes responsibility on companies and their management to
safeguard the accuracy and integrity of financial information that is
used internally and released externally

Copyright © 2018 Pearson Education Ltd.

Electronic Evidence and Computer
Forensics
• Electronic evidence
– Evidence for white collar crimes often in digital form
– Proper control of data can save time and money when responding
to legal discovery request

• Computer forensics
– Scientific collection, examination, authentication, preservation, and
analysis of data from computer storage media for use as evidence
in court of law
– Recovery of ambient data

Copyright © 2018 Pearson Education Ltd.

 ESTABLISHING A FRAMEWORK FOR SECURITY AND CONTROL

Information Systems Controls

• May be automated or manual
• General controls
– Govern design, security, and use of computer programs and
security of data files in general throughout organization
– Software controls, hardware controls, computer operations
controls, data security controls, system development controls,
administrative controls,

• Application controls
– Controls unique to each computerized application
– Input controls, processing controls, output controls

Copyright © 2018 Pearson Education Ltd.

Interactive Session: Organizations: Stuxnet
and the Changing Face of Cyberwarfare
• Class discussion
– Is cyberwarfare a serious problem? Why or why not?
– Assess the management, organization, and technology factors
that have created this problem.
– What makes Stuxnet different from other cyberwarfare attacks?
How serious a threat is this technology?
– What solutions have been proposed for this problem? Do you
think they will be effective? Why or why not?

Copyright © 2018 Pearson Education Ltd.

Risk Assessment
• Determines level of risk to firm if specific activity or
process is not properly controlled
• Types of threat
• Probability of occurrence during year
• Potential losses, value of threat
• Expected annual loss

Copyright © 2018 Pearson Education Ltd.

Table 8.5 Online Order Processing Risk
Assessment
EXPOSURE PROBABILITY LOSS RANGE EXPECTED
OF (AVERAGE) ($) ANNUAL
OCCURRENCE LOSS ($)
Power failure 30% $5,000 - $200,000 $30,750
($102,500)
Embezzlement 5% $1,000 - $50,000 $1275
($25,500)
User error 98% $200 - $40,000 $19,698
($20,100)

Copyright © 2018 Pearson Education Ltd.

Security Policy
• Ranks information risks, identifies acceptable
security goals, and identifies mechanisms for
achieving these goals
• Drives other policies
– Acceptable use policy (AUP)
 Defines acceptable uses of firm’s information resources and computing
equipment

• Identity management
– Identifying valid users
– Controlling access

Copyright © 2018 Pearson Education Ltd.

Figure 8.3: Access Rules for a Personnel
System

Copyright © 2018 Pearson Education Ltd.

Disaster Recovery Planning and Business
Continuity Planning
• Disaster recovery planning
– Devises plans for restoration of disrupted services

• Business continuity planning

– Focuses on restoring business operations after disaster

• Both types of plans needed to identify firm’s most

critical systems
– Business impact analysis to determine impact of an outage
– Management must determine which systems restored first

Copyright © 2018 Pearson Education Ltd.

The Role of Auditing
• Information systems audit
– Examines firm’s overall security environment as well as controls
governing individual information systems

• Security audits
– Review technologies, procedures, documentation, training, and personnel
– May even simulate disaster to test responses

• List and rank control weaknesses and the probability of

estimates
occurrence
• Assess financial and organizational impact of each threat

Copyright © 2018 Pearson Education Ltd.

Figure 8.4: Sample Auditor’s List of Control
Weaknesses

Copyright © 2018 Pearson Education Ltd.

What Are the Most Important Tools and
Technologies for Safeguarding Information
Systems? (1 of 3)
• Identity management software
– Automates keeping track of all users and privileges
– Authenticates users, protecting identities, controlling access

• Authentication
– Password systems
– Tokens
– Smart cards
– Biometric authentication
– Two-factor authentication

Copyright © 2018 Pearson Education Ltd.

What Are the Most Important Tools and
Technologies for Safeguarding Information
Systems? (2 of 3)
• Firewall
– Combination of hardware and software that prevents unauthorized
users from accessing private networks
– Technologies include:
 Packet filtering
 Stateful inspection
 Network address translation (NAT)
 Application proxy filtering

Copyright © 2018 Pearson Education Ltd.

Figure 8.5: A Corporate Firewall

Copyright © 2018 Pearson Education Ltd.

