[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
SMALL BUSINESS CYBERSECURITY: FEDERAL RESOURCES AND COORDINATION
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HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MARCH 8, 2017
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 115-007
Available via the GPO Website: www.fdsys.gov
______
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HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
DON BACON, Nebraska
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
VACANT
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT
Kevin Fitzpatrick, Majority Staff Director
Jan Oliver, Majority Deputy Staff Director and Chief Counsel
Adam Minehardt, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Steve Chabot................................................ 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
The Honorable Maureen K. Ohlhausen, Acting Chairman, Federal
Trade Commission, Washington, DC............................... 4
Chuck Romine, Ph.D., Director, Information Technology Lab,
National Institute of Standards and Technology, Gaithersburg,
MD............................................................. 6
Mr. Charles Rowe, President & CEO, America's Small Business
Development Centers, Arlington, VA............................. 7
Mr. Jim Mooney, President and CEO, Chevron Federal Credit Union,
Cybersecurity Committee Chair, National Association of
Federally-Insured Credit Unions, Arlington, VA, testifying on
behalf of the National Association of Federally-Insured Credit
Unions......................................................... 9
APPENDIX
Prepared Statements:
The Honorable Maureen K. Ohlhausen, Acting Chairman, Federal
Trade Commission, Washington, DC........................... 22
Chuck Romine, Ph.D., Director, Information Technology Lab,
National Institute of Standards and Technology,
Gaithersburg, MD........................................... 34
Mr. Charles Rowe, President & CEO, America's Small Business
Development Centers, Arlington, VA......................... 42
Mr. Jim Mooney, President and CEO, Chevron Federal Credit
Union, Cybersecurity Committee Chair, National Association
of Federally-Insured Credit Unions, Arlington, VA,
testifying on behalf of the National Association of
Federally-Insured Credit Unions............................ 48
Questions for the Record:
Questions and Responses from Hon. Adriano Espaillat to Hon.
Maureen K. Ohlhausen....................................... 77
Questions and Responses from Hon. Adriano Espaillat to Chuck
Romine, Ph.D............................................... 79
Questions and Responses from Hon. Adriano Espaillat to
Charles Rowe............................................... 82
Questions and Responses from Hon. Adriano Espaillat to Jim
Mooney..................................................... 85
Additional Material for the Record:
ICBA - Independent Community Bankers of America.............. 87
SMALL BUSINESS CYBERSECURITY: FEDERAL RESOURCES AND COORDINATION
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WEDNESDAY, MARCH 8, 2017
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:00 a.m., in Room
2360, Rayburn House Office Building, Hon. Steve Chabot
[chairman of the Committee] presiding.
Present: Representatives Chabot, Luetkemeyer, Knight,
Kelly, Blum, Comer, Bacon, Fitzpatrick, Velazquez, Evans,
Murphy, Lawson, Clarke, Espaillat, and Schneider.
Chairman CHABOT. Good morning. I will call the Committee to
order now. And we want to thank everyone for coming today.
Over the past year, this Committee has turned its attention
to an issue that is increasingly serious for small business,
and that is cybersecurity. In past hearings, we heard firsthand
accounts from small business owners who have been victims of
cyberattacks.
We have also heard dire warnings from cybersecurity experts
about the new and varied cyber threats facing America's 28
million small businesses.
There is no question that advances in information
technology have helped small businesses to increase their
productivity, become more efficient, and ultimately more
successful.
However, the same tools and resources that have given small
business owners a greater role in the marketplace have also
provided cyber criminals and foreign bad actors with more
opportunities to steal sensitive and valuable information that
small businesses rely on to remain competitive.
In 2015 alone, the United States Department of Justice
recorded nearly 300,000 cybersecurity complaints.
We have also learned that a cyber attack can have serious
consequences, not only for small businesses, but also their
customers and their employees and business partners. Sixty
percent of small businesses that fall victim to a cyberattack
close up shop within 6 months. Sixty percent. A 2014 survey
from the National Small Business Association estimated the
average cost of cyber attacks on a small business to be over
$32,000.
In our Committee's efforts to spotlight these serious and
growing threats, it has been abundantly clear that the Federal
Government needs to step up its game when it comes to
protecting the cybersecurity of small businesses and
individuals. And, to some extent, Federal agencies have begun
offering resources directly to small businesses in recent
years.
Today we will hear from some of the Federal agencies that
are already providing cybersecurity resources to small
businesses. We will examine how these tools can be more easily
accessed by small business owners and ensure that they are
effective.
Since the late 1990s, the Federal Government has become
increasingly active in protecting our Nation's critical
infrastructure and information technology, IT, systems. It has
gone to great lengths to coordinate these efforts with State
and local governments, as well as the private sector. However,
it was not until recently that the Federal Government was
encouraged to engage in greater information-sharing practices
with businesses through the development of an overall framework
for cybersecurity protocols. The framework would enable
businesses of all sizes to implement a set of best practices
for assessing cyber threats and reinforce their cybersecurity
systems.
Just last year, the House passed the Improving Small
Business Cybersecurity Act, a bill that helps small businesses
facing cyber threats by providing access to additional tools
and resources through existing Federal cyber resources. The
bill became law as part of the National Defense Authorization
Act of 2017. The Department of Homeland Security, DHS, and
other Federal agencies have been permitted to work through the
Small Business Development Centers, SBDCs, to streamline cyber
support and resources for small businesses.
While I believe this is a very good start, I think it is
glaringly obvious that Federal agencies tasked with providing
cybersecurity resources to small businesses can be better
coordinated. They should drive down duplicative resources and
processes and ensure that small businesses are equipped to deal
with the growing cyber threats.
I look forward to hearing from our witnesses and their
points of view on how we can more efficiently disseminate
Federal cybersecurity resources to all of America's small
businesses, and I would now like to yield to the ranking member
for her opening statement.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Developing new innovations is fundamental to our nation's
prosperity in the 21st century. But these technologies can only
be beneficial if small businesses can adopt them without fear
of malicious cyberattacks. Cybercrimes are becoming more
commonplace and more sophisticated. And no matter what form
they take, they can be devastating to business owners and their
customers. A single attack can wipe out a small business,
making cybercrime a severe problem for small entities.
While businesses of all sizes must increasingly monitor
cyber threats, small firms must prepare for these problems with
far fewer resources than their larger counterparts. Because of
the complexity and cost associated with implementing a security
plan, only 31 percent of small firms take active measures to
guard against such attacks.
More than 80 percent of the time, the owner handles
cybersecurity personally, making small firms more vulnerable
than a competitor with a dedicated IT security consultant or
staff member. In fact, last year, 60 percent of all targeted
attacks struck small- and medium-sized entities.
These actions have costly implications for the small
companies. The average cost of a data breach is nearly
$200,000, and leads to 60 percent of targeted small businesses
closing their doors within 6 months of being attacked.
Because small firms stand to lose so much without data
protection, it is imperative that they have the resources of
the federal government at their disposal. The federal
government has a duty to secure federal information systems and
assist in protecting private systems.
All agencies have their own duty to protect their systems,
but due to rapid changes in cyberspace, agency roles are
complex. The presence of over 50 relevant statutes addressing
various aspects of federal cybersecurity responsibilities adds
yet more confusion. And because agencies are busy navigating
the rules pertaining to their own systems, efforts to help
small firms have generally been neglected.
However, the Department of Defense and Homeland Security,
and the National Institute of Standards and Technology, have
all recently embarked on efforts to assist businesses with
cybersecurity needs.
Additionally, federal spending on cybersecurity is expected
to rise above $20 billion over the next several years.
Implementation of the Cybersecurity Information Sharing Act of
2015 continues moving ahead. Despite this progress,
collaboration between agencies and small firms is lacking,
which affects us all.
