Chinese industrial espionage now a major cause of data breaches, Verizon report finds

'State-affiliated actors' looking for IP

Industrial espionage by Chinese "state-affiliated actors" was responsible for one in five data breaches reported to Verizon by customers and through a range of global police forces, the company's annual Data Breach Investigations Report (DBIR) has found.

The 2012 DBIR pains a complex picture of attack frequency, motivations, methods and targets, but the relatively new theme of Chinese hacking is more apparent than it has ever been.

In total, during the year Verizon recorded 47,000 security incidents using its Vocabulary for Event Recording and Incident Sharing (VERIS) methodology, from which it was able to confirm 621 verified data breaches.

In total, 19 percent of these 621 breaches were attributed to "state-affiliated actors," or put another way, state-sponsored hacking by a single country, China.

Because only three quarters of externally-directed breaches could be pinned to a country of origin, the real level of Chinese-based hacking could be higher still.

Thirty-seven percent of the breaches were reported in the financial sector, 24 percent in retail (including restaurants), and 20 percent manufacturing, utilities and transport.

Three quarters involved stolen or compromised network credentials, half involved hacking, and 40 percent involved malware.

Outsiders accounted for 92 percent of all breaches which Verizon agrees flies in the face of the widespread belief that insiders perpetrate a lot of data breach incidents. It could be that the 'internals' are simply not being detected.

"China is far above everyone," said Verizon's global investigations manager, Dave Ostertag, with disarming bluntness. "There is definite evidence leading to China as being the source of [these] attacks."

The relationships discovered by Verizon in terms of the targets and methods are so striking that it sometimes looks as if they could be analysed using an unwritten algorithm to spot the telltale signs that mark one actor from another.

Chinese hackers, for instance, have a penchant for targeting infrastructure and of course government, which they attack using information and credential-harvesting tools pointed towards things like mail servers. By contrast, Eastern European attackers tended to be motivated by financial reward which leads to a different attack design.

The point of such complex data sets might simply be this; far from being inscrutable chaos, hacking might by 2013 have generated more than enough data for the most important patterns to be clear.

The Chinese attacks often used similar methods over and over, presumably because they worked, said Ostertag.

"A lot of the techniques they're using we've seen for years," he said.

As the company reported in an early draft of the report in March, successful breaches often lie undiscovered for at least months and sometimes longer.

Verizon has published its DBIR for six years although year-on-year comparisons are becoming difficult to make due to the way the company has gradually widened its source material and adjusted its 'Vocabulary for Event Recording and Incident Sharing' (VERIS) methodology.

This year, for instance, the company complemented data from its own customers with that from 19 different organisations, including a wide range of global police forces. One used last year - the UK's Police Central e-crime Unit (PCeU) didn't participate due demands placed on it while it merges into the new National Crime Agency (NCA). This makes trend analysis more difficult.

Verizon has also gradually downplayed the significance of expressing breaches in terms of the number of records compromised, mainly because not all sources record breaches using this metric.

These combined factors make it difficult to test the contention that data breaches are getting worse, or that more attacks are being launched. It is just as likely that more are being detected and then reported to national police forces.

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