The Expert Podcast

So how bad are these cyberattacks happening? Well, here's an example from First American Title, which, if you're not familiar, is the largest title company for real estate in the country. They provide closing and title insurance services for real estate agents, attorneys, and for most of the real estate transactions, at least residential.

What happened was that they had a cyberattack that compromised a lot of their data and a lot of their records. Real estate companies are particularly appealing to hackers because there's lots of money involved. So if you can hack a title company, a real estate company, or even an architect, you have access to information about large-volume transactions, hundreds of thousands, millions of dollars in every transaction.

If you can get into that, you may be able to divert wire transfers, convince people to send money to the wrong place, or even just lock up a bunch of transactions so nobody can complete them and hold the company hostage for ransom. That's what they did in this case. They got into the system, they compromised the identities of all of the customers of First American, and they had to shut down for a period of time and implement lockout systems that stopped their closings from happening.

That's going to have a material impact on their revenue for the fourth quarter, according to this article. And as a public company, you have to report that to the SEC, Securities and Exchange Commission, because it might affect your stock price, right? If you had a cyber attack that affected your business as a public company and that may make your stock go down, you have to let the SEC know because they may have to notify investors or may have to open an investigation if it hurts and harms investors because of something you did wrong.

You may have liability beyond just the liability for your customer's records that were released, or maybe if money was lost by a client or even by a third party, you may have liability for that. You may also have liabilities for investors. This is why having cyber insurance, cyber protection, or even cyber security in place is important.

What's funny about this article is that it says it's the second cyber attack experienced by large title underwriters—not First American but another company. So even though that industry has been targeted, it's still happened. Cyber attacks are in many cases preventable, but there's going to be so many attempts that you really have to be on your game, and it's very difficult to prevent from internal sources because your internal cyber security department may only be aware of the things that happen to your company.

It's very difficult to know the whole picture of what's going on in the marketplace. That's where your cyber insurance company is your best ally because they see the attacks in all the companies that they insure, and they can tell you, "Hey, watch out for this; this is how they're doing it now. Have your IT person change this setting because this is how they're getting into other companies."

You can use that cumulative knowledge to help prevent that happening in your company. In fact, a lot of cyber insurance policies, in addition, have monitoring and active monitoring to help you, and they have a response team. So if you do have a cyber attack, you can pick up the phone and call your insurance company. They have a defense team that will help your tech department, your IT department, prevent the attack, mitigate it, and shut it down so it doesn't expand and get much bigger.

Right, what's that old saying? "Who are you going to call? Ghostbusters," right? If you have a cyber attack, you can't call the police. They don't get involved with stuff like that. I can't call the FBI. They normally don't get involved unless it's terrorism or somebody getting a physical injury. So you don't have anybody to call. You have to handle it on your own. Your tech department can certainly help, but you don't want to do that on your own. You want resources.

So active monitoring, whether you get it from insurance or buy it separately, is an important thing to have. First American is a good example of how these attacks happen and to what extent they can really do a lot of damage, not only to the company but to investors.