Chinese cyber-espionage rising, says Verizon annual report

Cyber-espionage originating from China has become a top source of data breach incidents, according to an annual report from Verizon. The report found Chinese spying and theft of sensitive corporate information, such as intellectual property, accounted for about 20% of the 621 data breach cases last year that Verizon analyzed.

The data-breach victims are companies and government agencies around the world that are either Verizon's customers or case information was provided by the U.S. Secret Service and similar law-enforcement agencies in North America, Europe, Asia (though not China) or Latin America. Cyber-espionage from "threat actors in China" is hardly new, says Marc Spitler, senior analyst on Verizon's risk team, but because there are now better ways to track these cyberattacks, a clearer picture is emerging.

[ ROUNDUP: The year's worst data breaches -- so far ]

According to the report, virtually all (96%) of the data-breach incidents categorized as espionage involved China. And 95% of attacks tied to state-affiliated espionage employed phishing as a means of establishing a foothold in their victims' systems.

However, the majority of the incidents involve financial-related cybercrime, including payment-card theft and fraud committed by tampering with ATM machines.

One of the biggest problems stems from theft of payment card information from the merchants' Internet-facing point-of-sale devices, says Spitler, adding, "this is typically a small retailer."

When it comes to vulnerabilities that create risks, the main security failures are related to weak password authentication, processes and configuration, he says. The more advanced attacks that involve sophisticated malware or zero-day attacks occur but aren't as commonplace. That's perhaps because criminals find it easier to "pick the low-hanging fruit."

One question Verizon seeks to address in its annual report is whether a data breach of a company is caused by an outsider, an insider or a "partner," meaning a close business partner with access to a network or holding sensitive information related to another company. The breach might be malicious or accidental.

Accord to the report, "partner actors" constitute only 1% of breaches under review, while "internal actors" who are company insiders accounted for 14%. Those rogue employees were most often involved in the payment chain -- such as cashiers, waiters and bank tellers -- though in larger organizations the chances that systems administrators were the involved in some way in a data breach grows. But the "external actors -- the outsiders who had no trust or privileged access to the corporate network -- accounted for over 90% of the data breaches under review, whether it involved the roughly 80% involving financial crime or the 20% involving cyber-espionage.

In more than three-quarters of the cases, the country origin of the "threat actor" was discernible, according to the report, adding that "motive correlates very highly with country of origin."

"The majority of financially motivated incidents involved actors in either the U.S. or Eastern European countries (e.g., Romania, Bulgaria, and the Russian Federation). A whopping 96% of espionage cases were attributed to threat actors in China and the remaining 4% were unknown. That may mean that other threat groups perform their activities with greater stealth and subterfuge. But it could also mean that China is, in fact, the most active source of national and industrial espionage in the world today."

Ellen Messmer is senior editor at Network World, an IDG publication and website, where she covers news and technology trends related to information security. Twitter: @MessmerE. Email:

Read more about wide area network in Network World's Wide Area Network section.

Join the CSO newsletter!

Error: Please check your email address.

Tags securitydata breachU.S. Secret Service2013 Data Breach Investigations Report

More about IDGVerizonVerizon

Show Comments

Featured Whitepapers

Editor's Recommendations

Solution Centres

Stories by Ellen Messmer

Latest Videos

  • 150x50

    CSO Webinar: Will your data protection strategy be enough when disaster strikes?

    Speakers: - Paul O’Connor, Engagement leader - Performance Audit Group, Victorian Auditor-General’s Office (VAGO) - Nigel Phair, Managing Director, Centre for Internet Safety - Joshua Stenhouse, Technical Evangelist, Zerto - Anthony Caruana, CSO MC & Moderator

    Play Video

  • 150x50

    CSO Webinar: The Human Factor - Your people are your biggest security weakness

    ​Speakers: David Lacey, Researcher and former CISO Royal Mail David Turner - Global Risk Management Expert Mark Guntrip - Group Manager, Email Protection, Proofpoint

    Play Video

  • 150x50

    CSO Webinar: Current ransomware defences are failing – but machine learning can drive a more proactive solution

    Speakers • Ty Miller, Director, Threat Intelligence • Mark Gregory, Leader, Network Engineering Research Group, RMIT • Jeff Lanza, Retired FBI Agent (USA) • Andy Solterbeck, VP Asia Pacific, Cylance • David Braue, CSO MC/Moderator What to expect: ​Hear from industry experts on the local and global ransomware threat landscape. Explore a new approach to dealing with ransomware using machine-learning techniques and by thinking about the problem in a fundamentally different way. Apply techniques for gathering insight into ransomware behaviour and find out what elements must go into a truly effective ransomware defence. Get a first-hand look at how ransomware actually works in practice, and how machine-learning techniques can pick up on its activities long before your employees do.

    Play Video

  • 150x50

    CSO Webinar: Get real about metadata to avoid a false sense of security

    Speakers: • Anthony Caruana – CSO MC and moderator • Ian Farquhar, Worldwide Virtual Security Team Lead, Gigamon • John Lindsay, Former CTO, iiNet • Skeeve Stevens, Futurist, Future Sumo • David Vaile - Vice chair of APF, Co-Convenor of the Cyberspace Law And Policy Community, UNSW Law Faculty This webinar covers: - A 101 on metadata - what it is and how to use it - Insight into a typical attack, what happens and what we would find when looking into the metadata - How to collect metadata, use this to detect attacks and get greater insight into how you can use this to protect your organisation - Learn how much raw data and metadata to retain and how long for - Get a reality check on how you're using your metadata and if this is enough to secure your organisation

    Play Video

  • 150x50

    CSO Webinar: How banking trojans work and how you can stop them

    CSO Webinar: How banking trojans work and how you can stop them Featuring: • John Baird, Director of Global Technology Production, Deutsche Bank • Samantha Macleod, GM Cyber Security, ME Bank • Sherrod DeGrippo, Director of Emerging Threats, Proofpoint (USA)

    Play Video

More videos

Blog Posts

Market Place