- Central banks have developed continuous security protocols to detect and thwart fraud, which can impact small business owners.
Small businesses are impacted by a ton of different issues in the outside world. Emerging social trends, the proliferation of COVID-19 viruses and Central Bank policies are some of the factors that influence them. They have to regularly respond to these changes, such as developing customer service policies that are appropriate for the pandemic.
Central Banking policies have a huge impact on the everyday operations of many businesses. They have a huge impact on interest rates and the availability of money, which can change how easily businesses can get loans. These policies also influence the returns they will earn on their financial assets.
As a business owner, you need to pay attention to Central Bank policies. This includes thinking security protocols. Continuous security validation is a big part of central banking policies, which might have a ripple effect that is going to affect your business.
Small Businesses Should Pay Attention to Continuous Security Validation Efforts at Central Banks
The idea of the central banks of different countries releasing their digital currencies has been gaining traction. Many begin to acknowledge the impact of crypto in improving financial access and payment efficiency. However, the governmental adoption of digital currencies also comes with serious risks. As a small business owner, you should be aware of these risks.
During the Annual Meeting on Cybersecurity of the World Economic Forum (WEF), four critical cyber threats to central bank digital currencies (CBDC) were identified. These are credential theft and loss, users with privileged roles, system integrity and double-spending, and quantum computing.
The good thing is that three of these four risks are not challenging to address if only organizations pay enough attention to the need for adequate cybersecurity. This IT security adequacy is not just about having the proper cyber defenses in place, though. It also calls for honest-to-goodness security validation.
The importance of continuous security validation
“To ensure trust in CBDC, central banks must ensure their cybersecurity.” This is one of the key takeaways from the World Economic Forum’s Annual Meeting on Cybersecurity. CBCD is likened to any digital payment system prone to cyber-attacks, including account data breaches, theft, and social engineering.
The World Economic Forum suggests the adoption of cybersecurity best practices like those published by Microsoft in its “STRIDE” model and the United States National Institute of Standards and Technology (NIST). It also mentions the need to validate security controls to ensure that they are working the way they should. However, it is advisable to take it to a higher level and aim for continuous security validation.
Continuous security validation mitigates the risks of vulnerability. Cyber threats evolve ceaselessly and become more aggressive and sophisticated over time. Cybercriminals will stop at nothing as they seek out defects in the security posture of organizations. They relentlessly retool or tweak their attacks to exploit vulnerabilities, especially those that emerge when hardware and software are replaced or updated. Periodic security testing can leave gaps that bad actors will likely take advantage of.
Addressing credential theft and loss
Users of CBDCs need some form of access credentials to undertake transactions. These can be password or hardware tokens that contain private keys. Whoever possesses these credentials practically owns and can use the CBCDs. If somebody manages to access these credentials, the CBDCs essentially become theirs. Also, if a user loses these credentials, they lose digital money.
Continuous security validation platforms are designed to scan systems for possible vulnerabilities, such as stored passwords that have not been encrypted or the lack of multi-factor authentication when doing transactions. However, it is not enough to perform a test of security controls periodically since there is no assurance that the protocols and systems of an organization will stay the same forever.
Organizational changes can result in security issues that may not be detected soon enough to prevent cyberattacks from succeeding. It’s good if an organization has good change management practices, as they will likely have measures to address possible security gaps. Unfortunately, only a few organizations pay meticulous attention to how they implement changes, especially from the security perspective.
The continuous validation of an organization’s security posture helps plug all possible security holes that emerge after an organizational change or problems that appear as induced by complex social engineering-based attacks.
Addressing user privilege risks
It is not only organizations that use CBDCs that can benefit from continuous security validation systems. The central banks should also consider implementing continuous testing of their security controls and processes.
The World Economic Forum points out the possibility that central banks employees or government insiders, including law enforcement agents, may abuse their privileged roles in handling the CBDCs. they can freeze or withdraw funds without the consent of the digital currency owners. “These capabilities are in line with today’s compliance procedures in regulated payment systems. However, though such roles are likely to be a functional requirement of a CBDC, it is possible for them to enable malicious insiders to abuse the system,” the WEF says.
What’s great about the cybersecurity validation platforms available at present is that they do not only monitor technical threats. They can also spot weaknesses in protocols and policies to warn organizations of possible insider abuses. In addition, they employ purple teaming strategies to bolster security by emphasizing the adversarial perspective.
Addressing system integrity woes
In connection to the potential problem with privileges within central banks that manage the use of digital currencies, there are also possible risks in the system integrity of central banks. “Depending on the consensus protocol used, non-central bank nodes with privileged power could declare transactions as invalid, essentially blocking them from being accepted by the network and creating a denial-of-service attack for CBDC users and censorship of their transactions,” the WEF explains.
Additionally, it is possible for non-central bank nodes to facilitate a “double spending” attack, which is a form of digital money counterfeiting that results in the illegitimate multiple uses of CBDCs. The collision can also result in the forking of the CBDC as different tracks of the distributed ledger are created and left unchecked by colluding parties. Double spending is an exceptionally high risk for CBDCs that support offline use.
Continuous security validation systems can be custom-designed to cover system integrity and insider risks within the central banks that operate digital currencies. The security validation system, for example, can send alerts when certain spending limits and transaction frequencies are reached while the CBDC user is offline.
It is also worth mentioning that once CBDCs become prevalent, it is very likely for the MITRE ATT&CK framework to be updated to reflect the threats that are bound to hound central bank digital currency operations. The leading continuous security validation platforms integrate this framework, and they will inevitably be using it to help secure CBDCs.
More robust cybersecurity to support CBDC adoption
Quantum computing is expected to eventually threaten the blockchain ecosystem, which includes the CBDCs, but it is not an immediate threat, and cybersecurity experts will undoubtedly find ways to address it. For now, it is reassuring to know that cybersecurity threats should not be the reason for central bank digital currencies to be unviable. There are effective ways to address the threats, but organizations need to commit to continuous security validation.
Small Businesses Must Study Central Bank Security Protocols and Anticipate the Effect
There are a lot of Central Banking policies that can have a transient effect on small businesses. Continuous security validation is a top example. You should pay attention to these changes and anticipate the likely impact.