Threat of cyber attack looms as Russia responds to sanctions

As the world comes to terms with Russia’s military attack on Ukraine, the international community responds with a dramatic increase to sanctions on Russia. The latest tranche of sanctions target Russian banks and individuals among the Russian elite, restricting their movement within the global economy.

Describing the intended impact of these sanctions, US President Joe Biden stated on 24 February “This is going to impose a severe cost on the Russian economy both immediately and over time.”

Australia has followed suit with an extension to the autonomous sanctions imposed on Russia which were initiated in 2014. The sanctions relate to many areas including exports, imports, provision of services, assets and travel bans. Australia’s support of Ukraine and solidarity with our US and European allies makes us a target for Russian retaliation. The form this retaliation is most likely to take is cyber attack. A warning by the federal Government has been issued to Australian Businesses in the wake of heightened cyber risk following the escalating situation in Ukraine.

Australian Prime Minister Scott Morrison has urged Australian businesses to immediately review and initiate enhanced cyber security measures. During a press conference held on 24 February, Mr Morrison referred to the “historical pattern of cyber attacks” by Russia and stated “it’s an issue in which we need to be increasingly, constantly vigilant. “

This “historical pattern” of cyber attacks by Russia is well documented. Russia has consistently used cyber disruption as a weapon against its political enemies for decades and has been involved in many key cyber incidents in recent years including the massive attack that crippled Ukraine’s electricity network in December 2015. An attack which Russian president Vladimir Putin has acknowledged, along with its link to “patriotic hackers”. The Ukraine government has already seen dozens of official sites hacked in recent weeks, naming Russia as the culprit. Just hours before Russian troops were sent into Ukraine, several Ukrainian banks and government agencies were disabled by distributed denial of service (“DDoS”) attacks believed to be of Russian origin.

These attacks are expected to spread beyond Ukraine throughout allied nations including Australia. A recent cyber report published by intelligence agencies in the UK and US has just attributed a spate of new malware attacks to a Russian-backed hacking group. Speculation from cyber experts indicates Russian cyber disruption could impact Australian businesses in several ways. These include DDoS attacks on key organisations, ripple-effect damage from attacks on global organisations with operations in Australia and misinformation campaigns designed to create confusion and disruption.

Mr Morrison’s warning to Australian Businesses included the following advice:

“The Australian Cyber Security Centre recommends that organisations urgently adopt an enhanced cyber security posture. This should include reviewing and enhancing detection, mitigation and response measures. Organisations should ensure that logging and detection systems in their environment are fully updated and functioning, and apply additional monitoring to their networks where required. Organisations should also assess their preparedness to respond to any cyber security incidents and should review incident response and business continuity plans.”

With regard to Cyber Liability Insurance, standard policy wordings exclude insurers’ liability for acts of war or acts deemed to be taken by a nation state. It follows that insurers would mostly exclude losses from the Russia/Ukraine conflict. As such, businesses should not assume coverage under their policies, and they should take preventative measures to mitigate their exposures in this regard.

Bellrock works with third party experts that specialise in cyber security. These experts can assess cyber preparedness and assist clients in conducting a cyber risk review. We encourage clients to conduct cyber audits and update cyber security measures at regular intervals to manage the potential impacts to their businesses in the event of a cyber incident. Cynch Security provide a range of cyber security services tailored to small business clients and have released specific commentary in response to the Ukraine/Russia conflict here. For middle market businesses, Bellrock has developed a Cyber Risk Assessment guide with Casobe & Co which can be viewed here.

For further information and advice on managing the risk of cyber attack, please contact us via the form below.