We must improve our efforts to help small businesses
overcome these challenges. I was pleased, for example, that the
National Defense Authorization Act includes a provision
instructing SBA to coordinate with DHS to develop a small
business cyber strategy.
Most importantly, it leverages the SBA's vast network of
Small Business Development Centers, which have a proven record
of helping entrepreneurs all over the country.
Although this is a step in the right direction, we must do
more to encourage small firms to protect themselves and their
customers from cyber threats. Today's hearing will give us an
opportunity to review federal investment in cybersecurity and
how we can facilitate collaboration with the small business
community. We cannot accept the bare minimum as our nation
seeks to end continued data breaches.
With that, I want to thank all the witnesses for being here
today, for your participation and insights into this important
topic.
I yield back, Mr. Chairman.
Chairman CHABOT. Thank you very much. The gentlelady yields
back.
And if Committee members have opening statements prepared,
we would ask that they be submitted for the record.
And I will now take just a moment to explain our lighting
system. It is really pretty simple. Each of you get 5 minutes.
We all get 5 minutes. And the lights will assist you in kind of
keeping within that. The green light will stay on for the first
4 minutes. The yellow light will come on to let you know you
have got about a minute to wrap up. And then the red light will
come on, and, hopefully, you are finished by that time or will
be shortly thereafter. So if you could stay within those, we
would greatly appreciate it.
And I would like to introduce our very distinguished panel
here this morning. I will begin with our first witness.
Maureen Ohlhausen, who is acting chairman of the FTC,
Federal Trade Commission. She was sworn in as the commissioner
back in 2012. She also served as director of the Office of
Policy Planning from 2004 to 2008, where she led the FTC's
Internet Taskforce. And we welcome you this morning.
Our second witness will be Chuck Romine, director of the
Information Technology Lab at the National Institute of
Standards and Technology. Dr. Romine oversees a program that
promotes U.S. innovation and industrial competiveness by
developing standards and guidelines for Federal agencies and
U.S. industry, and we welcome you here, Doctor.
And our third witness will be Tee Rowe, who is the
president and CEO of America's Small Business Development
Centers. He is also the chairman of the Small Business
Legislative Council and a member of the U.S. Chamber of
Commerce's Council on Small Business. Mr. Rowe also served the
Small Business Committee for 10 years as counsel. So welcome
back.
And I would now like to yield to the ranking member to
introduce our fourth witness.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
It is my pleasure to introduce Mr. James Mooney, President
and CEO of Chevron Federal Credit Union, located in California,
and serving members since 1935. Mr. Mooney is also the
Cybersecurity Committee Chair for the National Association of
Federally-Insured Credit Unions, NAFCU. He is testifying on
behalf of NAFCU, which is the only national organization
exclusively representing the nation's federally-insured credit
unions. Welcome. Thank you for being here.
Chairman CHABOT. Thank you very much.
And now we will hear from our distinguished panel. And Ms.
Ohlhausen, you are recognized for 5 minutes.
STATEMENTS OF THE HONORABLE MAUREEN K. OHLHAUSEN, ACTING
CHAIRMAN, FEDERAL TRADE COMMISSION; CHUCK ROMINE, PH.D.,
DIRECTOR, INFORMATION TECHNOLOGY LAB, NATIONAL INSTITUTE OF
STANDARDS AND TECHNOLOGY; CHARLES ROWE, PRESIDENT AND CEO,
AMERICA'S SMALL BUSINESS DEVELOPMENT CENTERS; JIM MOONEY,
PRESIDENT AND CEO, CHEVRON FEDERAL CREDIT UNION, CYBERSECURITY
COMMITTEE CHAIR, NATIONAL ASSOCIATION OF FEDERALLY-INSURED
CREDIT UNIONS
STATEMENT OF MAUREEN K. OHLHAUSEN
Ms. OHLHAUSEN. Chairman Chabot, Ranking Member Velazquez,
and members of the Committee, I am Maureen Ohlhausen, the
Acting Chairman of the Federal Trade Commission. And I
appreciate the opportunity to present the Commission's
testimony on data security and, in particular, our efforts to
coordinate with our partners at NIST, who I am pleased to be
with here today, and the SBA, to educate small business.
Data breaches are commonplace, and in the case of small
business, a data breach can be devastating. While they may
never make headlines, the majority of attacks target small- and
midsized companies. And as you already mentioned, according to
the National Cybersecurity Alliance, some 60 percent of all
small businesses shutter their doors within 6 months of a
breach.
The Federal Trade Commission is a small, independent agency
with a large role to play when it comes to data security, and
we are committed to protecting consumer privacy and promoting
data security in the private sector through enforcement and
education.
The Commission enforces several statutes and rules that
place data security requirements on companies: the Gramm-Leach-
Bliley Act, which covers certain financial institutions; the
Children's Online Privacy Protection Act covering children's
information; and the Fair Credit Reporting Act covering credit
report information. The Commission also enforces the FTC Act,
which applies to a broad range of companies.
The core requirement under each of these laws is that
companies must maintain reasonable security. None of the laws
contain prescriptive, detailed legal requirements; rather,
their requirement of reasonable security is a flexible one that
is scalable for small companies. A company's data security
measures must be reasonable in light of the sensitivity of
consumer information it holds, the size and complexity of its
data operations, and the cost of available tools to improve
security and reduce vulnerabilities.
Since 2001, the Commission has used its authority to take
action against approximately 60 companies that it charged with
failing to provide reasonable protections for consumers'
personal information. In each of these cases, the data security
failures were not merely isolated mistakes. Instead, the
Commission challenged alleged data security failures that were
multiple and systemic. The Commission has made clear that it
does not require perfect security, that there is no ``one size
fits all'' data security program, and that the mere fact that a
breach occurred does not mean that a company has violated the
law.
In addition to law enforcement, the FTC offers guidance to
help businesses of all sizes improve their data security
practices. In November, we released an update to ``Protecting
Personal Information: A Guide for Business,'' a guide we first
published in 2007. Last fall, the FTC released guidance
describing immediate steps companies should take when they
experience a data breach. And in 2015, the FTC launched its
Start with Security initiative, which includes a guide for
business that summarizes the lessons learned from the FTC's
data security cases. As part of this initiative, the FTC hosted
events across the country, bringing business owners together
with industry experts to discuss practical tips and strategies
for implementing effective data security. Last year, staff
presented our Start with Security materials to thousands of
small business owners on six cybersecurity webinars sponsored
by NIST and the SBA.
We are especially sensitive to the needs of small business.
Sole proprietors and companies with just a few employees
generally do not have full-time information technology or human
resources staff, and that is why I have directed FTC staff to
create a one-stop shop on our website with materials
specifically for small business. And in the coming months, we
will expand our business outreach on data security issues with
a focus on helping very small companies identify risks and
develop data security plans.
So thank you for the opportunity to provide the
Commission's views, and we look forward to continuing to work
with the Committee and Congress on this critical issue.
Chairman CHABOT. Thank you very much.
Dr. Romine, you are recognized for 5 minutes.
STATEMENT OF CHUCK ROMINE
Dr. ROMINE. Chairman Chabot, Ranking Member Velazquez,
members of the Committee, thank you for the opportunity to
appear before you today to discuss NIST's cybersecurity efforts
as they relate to small businesses.
The IT security challenge for small businesses looms larger
than ever. Since nearly 99 percent of all U.S. businesses are
small- or medium-sized, a vulnerability common to a large
percentage of these organizations could pose a significant
threat to the Nation's economy and overall security.
NIST has worked with Federal agencies, industry, and
academia in cybersecurity since 1972. NIST's role to research,
develop, and deploy information security standards and
technology to protect the Federal Government's information
systems against threats to the confidentiality, integrity, and
availability of information and services, was reaffirmed in the
Federal Information Security Modernization Act of 2014.
