Podcast: Corporate Business Killers - "Acts of War" Clause

Published on April 12, 2022

In this week's episode, James and Taylor talk about the state of cyberwar, Biden's Cybersecurity Round Table, and SMBs relying on cyber insurance as their corporate lifeline.

The following transcript was generated using an automated voice recognition tool. Some small discrepancies may exist between this written transcript and the original audio recording.

 
Taylor (00:10)
Welcome back team! I'm happy to be back. It was a long time out! It's been over a month since I've been on the podcast. 
 
James (00:16)
For you, yeah.
 
Taylor (00:17)
It's been a month since we've podcasted! Even though a lot has hit- a lot has hit the fan but, it just felt like honestly, we're gonna talk about this, the boy who cried wolf, bits kept hitting the fan but loosely hit the fan?
 
James (00:28)
Yeah well it seems like it's been that way for some time now. That's- you're right, that's all it's been, are little bits.
 
Taylor (00:33)
Little bits.
 
James (00:34)
They're mounting up though, huh?
 
Taylor (00:35)
But news is blowing up right now. I think specifically, this week, I feel like there's a lot of talk about it James but, two things I want to bring up: President Biden at a business roundtable speaking cyber security, like Wire, why is the President hiding at a round table?
 
James (00:52)
Right.
 
Taylor (00:53)
But, we'll talk about that in a minute and then also, I'm seeing a lot about things falling into this category of acts of war.
 
James (00:58)
Right. 
 
Taylor (00:59)
That has to be pretty concerned. I mean, I did just get married and-
 
James (01:02)
Yeah.
 
Taylor (01:03)
My contract had the quotes "acts of war" in it. You don't get your money back.
 
James (01:07)
Sure. The marriage contract?
 
Taylor (01:08)
Right, right. 
 
James (01:09)
Is that the one you're talking about?
 
Taylor (01:10)
The venue contract.

James (01:11)
Oh the venue contract! I'm sorry. Yeah!
  
Taylor (01:15)
That too though!
 
James (01:17)
Where do you want to start?
 
Taylor (01:18)
So let's let's start with the first one. Why is Biden not at a round table? Is that common? Is he speaking on behalf of CISA and our federal agencies or what's going on?
 
James (01:26)
Sure, yeah. No, there's- there's two components to that one. The- the- the business roundtable happens frequently. Presidents often meet with- with the larger organizations leadership. We always hear about this for- in the tech industry, for being like Mark Zuckerberg, Bezos, Elon Musk, often times.
 
Recently, they've been grilled in front of congress for different things they do within their- their- their algorithms but, this was more of a how does- how does- how is business operating? What's the economy doing? So, I thought this was going to be a lot on inflation. I thought it'd be a lot on taxes and even more on international trade. Instead, he spent more time than I would have thought talking cyber security practices.
 
So that was a little bit different. Usually, Biden wouldn't talk cyber security at least as loosely as he did. Some of the things he said when he was in front of the group was that a- I guess our intelligence programs have evolved and that we are getting more and more information that a mass-scale cyber attack from Russia is imminent. That was a bit drawn back later, I'll explain that later, but he said that to the group then he said it's our patriotic duty that we invest all we can into making sure that we're putting in preventative measures to protect ourselves.
  
Taylor (02:46)
Because if you're not going to do it just because you're a good citizen, then you better tie some emotions to it and be a freaking good citizen. 
 
James (02:53)
That's hilarious, when I first heard it, I was hearing the patriotic obligation comment and I was thinking about the stories that I learned in school about like World War One and World War Two and how the men had to go fight the wars and the women went to the steel bills and I mean, they went and played baseball, right, was there a big movie on that.
 
Taylor (03:09)
Yeah.
 
James (03:10)
Yeah so, this one is a little different. We can all sleep in our beds at night and stay home but we need to invest all of our discretionary funds, I guess, into preventative measures in cyber security, but like you said, CISA is a branch of Homeland Security that usually deals in these matters. They- they usually speak on the- on behalf of the White House for this type of thing.
 
Taylor (03:33)
Yeah it sounds like they got their word in too because I think about- think about like, President Biden, like he can't possibly know what's going. I mean we hardly know we
can keep up with what's going on. Like, yeah, they really step in and speak-
 
James (03:46)
They're the ones who released the memo that we've done podcasts on before, right, so I know our audience has heard their language.

Taylor (03:52)

Yeah.

James (03:53)
Through our voice at least.
 
Taylor (03:54)
Right, I know and our CISO has been active on, at least, funneling information through us-
 
James (03:59)
Right, internally. 
 