What Are the Most Important Tools and
Technologies for Safeguarding Information
Systems? (3 of 3)

• Intrusion detection system

– Monitors hot spots on corporate networks to detect and deter
intruders

• Antivirus and antispyware software

– Checks computers for presence of malware and can often
eliminate it as well
– Requires continual updating

• Unified threat management (UTM) systems

Copyright © 2018 Pearson Education Ltd.

Securing Wireless Networks
• WEP security
– Static encryption keys are relatively easy to crack
– Improved if used in conjunction with VPN

• WPA2 specification
– Replaces WEP with stronger standards
– Continually changing, longer encryption keys

Copyright © 2018 Pearson Education Ltd.

Encryption and Public Key Infrastructure
(1 of 3)
• Encryption
– Transforming text or data into cipher text that cannot be read by
unintended recipients
– Two methods for encryption on networks
 Secure Sockets Layer (SSL) and successor Transport Layer Security (TLS)
 Secure Hypertext Transfer Protocol (S-HTTP)

Two methods for encrypting network traffic on the Web are SSL and S-HTTP. Secure Sockets Layer (SSL)
and its successor Transport Layer Security (TLS) enable client and server computers to manage encryption
and decryption activities as they communicate with each other during a secure Web session. Secure
Hypertext Transfer Protocol (S-HTTP) is another protocol used for encrypting data flowing over the Internet,
but it is limited to individual messages, whereas SSL and TLS are designed to establish a secure connection
between two computers.

Copyright © 2018 Pearson Education Ltd.

Encryption and Public Key Infrastructure
(2 of 3)
• Two methods of encryption
– Symmetric key encryption
 Sender and receiver use single, shared key
– Public key encryption
 Uses two, mathematically related keys: public key and private key
 Sender encrypts message with recipient’s public key
 Recipient decrypts with private key

Copyright © 2018 Pearson Education Ltd.

Figure 8.6: Public Key Encryption

Copyright © 2018 Pearson Education Ltd.

Encryption and Public Key Infrastructure
(3 of 3)
• Digital certificate
– Data file used to establish the identity of users and electronic
assets for protection of online transactions
– Uses a trusted third party, certification authority (CA), to validate a
user's identity
– CA verifies user’s identity, stores information in CA server, which
generates encrypted digital certificate containing owner ID
information and copy of owner’s public key

• Public key infrastructure (PKI)

– Use of public key cryptography working with certificate authority
– Widely used in e-commerce

Copyright © 2018 Pearson Education Ltd.

Figure 8.7: Digital Certificates

Copyright © 2018 Pearson Education Ltd.

Ensuring System Availability
• Online transaction processing requires 100%
availability
• Fault-tolerant computer systems
– Contain redundant hardware, software, and power supply
components that create an environment that provides continuous,
uninterrupted service

• Deep packet inspection

• Security outsourcing
– Managed security service providers (MSSPs)
monitor network activity and perform vulnerability testing and intrusion detection.

Copyright © 2018 Pearson Education Ltd.

Security Issues for Cloud Computing and
the Mobile Digital Platform (1 of 2)
• Security in the cloud
– Responsibility for security resides with company owning the data
– Firms must ensure providers provide adequate protection:
 Where data are stored
 Meeting corporate requirements, legal privacy laws
 Segregation of data from other clients
 Audits and security certifications
– Service level agreements (SLAs)

Copyright © 2018 Pearson Education Ltd.

Security Issues for Cloud Computing and
the Mobile Digital Platform (2 of 2)
• Securing mobile platforms
– Security policies should include and cover any special
requirements for mobile devices
 Guidelines for use of platforms and applications
– Mobile device management tools
 Authorization
 Inventory records
 Control updates
 Lock down/erase lost devices
 Encryption
– Software for segregating corporate data on devices

Copyright © 2018 Pearson Education Ltd.

Ensuring Software Quality
• Software metrics: Objective assessments of system in
form of quantified measurements
– Number of transactions
– Online response time
– Payroll checks printed per hour
– Known bugs per hundred lines of code

• Early and regular testing

• Walkthrough: Review of specification or design document
by small group of qualified people
• Debugging: Process by which errors are eliminated

Copyright © 2018 Pearson Education Ltd.

Interactive Session: Technology: BYOD: A
Security Nightmare?
• Class discussion
– It has been said that a smartphone is a computer in your hand.
Discuss the security implications of this statement.
– What kinds of security problems do mobile computing devices
pose?
– What management, organizational, and technology issues must
be addressed by smartphone security?
– What steps can individuals and businesses take to make their
smartphones more secure?

Copyright © 2018 Pearson Education Ltd.