In 2016, NIST released a major revision to the popular
report, ``Small Business Information Security: The
Fundamentals.'' The report is designed for small business
owners with little cybersecurity expertise and provides basic
steps needed to help protect their information systems.
NIST's framework for improving critical infrastructure
cybersecurity, or the framework, was released 3 years ago. The
framework's voluntary, risk-based, prioritized, flexible,
repeatable, and cost-effective approach was developed for use
by organizations, including small businesses, to help manage
cybersecurity-related risk. Key to the continuing success of
the framework is that it is voluntarily implemented by industry
and voluntarily adopted by infrastructure sectors.
In addition to the cybersecurity framework, NIST has
developed over the past decade an extensive set of security
standards and guidelines, including a risk management framework
that can be customized for small businesses and voluntarily
implemented to help protect intellectual property and
organizational assets.
Building on the success of the cybersecurity framework and
the Baldridge Performance Excellence Program, NIST released the
draft Baldridge Cybersecurity Excellence Builder, a self-
assessment tool, to help organizations of all sizes better
understand the effectiveness of their cybersecurity risk
management efforts. Using the Builder, organizations of all
sizes can determine cybersecurity-related activities that are
important to business strategy and the delivery of critical
services, and prioritize investments in managing cybersecurity
risk.
Since 2001, NIST has partnered with the Small Business
Administration and the Federal Bureau of Investigation's
InfraGard program to sponsor regional computer security
workshops and provide online support for small businesses. The
workshops feature security experts who explain information
security threats and vulnerabilities, and describe protective
tools and techniques that can be used to address potential
security problems. In 2016, NIST partnered with the SBA, the
Federal Trade Commission--I am grateful that we are here
together--and the Department of Energy, to provide
cybersecurity training webinars to hundreds of small
businesses.
The National Initiative for Cybersecurity Education, or
NICE, led by NIST, released the draft NICE Cybersecurity
Workforce Framework in 2016, to help our Nation more
effectively identify, recruit, develop, and maintain its
cybersecurity talent.
NIST is also piloting the establishment of alliances to
coordinate regional activities addressing the cybersecurity
workforce shortage.
The NIST National Cybersecurity Center of Excellence, or
NCCoE, collaborates with experts from industry, academia, and
government to create and promote standards-based solutions to
real world cybersecurity problems using commercially available
products in the form of technical practice guides that can be
used by organizations, including small- and medium-sized
businesses.
The NCCoE project on mobile device security, for example,
provides guidance on the implementation of capabilities to
secure sensitive business data residing in the cloud and being
accessed by employees on mobile devices.
Small businesses are more innovative, agile, and productive
than ever, thanks to the capabilities delivered by information
technology, but the IT security challenge looms larger than
ever. The NIST programs described today demonstrate that NIST
cybersecurity portfolio is applicable to a wide variety of
users, including small businesses.
NIST is fiercely proud of its role in establishing and
improving the comprehensive set of cybersecurity technical
solutions, standards, guidelines, and best practices, and of
the robust collaborations enjoyed with its Federal Government
partners, private sector collaborators, and international
colleagues.
Thank you for the opportunity to present NIST's views
regarding security challenges facing small businesses. I will
be pleased to answer any questions that you may have.
Chairman CHABOT. Thank you very much, Doctor.
Mr. Rowe, you are recognized for 5 minutes.
STATEMENT OF CHARLES ROWE
Mr. ROWE. Chairman Chabot, Ranking Member Velazquez,
members of the Committee. Thank you for inviting me to testify
on behalf of America's SBDCs.
SBDCs operate in all 50 States and D.C., Puerto Rico, the
Virgin Islands, American Samoa, and Guam. Every year, SBDCs
assist over 200,000 small businesses, and last year we helped
those clients gain nearly $7 billion in sales.
But that statistic comes with a hidden peril, cybercrime.
More of our clients do business online, and every one of them
is vulnerable. They want to do more business online, but they
have weaker online security, and they can be a gateway to
clients, partners, and contractors. And those secondary attacks
are now a regular problem for our small business clients.
And not all hacking is for financial gain. Two years ago,
websites were plastered with Islamic State logos; among them,
Montauk Manor in New York and El Dora Speedway in Ohio. No
financial information was stolen, but they had to rebuild their
sites and restore client confidence.
SBDCs are working to spread awareness of these threats and
build training programs at SBDCs all across the country. Around
the Nation, we are developing programs to build capacity and
our training skills. In Florida, our network is working with
former DHS Secretary Tom Ridge to develop a series of training
videos. The New York SBDC published a cybersecurity planning
guide, which I think all of you have in front of you, which we
are disseminating to other States to help them build their
capacity.
We began developing these resources because advising
clients on the Internet as a business engine also requires
education on the dangers of cybercrime.
Under the 2017 NDAA, SBDCs are now working with Homeland
Security and SBA to leverage our resources and provide enhanced
training and assistance. We want to develop cost-effective,
high-quality tools for small business and a network to share
information and threat analysis with those small businesses.
I want to thank the members of this Committee for working
on that language and getting it into the NDAA. The timing could
not be more critical.
While SBDCs are training small business on the first line
of their cybersecurity needs, the internal focus of basic
security practices, threats and weaknesses, ways to help them
protect their customers and themselves, we are looking at a
bigger effort, and that is the external demands of
cybersecurity.
On the commercial side, large businesses are going to place
growing demands on their small business suppliers. What
certifications are they going to ask for? What kind of systems?
And who is going to supply those certifications? And more
important, who is setting the standards?
Last year, the FCC stepped in and declared ISPs to be
common carriers. Now they have pulled back in favor of
harmonization, but small businesses are left wondering who is
actually making rules? And while Verizon and Comcast are
batting Google and Facebook over this, what regulations will
end up being placed on small business?
We know small businesses can be a back door. Does that mean
the rules will be set by the biggest firms at the expense of
the small firms?
Google already declared certain websites to be unsafe if
they do not have what Google considers adequate security. Now,
http versus https is serious, but how many small businesses
know this? And how much business will they lose because eBay
was not http-compliant and Google users could not find them, or
would not go to them.
And then there is the government side. The previous
administration was proud of meeting small business goals. Will
that last? They also put out a lot of cybersecurity
regulations. The DOD and the FAR Council issued cybersecurity
amendments to their acquisition regulations, and Homeland
Security recently released three more proposed regulations for
their acquisition regs. How are all of these regulations going
to operate, and how will the agencies harmonize them with FSMA
and the FTC? And will the standards be set at the convenience
of the largest contractors? And what about the subcontractors?
If you have a cybersecurity protocol for large prime
contractors that flows down, it can easily freeze out small
subcontractors.
That is why SBDCs are glad we are working with DHS and SBA
now, because we want to head off this confusion. A lot of our
members work with PTACs and do a lot of procurement assistance
with small businesses, as well as regular business assistance,
and we want to ensure that opportunity is not sacrificed for
cybersecurity.
Thank you again for the opportunity to testify. I look
forward to your questions.
Chairman CHABOT. Thank you very much.
Mr. Mooney, you are recognized for 5 minutes.
STATEMENT OF JIM MOONEY
Mr. MOONEY. Chairman Chabot, Ranking Member Velazquez,
members of the Committee, thank you for inviting me here for
this meeting today on behalf of NAFCU.
As you know, cyber and data crime have reached epic
proportions in nearly all sectors of the economy. As the
ranking member mentioned in her opening statement, 65 percent
of all targeted attacks last year were struck at small- and
medium-sized companies.
Now, credit unions and other financial institutions are
required to protect data consistent with provisions of the
Gramm-Leach-Bliley Act. Unfortunately, for other entities that
handle sensitive, personal, and financial data, there is no
comprehensive regulatory structure comparable or similar to
GLBA. It is with this in mind that NAFCU supports comprehensive
data and cybersecurity measures to create a national standard
to protect consumers' personal information.