Taylor (04:01)
The White House memos and all of that.

 James (04:02)
And so their- their voice is really trying to tell everybody it's not that we have a reason to believe that a cyber attack's happening tomorrow um, although I would argue there are some- some reasons on why you might think that they were really saying here are the things you should do to help yourself they even future-proofed it, said Once this round kind of subsides here are the things that we're going to be focusing on in the future. So should your investment strategy allow you to start putting towards some future items, you can future-proof yourself for what the CISA is going to tell us is fundamental, I don't know, two years from now? So that's really what happened.
 
Taylor (04:35)
Yeah, I'd like to go back to the the cyber war though like- that's- I mean that's probably the biggest news stories. When is it going to happen? Is it going to happen at this point We've been warned six- for six weeks now or whatever.
 
James (04:47)
This one feels different for sure.
 
Taylor (04:49)
Yeah, why?
 
James (04:51)
Yeah, so well-
 
Taylor (04:52)
I know the media- so the media is diluting it.
 
James (04:54)
Right
 
Taylor (04:55)
And I feel like are we doing the same for our customers too because-
 
James (04:58)
Sure.
 
Taylor (04:58)
We're on the edge of our seats, like, waiting for this to happen and when it doesn't rain, are we going to be surprised? Are we just going to be the boy who cried wolf?
 
James (05:06)
We're gonna pretend we're surprised. No, so the- the surrounding news stories with this are rather interesting. There's- there's some- some cool ideas for this. One thing that they released right before the round table was a list of 140 Russian-based IP addresses and those IP addresses are and they've been captured, or caught by, our government on U.S companies scanning those businesses.
 
That and almost every one of those circumstances was found on a company that fits within critical industries or critical infrastructure. I'll talk more about those 140 in a minute. One of the reasons that this hasn't happened according to Biden, he mentioned that it's just not a- a tool in Putin’s tool belt that he's yet to pull out and use.
 
Taylor (05:56)
But it's waiting.
 
James (05:58)
It's ready, yeah. He thinks it's coming any day. 
 
Taylor (05:59)
Yeah.
 
James (06:00)
Because he's just looking at Putin's current physical strategy-
 
Taylor (06:04)
Right.
 
James (06:05)
-seeing that it's not working, so we put these sanctions in, we reduced the- the value of the ruble, now Putin's starting to feel some- some pain both ego, where he's getting slammed globally for his behavior, and now in the pocketbook and so that he believes that the weaponry is getting more and more aggressive that in turn so will the odds of a cyber attack. I have a personal theory that I think that Putin believes he has a physical advantage, but the moment he opens up the cyber attack world and the cyber war opens up, his physical muscle no longer matters.
 
His intellect muscle matters most and I don't know that he knows what the other team has. He knows he's physically superior though to Ukraine. He may not know what happens when he opens that up not to mention there's a NATO rule, attack one you attack all. I've heard mixed stories but there's- there's a chance that cyber war circumnavigates that clause. That doesn't necessarily directly impact that idea. So if we're coming to the realization that Putin could attack that way and not have it impact NATO, then I would imagine he's more likely to go that route until the U.S quit sanctioning me so hard, quit doing these things.
 
Taylor (07:16)
Yeah.
 
James (07:19)
But lastly, it may be happening, I just mentioned 140 IP addresses that were caught, that's an interesting story in itself. We've also got recent news stories as recent the last say five to seven days um close to home to us in San Antonio Baxter County. They- they were hacked and they had a major breach. Hubspot, the- the CRM tool, they were breached, and then maybe the biggest, OCTA, which is a multi-factor authentication program, a major enterprise company, I'd say the global standard right now for that process, they were hacked. It kind of made me laugh. In their hack, there's a little sidebar, but a long time ago when- when KOBE was kind of first coming into effect and all these cyber attacks were going up, Rakata, the camera company, was hit. Remember that?
 
Taylor (08:05)
Yeah.
 
James (08:06)
We have Rakata cameras inside our office, so we were a bit nervous but what that meant turned out we weren't impacted um but i remember when the rakata attack happened everyone said octo was hacked and it was like simultaneous it turned out was because they had prakata cameras they ended up not being breached and their CISO had to release statements a year ago saying like here's what we saw here's what happened here's where we took action they weren't actually breached though now they are.
 
Taylor (08:30)
Sort of bad press though. Like someone-
 
James (08:32)
Yeah. 
 
Taylor (08:33)
Someone says that you're a part of it, and it's part of that.
 
James (08:34)
Turns out you're not.
 