From the perspective of the financial services industry,
cybersecurity and data security are inherently linked. Securing
consumers' personal information and financial accounts requires
the entire payments ecosystem to take an active role in
addressing emerging threats.
Since 1999, GLBA and its regulations have proven to be
effective in limiting data breaches and protecting valuable
information among financial institutions. Regulators have
developed robust guidance to help institutions create
information security programs and enterprise risk management
policies to address data and cybersecurity needs.
In addition, they oversee financial institution
cybersecurity through periodic examinations designed to assess
the risk associated with IT environments of various sizes and
complexity.
The Federal Financial Institutions Examination Council has
adopted the guidance of our friends from NIST in creating a
cybersecurity assessment tool, or CAT. The CAT is a voluntary
tool that credit unions and banks can use to gauge their
cybersecurity readiness in advance of regulatory examinations.
Credit unions and banks have also benefitted from the
availability of government initiatives aimed at coordinating
information sharing, identifying emerging threats, and
providing greater cybersecurity expertise.
A recent NAFCU survey found that credit unions use a range
of government resources to maintain an awareness of emerging
data security threats and to develop stronger cybersecurity
standards. NAFCU has also engaged Treasury's Office of Critical
Infrastructure Protection to suggest areas of improvement and
future opportunities for public-private collaboration.
Information sharing is a key weapon in credit unions'
arsenal against cybercrime. To that end, NAFCU has recently
collaborated with the industry-led Financial Services
Information Sharing and Analysis Center to promote awareness of
a new information sharing initiative specific to credit unions.
Now, financial institutions are not the only targets of
cyberattacks. Cybercriminals are realizing that merchants and
retailers are often the weak link in the payment system.
Retailers are an attractive target because they are not
currently subject to any Federal laws on data security or
breach notification.
Data breaches at retailers can have a significant cost to
financial institutions. From 2013 to 2016, data breaches have
cost my credit union an estimated $833,000 just in member
notification and card-reissue expenses. This does not even
account for the actual fraud losses. These costs are almost
double what Chevron Federal Credit Union pays annually for
information security systems and services.
Unfortunately, credit unions are rarely reimbursed for the
costs associated with the majority of data breaches. As member-
owned, not-for-profit cooperatives, it is our members who
ultimately bear the burden. These concerns have led NAFCU to
urge Congress to create a national standard for data security.
I outlined the key principles of this in my written testimony.
In conclusion, cyber and data security are the
responsibility of every participant in the payments chain.
Credit unions and their 106 million members across the country
are looking to Congress to advance meaningful and robust data
security legislation. It is time to level the playing field and
create a national data and cybersecurity standard for everyone
in the payments ecosystem.
Thank you for the opportunity to appear before this
Committee, and I welcome your questions.
Chairman CHABOT. Thank you very much. And we thank all the
witnesses for their testimony this morning. And I will begin
the 5-minute questioning by each of us. I recognize myself.
I will begin with you, Ms. Ohlhausen. You thoroughly
outlined the differences and the different resources that the
FTC offers to small businesses, from guides on best practices
to blog posts encouraging businesses to use email
authentication and how to identify ransomware. And this is
precisely the kind of information that small businesses need.
No question about that.
However, I have concern that we are just not reaching small
business owners quickly enough or comprehensively enough; that
there are a lot of them out there that just do not know about
these offerings that are there for them. Do you have metrics on
how many small businesses you are impacting? And what efforts
are being made at the FTC to disseminate information more
broadly? And finally, do you have any suggestions on how the
Federal Government as a whole can provide a broader audience
with cybersecurity resources?
Ms. OHLHAUSEN. Thank you for your question, Chairman.
First, starting with metrics, we do try to keep track of
how frequently people access our materials, our guides, our
videos, websites, things like that, and just one small measure
is we actually have disseminated field orders for 500,000
printed copies of some of our business education. It is
available on our website. We do try to reach out to let people,
small business know about it, and we work with our Federal
partners. We are always happy also to work with members of
Congress if you would like to put this on your website or brand
it on a website. We also work with other organizations,
community organizations, and we are happy to go out and do
events around the country to bring this to small business. I
have actually personally participated in several of those.
Chairman CHABOT. Thank you very much.
Dr. Romine, in your testimony you mentioned this
partnership with the Small Business Administration and the FBI,
as well as your cooperation with the SBDCs. Have these
partnerships been effective in reaching small businesses? And
if so, do you think they could serve as models for future
interagency collaborations to assist small businesses
developing cybersecurity systems?
Dr. ROMINE. I would say, Mr. Chairman, yes, they have been
highly effective. The extent of penetration we do not have
statistics for, but I think small businesses have definitely
benefitted from the partnership and from our campaign in
partnership with both the InfraGard program with the FBI and
also the SBA. I think it has been highly effective.
Chairman CHABOT. Thank you.
Mr. Rowe, do you think it would be beneficial to have a
single entity to coordinate cybersecurity resources across
Federal agencies, and if so, what would be the architecture of
such? And today, are there any existing agencies or government
entities that would be positioned to take on such a role?
Mr. ROWE. Well, I am almost kind of loath to suggest
creating more government, but I do think, at least on the
procurement side, the FAR Council is there for a reason. And
the FAR Council should be, frankly, focusing better on making
sure that everyone in the Federal procurement arena is informed
and has adequate resources. Now, that is just a specialized
area.
On the commercial side of it, I think we have got a lot of
resources here, and as you said, I think the biggest problem we
have is they are not coordinated. I mean, we have 1,000 centers
and we are working like crazy to try and keep people informed
and give them the best possible resources. The biggest problem
you have is the average small business owner is, well, we like
to call it trapped in the whirlwind. They have got 5,000 things
to worry about and sometimes this is not the wolf closest to
the sled. I believe we need to coordinate much the same way we
have an interagency trade promotion coordinating committee.
There should be a cybersecurity coordinating committee between
the agencies.
Chairman CHABOT. Okay. Thank you very much.
Mr. Mooney, with the remaining time, I would like to move
to you. I know that there have been these distributed denial of
service attacks going on and ransom, et cetera, and it has been
hitting the big folks, but it has been hitting small business
folks as well. It seems like a 21st century bank heist where
the robber basically says give me your money or I will shut
down your website, in essence. Could you comment on that? What
is being done about that? How can people protect themselves
from that type of thing when they literally grab a hold of
everything and want ransom in order to give you back your
computer system?
Mr. MOONEY. Mr. Chairman----
Chairman CHABOT. If you could turn on the mic. Sorry.
Mr. MOONEY. Mr. Chairman, the key is to have a security
system that is multifaceted and multilayered. And in our case,
we have built in for as many of those kinds of contingencies
and attacks as we may face, as well as we can predict. And so
what we find again is that there is no one answer to any
security problem. You have to attack it in multiple ways, and
that is what we tend to do.
Chairman CHABOT. Thank you very much. My time is expired.
The ranking member is recognized for 5 minutes.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
You have testified about ways the FTC has provided
resources to consumers and businesses to improve data security.
You mentioned today that you hope to centralize information for
small businesses. The number one consumer request for 13 years
running has been an annual report on ID theft and data
security. So has the FTC considered such a report that includes
information on the latest threats and how we can mitigate those
efforts?
Ms. OHLHAUSEN. Thank you for your question. The FTC does
collect information about what the biggest consumer threats
are. We have a system called Consumer Sentinel. ID theft, you
are absolutely right, has been very much a top concern. We have
tried to counter that on several fronts. One is giving advice
to businesses about how they can secure their data. Another is
we have an identifytheft.gov tool on our website that helps
victims of identity theft create a personalized plan to get
their good credit and name back. I think that in addition to
those things, we also bring, you know, enforcement actions
where necessary if a company has not taken appropriate steps.
Ms. VELAZQUEZ. And why is it that difficult for the FTC to
produce a report geared to small businesses that provides a
comprehensive view of all the threats and how they can mitigate
them?
Ms. OHLHAUSEN. Well, we could certainly consider doing a
report. We do have our Start with Security brochure that gives
a step-by-step approach for small business on how to take steps
to protect data, and then if there is a breach, how they can
remedy that breach. And if a report that is tied to current
threats would be of additional interest to businesses, we can
certainly consider that.
Ms. VELAZQUEZ. Thank you.
Mr. Mooney, despite the widespread nature of cybercrime,
there remains a great deal of confusion in the legal system as
to when individuals and businesses should bear losses and when
financial institutions should be held responsible. Do you think
that legislation is required to address this issue on a
national basis?
Mr. MOONEY. I believe it can. And the reason I say that is,
as you noted, it is very ambiguous right now. And what I think
really would clarify matters tremendously is if we had a
national standard related to security practices, one that goes
beyond what we have today. Today, Gramm-Leach-Bliley, as I
mentioned before, provides that kind of clarity for banks,
credit unions, and other financial institutions. Outside of
that, there is really no clarity at all. And what we recommend
is that there be a national standard along the lines of GLBA
that provides the kind of flexibility, scalability, and risk-
based assessments that will add to the clarity and allow
everybody to step up to the plate in the payment system.
Ms. VELAZQUEZ. Okay. Thank you.
Tee, would you like to comment on that?
Mr. ROWE. Well----
Ms. VELAZQUEZ. I know that you do not like legislation.
Mr. ROWE. Well, I cannot say that. I made my living off of
legislation. But I think you raised a good point. We have so
many small business clients who are surprised to find out that
when their account got drained there is no recourse. They are
not like a consumer who is--I think it is Regulation E that
protects them. They are under the Uniform Commercial Code. So
basically, it defaults to that reasonableness standard. And the
whole problem with the reasonableness standard is what is
reasonable is shifting all the time. And it is hard to tell if
you are a small business where the bar has moved to.
Ms. VELAZQUEZ. Okay. I know that it has not been long since
we passed the NDAA, it was signed into law, but in terms of the
SBDCs, working on implementing and disseminating cyber
strategy, what type of progress has there been so far?
Mr. ROWE. Well, we always run into the problem in the
transition, but, you know, we have been talking with SBA. Jack
Bienko at SBA has been very helpful, and Holly Jackson from
Homeland Security, who is in their cybersecurity and
stakeholder engagement, which I never knew you had that in
cybersecurity, which is great. So we are getting started. As I
said, we have already organically begun our own efforts. The
larger concern for us is going to be what you talked about, how
do we develop--you talked about the report, but how do we
develop basically a threat analysis and information network for
small business? An annual report, well, that tells you what
happened over the last year. It does not tell you what is going
on now.
Ms. VELAZQUEZ. Thank you.
Chairman CHABOT. The gentlelady's time is expired.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Chairman CHABOT. Thank you.
The gentleman from Missouri, Mr. Luetkemeyer, who is the
vice chairman of this Committee, is recognized for 5 minutes.
Mr. LUETKEMEYER. Thank you, Mr. Chairman.
Mr. Rowe, in your testimony, or in your written testimony I
should say, you have some statistics there that are
mindboggling. Cybercrime costs the global economy $445 billion
every year with the damage to business from theft of
intellectual property exceeding $160 billion loss to
individuals. So you are looking at $600 billion of loss total
there. Fifty percent of the businesses as you say, I mean,
small businesses, have been victims of cyberattacks, and over
60 percent of those will go out of business.
My question to you is did they go out of business or will
they go out of business because of the liability exposure that
they have there? Or did they go out of business because of the
money that is stolen from them or because of the reputational
problems that they have had to be able to stay in business? A
combination of all those? Can you answer that?
Mr. ROWE. Sir, I would say it is a combination of all of
those. I would say that the financial loss is generally the
hardest hit for a small business. As you and the members of the
Committee know, small business, they live off of cash flow.
They live off of their capital. And a hard hit to that is
something that is very difficult to overcome.
Mr. LUETKEMEYER. Now, with regard to the small businesses,
though, do you see any of them being sued for the lack of
adequate cyber protection?
Mr. ROWE. Well, that goes to what Ms. Ohlhausen was talking
about. What is reasonable? If a small business has got decent
cyber protection, is that a reasonable amount? I honestly do
not know. The problem is that that bar keeps shifting as
technology changes. We are working on things now that, frankly,
block chain technology is going to change massively.
Mr. LUETKEMEYER. Ms. Ohlhausen, would you like to comment
on that?
Ms. OHLHAUSEN. I think there are probably a variety of
reasons that a company, a small business, may go out of
business after a data security breach, including the financial
implications that Mr. Rowe mentioned, as well as that small
businesses are close to their customers. Right? If they lose
customer trust, then I think that could also be a problem.
Mr. LUETKEMEYER. Okay. So my concern is we know we are
being attacked. How do we protect the business' viability
against that attack? Have you seen some businesses go out of
business because they are being sued because of lack of data
security protections?
Ms. OHLHAUSEN. I am aware that some businesses have----
Mr. LUETKEMEYER. Because I can tell you from the financial
side, if I am a financial services regulator and I go into a
financial services credit union, bank, whatever, and I see I
have got a small business there that is highly leveraged and
they deal with lots of personal data, there is an exposure
there that I am very concerned about that if they have a data
breach, is the viability of that business going to be affected?
And so how does that small business protect themselves against
that liability exposure? What kind of safe harbor can we put
together?
Where I am going with the question is can we find a way to
provide a safe harbor? Or is the safe harbor something like an
insurance policy that is put in place to protect a small
business which does not have the resources of a Target or a
Home Depot when they have some data breaches? I mean, I had a
large supermarket in my area that had its own debit card got
breached and cost several hundred thousand dollars. It was
dispersed, but it was significant. So how do we come up with a
safe harbor for these small businesses? Is it an insurance
policy that you go down this road to be able to help them or
are they just exposed?
Mr. ROWE. Honestly, you are right. They are just exposed
right now. There is a fledging industry on cybersecurity
insurance, but, frankly, even if you are insured, I wonder how
the actuarial effort would work. You can go now and you can get
your car insured, if you have LoJack sometimes you will get a
rebate on your insurance. Sometimes you will not.
Mr. LUETKEMEYER. Well, my concern is if we have got some
exposure, how do we protect the small businesses against that?
And while Dr. Romine was very specific about some of the
guidelines and principles that he is recommending here, that is
fine. But if it does not provide the safe harbor, and if I am
looking at the viability of the business, to me an insurance
company is a whole lot more nimble and flexible to be able to
come out and tell the small business we found a new way,
especially with the Fintech industry today continuing to evolve
and continuing to have all sorts of--I do not want to say the
word ``exotic,'' but there are certainly interesting products
out there that help integrate all these different businesses
and the payment systems. To me, you only have to figure out a
way to have some sort of--I think the private sector is a
better way to go about this, provide that kind of coverage and
safe harbor.
Mr. ROWE. Well, I would agree with you because I think in
general the private sector is much more nimble. Rather than
insurance, I would think about it from the financial sector
point of view. There is a lot of money invested, whether it is
through lenders like credit unions or 7(a) lenders or you name
it, Fintech, who all have a stake because if the small business
gets hacked and goes under, they are not going to get repaid.
So they have a stake in trying to build that up.
Mr. LUETKEMEYER. Thank you.
Chairman CHABOT. The gentleman's time is expired.
It is my understanding that the gentleman from Missouri
wants to make a unanimous----
Mr. LUETKEMEYER. Yes, ICBA has a letter to the Committee
and I would like to put it into the record.
Chairman CHABOT. Without objection, so ordered.
Mr. LUETKEMEYER. Thank you.
Chairman CHABOT. And the gentleman from Illinois, Mr.