Taylor (08:35)
Yeah.
 
James (08:36)
So the- the story behind the IP address is though scanning has a lot of people kind of shaking their heads initially, most I would hear from would say that's crazy the 140 IP addresses from Russia that are doing bad activities on your network, that's just geo fencing and geo filtering which is part of our secure by default that's really fundamental foundational stuff it's technical as all get out but it's- it's fundamental. There is a way to kind of stop that, but if you look at it from a different direction, why would someone be scanning someone's network? Well, that's- that's a precursor to a breach.
 
Taylor (09:09)
Right.
 
James (09:10)
So they're probably doing it for reconnaissance so if they're- if they're looking at our critical industries, specifically five energy companies and then others within critical industries for reconnaissance purposes and then on top of that we're seeing Octa's and Hubspot's and Baxter, but the attack might be already occurring.
 
Taylor (09:28)
Yeah, yeah. I mean that's- that's good stuff. I just want to end on this- on this topic and we can dive-in just a little bit but this idea of cyberwar and what happens when it breaks out and our customers or whoever, if you're relying on cyber insurance to cover you- you've reached a point of no return, because we're gonna go back to this topic of act of war, that's your cause, it's not gonna- it's not gonna be your fail safe anymore.
 
James (09:53)
Yeah so this- this is a- that's a great point. The- the active war clause is the most common exclusion in cyber insurance contracts and so, for our listeners that may not read the
contracts that closely, there's the- the most common outside of active war are third party vendors which takes you back to those supply chain attacks like that Solarwinds breach we've already talked a lot about, lost portable devices, and then security maintenance failures. Security maintenance failures is an interesting one too so essentially, if you don't do your job right in patching, you're- you're- you're kind of not going to get your- that's an exclusion in itself.
 
Taylor (10:32)
Yeah.
 
James (10:33)
But then, in turn, if you patch and that patch is a supply chain attack, well, that's a third-party vendor. 
 
Taylor (10:37)
Yeah.
 
James (10:38)
So you're- you're finding more and more ways that insurance can get out of pain the way they're working act of war these days is actually war invasion and terrorism so a war invasion and terrorism clause is going to keep you from potentially getting your payout should you be breached during a state of war with Russia.
 
Taylor (10:56)
So if you're swimming now and something happens there is literally no one to left to pull you out of the pool but yourself.
 
James (11:00)
Yeah, pull yourself out. 
 
Taylor (11:03)
Yeah.
 
James (11:04)
Essentially, you're operating in a way where you paid your premiums, but you're going to be self-insured because you're going to cover that cost.
 
Taylor (11:09)
Yeah.
 
James (011:10)
You're playing both.
 
Taylor (11:11)
At this point, and we're in war.
 
James (11:14)
We’re in war, that's a great point now Putin's saying the Kremlin in general is saying no. They're denying it, surprise surprise. Right, but that's not-.

 
Taylor (11:25)
We're not doing that! What are you talking about?
 
James (11:26)
To think of an insurance business looking at that- They're not going to say, well the Kremlin said it's not war then we're going to pay it out, they're going to look at what Biden has said about it's imminent, it's coming, and that these are coming out of Russia and they're going to find what reasons they can keep from paying. So it's not the world's greatest scenario right now if you're in a position of not having preventative maintenance and preventative measures already in place.
 
Taylor (11:48)
Yeah. Yeah. Last punchline to business leaders? Got anything? Stop waiting?
 
James (011:55)
I think it would be- I know everybody we've talked to is looking for the wise way to spend money but if you've got anywhere in your business where you might be spending wastefully, even if it's like at your coffee bar and break room, think about how you ought to be putting those- that extra money today in this preventative measure, and it's possibly a- more than one fundamental measure you're missing, but you need to shore these areas up. No one's- no one's gonna back you out of it once something happens.
 
Taylor (12:21)
Guys, you keep following along as the bits hit the fan. You can follow us on Twitter, LinkedIn, we're talking all these stories [and] breaking them down. We're even taking a deep dive on our blog on a lot of these hot topics so you can find more there. We'll definitely link those in the show notes. That's it for us today. We'll see you in your feed next time, when bits at the fan.

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Centre Technologies is a full-service IT consulting and managed services provider headquartered in Texas, with a focus on mid-sized businesses. As a trusted IT partner for well over a decade, Centre is recognized for its local experience and enterprise-grade cloud and cybersecurity solutions. Centre is committed to helping organizations harness the power of technology to maximize their operational efficiency and exceed their business goals. Learn more about Centre Technologies »

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