Schneider, who is the ranking member of the Subcommittee on
Agriculture, Energy, and Trade, is recognized for 5 minutes.
Mr. SCHNEIDER. Thank you, Chairman. And again, thank you to
the witnesses for making time to not just be here, but to
prepare. I know how much work goes into this, so thank you for
sharing your expertise and insight.
The issue of cybersecurity, the issue of dealing with these
challenges for small businesses are complex, confusing, and
constantly changing. That is one of the problems we face and
the risks keep growing.
Mr. Mooney, you talked about the idea of trying to
establish a national standard. I would imagine one of the
challenges we face in doing that, that once we get consensus,
it is going to be out of date. So opening this up to the whole
panel, how in partnership, private sector-government, might we
best work to address the dynamism, if you will, of the threat?
Mr. MOONEY. Well, if I might take the first shot at that
question, Congressman, I think the experience that we have had
in the financial services industry suggests that there is a way
to not be locked into any particular perspective or way of
doing things. The way that Gramm-Leach-Bliley works is it
provides a great deal of flexibility. It is risk-based. It is
scalable so that it addresses the concerns as they exist at the
time. And in suggesting that we would want to have some sort of
national application of that, we would recommend that it has
and follows those same principles.
Mr. SCHNEIDER. Mr. Rowe?
Mr. ROWE. Well, you are absolutely right. The shifting
nature of the problem is sort of what militates against a
national standard unless that standard is based on
responsibility. And it then becomes a question of who is going
to be responsible? I would say in so many areas, whether it is
a small medical practice that is dealing with HIPAA information
or a small business that may have a fair amount of financial
information--a small insurance agency or an investment
advisor--you have got to begin to follow the money.
And you have also got to place responsibility on the
merchant services corporations who you are dealing with. Amazon
and eBay make a fair amount of money supporting small
businesses who are selling. It might be an interesting idea to
say they bear some responsibility in helping to educate the
people who work with them.
Mr. SCHNEIDER. You talk about a small insurance agency. I
had the privilege of running a small insurance agency. There
were two producers and we had a staff of eight. None of the 10
of us were the technology expert. Now, this was in 1997 to
2003, an entirely different environment than what we are facing
today. And as I think through this problem, I know the time we
spent on technology, on handling a lot of classified personal
information and making sure that it was always safe and always
protected. That just keeps getting increasingly hard. Are there
ways, whether it is the work you do, things that we can do to
help small businesses continue to stay ahead of the curve?
Mr. ROWE. And that is the whole key to what we are trying
to accomplish here is build the resources and get the resources
out so that small businesses can stay ahead of the game.
Mr. SCHNEIDER. Yeah, and I will add, as you talked about in
your testimony, large corporations have resources and the
people to do this. It falls oftentimes to the smaller
companies, especially, for example, the ones trying to do
business through Amazon and eBay and other opportunities that
are there.
I appreciate that. I am nearly out of time. I will yield
back the balance of my time to keep us on schedule.
Chairman CHABOT. Thank you very much. The gentleman yields
back.
The gentleman from Kansas, Mr. Marshall, is recognized for
5 minutes.
Mr. MARSHALL. Thank you, Mr. Chairman.
My first question is for Dr. Romine. You may know I am a
physician and help run a hospital as well, and health care
seems to be particularly vulnerable to cyberattacks. Does NIST
have any ideas on how to ensure the safety of healthcare data
from cyberattacks? Are there any best practices? And especially
I am thinking of smaller community hospitals, that type of
thing.
Dr. ROMINE. Thank you for your question. We have projects
going on through our National Cybersecurity Center of
Excellence having to do with specifically that. We have a
program in protection of health care and healthcare
information. We also have, as part of that program, the
protection of medical devices. So, for example, we have a
program on trying to secure wireless infusion pumps in
hospitals and trying to understand the threat that they present
to the patient, as well as to the enterprise of the hospital,
as an entry point for getting into other parts of the system.
With regard to the relation to small business, one of the
things that we are looking at now and have completed recently
for publication is trying to understand how to secure patient
information or protected information when a physician is using
a mobile device, to access that patient information.
Anecdotally we hear, for example, the physician really just
wants to do the best for the patient. Some of the rules
regarding the transfer of that patient information can get in
the way of providing that, and so we are trying to find ways
that we can secure that communications mechanism to make it
both more efficient for patient care, as well as more secure.
Mr. MARSHALL. As a physician, I am more concerned about
patient confidentiality today than I was 10 years ago. The
worst thing I had 10 years ago was someone could come in and
steal a chart, but now if they crack the code they have access
to thousands of charts. So it is almost like this has backfired
on us.
I am into solutions. One of the biggest concerns I hear
from the banking institutes, credit associations, is when they
have a breach, there are significant fines. Small businesses, I
am thinking of convenience stores where they are just doing
thousands of transactions a day with a credit card, if they
have a data breach, it still falls back on the banking
institute. And I am looking for solutions. How can we help both
sides here? What is the solution that anyone would have to that
problem so it does not always fall just on the banking
institutes or the credit cards?
Mr. MOONEY. May I take that?
Mr. MARSHALL. Please. Yeah.
Mr. MOONEY. Well, Congressman, I think our approach here
and the suggestions that we are making regarding some sort of
consistent level of standards for all players in the payment
system we think is vital to accomplishing what you were just
talking about. Under Gramm-Leach-Bliley, we are really given
the duty to make data security our responsibility and our
focus. And what we think is for the payment system to be
viable, everybody has to be playing at the same level. Now,
again, we talk about small businesses and big businesses. As
GLBA has functioned, it is scalable. So the risks that a large
multinational financial institution has is going to be much
greater than a small credit union, and the risk assessments
accordingly are much different and the responsibilities are
much different, but everybody is on the same page in terms of
the responsibilities of protecting consumer, financial, and
personal data.
Mr. MARSHALL. Okay. Anybody else have a comment?
Ms. OHLHAUSEN. The Federal Trade Commission has in previous
Congresses supported on a bipartisan basis Federal data
security and breach notification legislation that would give a
clearer standard, a process-based standard, to businesses and
also have a Federal requirement that if there is a breach,
under certain conditions they have to notify consumers about
it. So they can also take steps to protect themselves.
Mr. MARSHALL. Okay.
Mr. MOONEY. And if I may, just to add to that, and that is
the environment that financial institutions operate under
today. And so you are suggesting just broadening, which is what
we think makes a lot of sense.
Mr. MARSHALL. Thank you, Mr. Chairman. I yield back.
Chairman CHABOT. Thank you very much. The gentleman yields
back.
The gentlelady from Florida, Ms. Murphy, is recognized for
5 minutes. And she is the ranking member of the Subcommittee on
Contracting and Work Force.
Ms. MURPHY. Thank you to our witnesses for testifying
today.
As was just mentioned, I serve as the ranking member on
Contracting and Workforce. And you have discussed at length
today in your testimony the great number of challenges that
small businesses face in complying or dealing with
cybersecurity. But I am specifically interested in honing in on
the challenges that face small businesses in the contracting
community and how these issues will affect the ability of small
firms to compete for and win Federal contracts.
As you may know, it is becoming an increasingly common
prerequisite for small businesses to be able to meet
regulations that demonstrate their ability to maintain safe and
secure networks before they can even participate in the
competitive contracting process. My concern is that over time
this may lead to more small firms losing bids or it may even
discourage them from engaging in the bidding process at all
because they simply cannot compete with larger companies that,
unlike them, have the resources to hire and retain dedicated
cybersecurity and IT personnel.
So Mr. Rowe, in your experience, how has the sheer
complexity of these regulations so far affected the small
business contractors that you have worked with? And what do you
advise them as they face uncertain regulations and prohibitive
compliance costs?
Mr. ROWE. Well, the hardest thing any of them have facing
them is just knowledge of the Federal Register. I would be
willing to bet half of them have no idea that the Department of
Homeland Security just put out a proposed regulation on, what
do they call it, confidential unclassified information. Now, I
am not even sure what that is. But in all of these situations--
and these are all operating from the best of intentions, all of
these agencies. They are trying to protect sensitive
information on everything from weapon systems to medical
equipment. But there is that tendency to go with the
sledgehammer to kill a gnat.
And small businesses are left behind in all of these
regulatory efforts because they have got to know what the
Federal Register is, comment in the Federal Register, have that
comment taken seriously, while, frankly, Lockheed and Boeing
and SAIC have guys like me that they pay lots of money to do
that for them.
To date, it has not really become horrible. My concern is
if you have got a defense acquisition regulation system, a
Federal acquisition regulation system, a Department of Homeland
acquisition regulation system, all of which have cybersecurity
regulations which may not all be exactly the same, and then you
are requiring security protocols for a small business that may
be working three or four agencies and trying to get their
security to match up with the security systems in four
different computer systems, we all know that at a certain point
it just does not work. And that is the biggest concern that we
have is getting enough flexibility so that the small business
can protect the data without having to do all their work in
triplicate.
Ms. MURPHY. Do you have any suggestions on how that
regulatory process can be streamlined or rationalized in a way
that would avoid the scenario that you just laid out?
Mr. ROWE. Yes. Again, it goes back to what I said to the
chairman. I think there needs to be an interagency coordinating
committee on cybersecurity so that when the FAR Council, which
is really just DOD, GSA, and the Office of Management and
Budget, make a decision, there has been input from all the
other agencies and from small business.
Ms. MURPHY. Great. Thank you. And I will yield back the
remainder of my time.
Chairman CHABOT. Thank you very much. The gentlelady yields
back.
The gentleman from Pennsylvania, Mr. Fitzpatrick, is
recognized for 5 minutes.
Mr. FITZPATRICK. Thank you, Mr. Chairman. Thanks to
everyone on the panel for your time today.
I want to ask specifically about law enforcement
corroboration and collaboration. Department of Homeland
Security, Department of Justice, particularly the FBI, are the
two main law enforcement organizations responsible for
investigating cyber-related crimes and national security-
related cyberattacks. Dr. Romine mentioned the InfraGard
program. That is one of several programs that exist.
My question, not only from the small business standpoint,
but also I am on the Cyber Subcommittee of Homeland Security,
what is the collaboration currently? How has it been going in
both directions?
Because not only is it important that law enforcement
receive this information to track digital fingerprints and
patterns of cyberattacks; it is equally important for the small
business community that there be a good relationship that the
Bureau and Department of Homeland Security can share tips on
the private side on how to best protect small businesses form
cyberattacks. So if any one of you could just comment on what
the status of relationships is with those two Federal agencies,
what works and what has not worked.
Dr. ROMINE. Thank you for the question.
I am happy to reiterate the importance that we accord to
the partnership with FBI's InfraGard program and the SBA as a
mechanism for outreach to provide the kind of information that
you just discussed, to the private sector broadly, but
particularly to small- and medium-sized businesses. I think
that has been very effective and it is a strong relationship.
Mr. FITZPATRICK. Department of Homeland Security. Has there
been any relationship or outreach with them?
Dr. ROMINE. We have ongoing relationships with the
Department of Homeland Security. They were vigorous
participants during the development of the cybersecurity
framework, for example. They spent a lot of time generating a
voluntary program that they used in concert with, and using the
cybersecurity framework as it emerged, to provide that kind of
outreach. We had a lot of strong input from them and provided
them a lot of useful information that they could then use in
their voluntary program for people to adopt the framework or to
get assistance in using the framework.
We have partnerships with the FBI in other areas such as
biometrics technologies, for example. That is a slightly
different topic, but with the understanding of trying to
improve the accuracy of biometrics. That partnership goes back
to 1963 with the FBI, so we consider that a pretty strong
relationship.
Mr. FITZPATRICK. Has there been any frustrations that you
have heard from the small business community with regard to law
enforcement not taking certain cases because they do not fall
within the threshold that would allow for an investigative
activity?
Dr. ROMINE. NIST would not hear something like that.
Mr. FITZPATRICK. Okay.
Dr. ROMINE. I think that is not the kind of information
that they would share with us. We do ensure that we have
outreach to small businesses so that we can ensure that our
work products, our cybersecurity guidance is scalable and
digestible at all levels. We are working much harder on that to
ensure that it is useful across the spectrum, all the way from
small to very large enterprises.
Mr. FITZPATRICK. Thank you. I yield back.
Chairman CHABOT. Thank you. The gentleman from Pennsylvania
yields back.
That concludes our questions to the panel. We want to thank
the very distinguished panel for their testimony here today. It
has been very helpful. I think once things clear, and that is
the people up here, the members on both sides of the aisle want
to do everything we possibly can to ensure that small
businesses have the best possible cybersecurity resources
available to them.
And along those lines, we, being the Committee, are going
to be putting this up online today. These are easy-to-
understand security packets that will be available to small
businesses. They are kind of step-by-step guides on how to
protect themselves, small business folks, from cyberattacks.
And these will be up on the Small Business Committee's website
today. So I just wanted to mention that.
And I would remind folks that members would have 5
legislative days to submit statements and supporting materials
for the record.
And if there is no further business to come before the
Committee, we are adjourned. Thank you very much.
[Whereupon, at 12:11 p.m., the Committee was adjourned.]
A P P E N D I X
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Chabot, Ranking Member Velazquez, members of the
committee. Thank you for inviting me to testify on behalf of
America's SBDC, the Association of Small Business Development
Centers.
SBDCs operate over 1,000 centers in all fifty states as
well as the District of Columbia, Puerto Rico, the Virgin
Islands, American Samoa and Guam. SBDCs provide management and
technical assistance to over 200,000 small businesses every
year and training to over 300,000 business owners and their
employees. All of these small business owners hae the same
basic question, ``How do I succeed?''. That's not always a
simple answer but, for almost every business that means
maximizing sales, and we've been able to aid those clients to
the tune of nearly 7 billion of new sales every year.
This is a great statistic, but it contains a not too hidden
peril, cyber-crime. More and more of our clients do business
online. Every single one of them is vulnerable, and they may
not even know it. They may not even have a website but they are
potential victims. Every time they run a credit card
transaction, or answer their email they expose themselves and
their customers to the risk of hacking, phishing and
ransomware. And the dangers go beyond e-commerce. Any business,
whether a vendor or a contractor, is at risk if they are
connected and have personally identifiable information or the
potential to be an access point to others who do.
By now I assume everyone is aware of the alarming
statistics about cyber-crime. Cybercrime costs the global
economy about $445 billion every year, with the damage to
business from theft of intellectual property exceeding the $160
billion loss to individuals. Fifty percent of small businesses
have been the victims of a cyber-attack and over 60 percent of
those attacked will go out of business.
Despite these facts many small businesses continue to
ignore or avoid the risk. Many of our clients believe, ``I
don't do business online or I don't have any valuable
information.'' Of course, the truth is exactly the opposite.
Every time they take an order, swipe a credit card or send an
email they put themselves and their customers at risk. Too
often the concern is for customer privacy but corporate clients
and vendors are at risk too.
Small business present cybercriminals with an easy way to
gain access to customer credit card records and bank accounts,
supplier networks and employee financial and personal data.
They want to do more and more business online but they have
weaker online security. Or they use cloud services that don't
have strong encryption. As a result, the small business can be
a gateway to gain access to clients, business partners, and
contractors and a backdoor into many large organizations. To a
hacker, that translates into reams of sensitive data behind a
door with an easy lock to pick. If a small business has any
Fortune 500 companies as customers, they are an even more
enticing target. These secondary attacks are now a regular
problem for small business.
Small businesses are particularly vulnerable to email
attacks mimicking their banks or other trusted institutions and
citing an urgent need for account or some other vital
information, and often multiple employees have access to that
information. Further, business accounts do not enjoy the same
protection against loss as consumer accounts--something many
small-business owners do not discover until it's too late.
Consumers are protected by regulations which limit their
liability. Commercial accounts, however, are covered by the
Uniform Commercial Code (UCC) and enjoy no such protections.
Under the UCC banks aren't liable for unauthorized payments if
their security is considered ``commercially reasonable''. As a
result, few small businesses that are the victims of cyber
theft ever recover their funds.
More than ever, sensitive data, intellectual property and
personal information of small and medium sized firms are
targeted by an ever increasing and sophisticated community of
cybercriminals. Symantec has found that over the last several
years there has been a steady increase in cyber-attacks
targeting businesses with less than 250 employees.
And not all hacking is for financial gain. Two years ago,
several businesses were simultaneously hacked and their
websites were taken over by what appeared to be ISIS. Islamic
State logos and Arabic script was plastered all over the sites
for Montauk Manor in the Hamptons; Eldora Speedway in New
Weston, Ohio; Dogwoods Lodge dog kennel in Des Moines, Iowa;
Sequoia Park Zoo in Eureka, CA; Montgomery Inn in Montgomery,
Ohio; the Moerlein Lager House in Cincinnati; and Elasticity, a
vocational charity St. Louis, MO. No financial information was
stolen but imagine the time, effort and lost business for each
of these firms. They had to rebuild their sites and try to
rebuild client confidence. After all, if you knew a hotel had
been hacked would you give them a credit card to hold a
reservation?
At the SBDCs we have been working to spread awareness of
all these threats to our clients. We offer training programs to
our clients at most SBDCs and we are working to expand the
coverage to the entire network. In our centers in New York,
Delaware, Florida, Texas and others we are developing programs
to not only advise and inform our clients but spread the
information and training capacity throughout our networks. In
Florida, our network is collaborating with Ridge Global, the
firm founded by former DHS Secretary Tom Ridge, to develop a
series of training videos on cybersecurity. The New York SBDC
has developed a cybersecurity planning guide which we are
working to disseminate to other states to help them build their
capacity. In Michigan, besides training, our network is
launching a media campaign day to spread awareness. SBDCs began
developing these resources on our own over the last few years.
My members recognized that, while they are advising and
training their clients on the value of the web as a marketing
and sales engine, they also needed to educate them on the
dangers and pitfalls of the web.
On top of the organic efforts within the SBDC networks we
are now working at the national level to help develop a
national small business cyber strategy. Pursuant to section
1841 of the National Defense Authorization Act for 2017
America's SBDCs is working with the Department of Homeland
Security (DHS) and the Small Business Administration (SBA) to
develop a strategy to leverage the collective resources of DHS,
SBA and the national network of SBDCs to provide the resources,
training and assistance small businesses will need.
We will be working share and improve cyber programs,
enhance services and raise awareness of the threats. In
particular, we want to help develop cost-effective, high-
quality tools for small business and a network to share
information and analysis on threats.
On behalf of our clients I want to thank the members of
this committee for their efforts in getting that language
included in the NDAA. The timing could not be more critical,
the threats and the awareness of the threats has grown but at
the same time so has the confusion. What steps do small
businesses need to take? Do they need security software, a
cyber specialist, certifications? What tools are effective,
what certifications are valid?
SBDCs are developing and training small businesses on that
first line of their cyber security needs, the internal focus of
basic security practices. Teaching employees about the threats
and weaknesses, helping them protect client and customer
information. They are also working with small businesses to
help them recognize and develop their own strategies and
assessments of their needs. My members have developed some
excellent education and it will grow stronger but the harder
effort is going to be assisting small businesses in dealing
with the external demands of cybersecurity.
Commercial customers and big business will have growing
demands on the cyber infrastructure of their small business
suppliers. What certifications will they demand, what hardware?
Who will supply these certifications, and at what cost? If we
add federal procurement issues (already a complicated area) how
will small businesses cope? I want to divide this area of
concern into two sides--commercial business and government
business.
On the commercial side, small business faces a real
problem. Who is in charge and to whom are they responsible?
Last year, the Federal Communications Commission (FCC) stepped
into the world of e-commerce and declared Internet Service
Providers (ISPs) to be ``common carriers''. Now the FCC has
decided to hold off on the privacy rule in favor of
``harmonization''. Small businesses are left to wonder, ``Who
is responsible, anyone?''
At America's SBDC we will be working hard to ensure that
our clients have the best possible, most cost-effective tools.
At the same time, it would nice to know if anyone further up
the ``food chain'' is to be held accountable. There is a real
concern about the trickle down nature of the regulatory
framework. While titans like Verizon and Comcast battle Google
and Facebook, what level of regulation will be placed on small
business?
We know there is a potential for small business to be a
back door. Does that mean, in a regulatory framework controlled
by internet giants, that the rules will be set by the giants at
the expense of the pygmies? We have already seen Google declare
that websites without what they consider ``adequate security''
will be labeled ``unsafe''. I do not doubt that http vs. https
is serious, but how many small businesses are either aware of
this distinction or aware of what they need to do to be Google
compliant?
I expect Google aficionados and techies will call me a
Luddite. They would be wrong. I use Chrome and love it. I know
what an SSL certificate is. How many small business owners do,
or know where they can get the help they need? How much
business will a small business lose because they are on eBay
and, as of the end of January, eBay wasn't https complaint?
These are the types of trickle-down, large firm favoring
regulatory schema about which we should be concerned.
Now I'd like to comment on the government side. The
previous administration was proud of their efforts and
successes at meeting small business contracting and
subcontracting goals. I'm concerned about how weather that
success can last. Unfortunately, a lot of the uncertainty we
face now is because the previous administration also put out
cybersecurity regulations at the very end of their term before
anything could really be discussed and tried out. The result is
the uncertainty and confusion we see now.
There should be significant concern that federal and state
agencies will begin to develop conflicting and potentially
contradictory procurement regulations, derived from the best
intentions regarding security and privacy, but having a
negative effect on small business participation. The Department
of Defense has issued cybersecurity amendments to the Defense
Acquisition Regulations (DFAR) and the FAR Council issued
amendments to the Federal Acquisition Regulations (FAR). Just
recently the Department of Homeland Security released three
proposed regulations on cybersecurity though they are, I
believe being held by the current administration. Those
regulations weren't even for classified information; they were
for Controlled Unclassified Information (CUI). To date, I have
seen only two comments in the Federal Register. I doubt any
small business that contracts with DHS is aware of these
proposed regulations, and many of our SBDC clients are those
affected businesses.
How will all these regulations operate? Can they co-exist?
Agencies issue the proposed rules and state they will
``harmonize'' them with FTC and other efforts, how? Who will
``harmonize'' them? These regulations have the best and most
laudable goals, protecting government data integrity and
protecting citizens' privacy. However, the potential costs of
compliance for any small business involved in, or wishing to be
involved in government contracting could be crippling. Will the
standards be set at the convenience of the largest contractors
with small businesses left to wonder how they'll be able to
comply?
In addition, what will happen to subcontractors? Imagine a
one-size fits all cybersecurity protocol that flows down to
subcontractors. The potential for small businesses becoming
frozen out is very real.
That is why America's SBDCs is glad to be working on this
strategy with DHS and SBA now. We want to help head off the
confusion and provide training to ensure opportunity is not
sacrificed for cybersecurity. At America's SBDC we believe it
important to be at the front of this effort, to develop a set
of resources to enable small business participation through
assistance and training, rather than having to play ``catch
up'' with small businesses confused by a new regulatory
framework.
Thank you again for the opportunity to testify. I look
forward to your questions.
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