The Friday Five by Jefdata - The Hack Edition

1. The First Hack 2. The Great Hack 3. The Latest Hack 4. The Next Hack 5. The Final Hack

A catalog compiled by the Privacy Rights Clearinghouse confirms that 9,002 data breaches have been made public in the United States since 2005. Consumer convenience and human connectivity have compelled us to embrace data input and sharing with a limited understanding of the data trail left behind. The increased value of data and the intimacy of information we are willing to share with our trusted devices has made the illegal collection of data through hacking a popular endeavor for those with the skill and motive to do so. This week, in the spirit of the striking new Netflix Documentary “The Great Hack” which focuses on the events surrounding the Facebook/Cambridge Analytica data scandal of 2016, we focus on the history of data breaches and how to collect and protect data for responsible analytical use in the future.

QUOTE OF THE WEEK “Privacy cannot be a luxury good offered only to people who can afford to buy premium products and services…Privacy must be equally available to everyone in the world." — Sundar Pichai, CEO, Google – New York Times Op-Ed (May 7th, 2019)

1. The First Hack 2013: Every single Yahoo account was hacked – 3 billion in all – CNN - 3 Minute Read

Rich's Thoughts: Do you remember the first time a data breach made you wonder where your data is stored and how is it protected?

Cyber Security stocks have outperformed the broad stock market over the past five years

Chart Source: Bloomberg / S&P Kensho

In 2013, Yahoo was hacked on several of its platforms/brands and personal information such as names, emails, telephone numbers, and hashed passwords were stolen in a “state-sponsored act”. Now, both state-sponsored and individual or “lone-wolf” hackers are infiltrating data systems looking for ways to steal and disseminate data for a profit or other personal/professional gains. Since the Yahoo data breach, hackers have become more sophisticated in skill, motive, and most importantly, the ways they use the stolen data to manipulate markets and governments. Cloud security is at top of mind for data-harnessing executives around the world.

2. The Great Hack The Great Hack – Netflix - 113 Minute Documentary

Rich's Thoughts: Netflix’s new documentary “The Great Hack” will surely illicit conversation around Cambridge Analytica’s actions surrounding the 2016 U.S. and U.K. elections and debate about data analytics going forward. As we will highlight in “The Next Hack”, Millennials are carefree when it comes to data privacy, if it means sacrificing convenience or entertainment value. The rhetoric around personal data and trust of large tech companies over the past twelve months has drastically changed. In order to keep a healthy third-party-data-analytics environment, we must learn from our motives and make privacy and transparency a priority.

Within investment management, our goal is to increase the amount of anonymous consumer data available for analytical use in fair markets. One thing we learned from “The Great Hack” was that while Cambridge Analytica allegedly scraped aspects of Facebook data without consent, it was the manipulative use of the stolen data that was alarming to many. Consumers desire personalization and convenience. Personalization and convenience require data. Companies which use consumer data at scale to create analytical solutions are coming together to show both their data suppliers and customers that they are focused on responsible data collection, premium data privacy, and moral product implementation. Organizations such as the Financial Data and Technology Association (FDATA) as noted in our “Alliance of the Week”, are attracting privacy-first-minded companies such as M Science, Betterment, Cardlytics, and Intuit.

3. The Latest Hack Capital One Says Breach Hit 100 Million Individuals in the U.S. – Bloomberg - 4 Minute Read

Rich's Thoughts: This week, it was announced that Capital One’s systems were hacked by an individual, not an enterprise or group. This shifts the narrative about data protection to one that is similar to broad crime in general, one in which motives are vague and preemptive actions are tough to track.

Data breaches within the Financial and Insurance sectors have only accounted for 7% of total data breaches since 2013 but they often have the most immediate impact on consumer anxiety. Healthcare, Medical Provider & Medical Insurance Service company breaches lead at 50%. They have been extremely sophisticated hacks within large systems and proven malice. It has been reported that medical records are 50x more valuable than financial records to a hacker because of the breadth of data within medical records, the hacker’s ability to make fraudulent insurance claims using stolen data, and the challenge of detection after information has been poached. The intersection of healthcare and data science will not be limited to drug discovery, clinical trial efficiency, or diagnostics, it will expand to harness the security needs of those they are attempting to cure.

4. The Next Hack Democracy is for sale, says “The Great Hack” director Karim Amer – Recode Decode Podcast with Kara Swisher - 55 Minute Podcast

Rich's Thoughts: Where do we go from here? If the in-depth results from a survey of over 200 Millennials by Jefferies’ Millennial Expert, Lily Calcagnini, is any indication, the current and next generation will produce more exhaust data than ever. According to our survey, ~85% of Millennials do NOT let concerns about data privacy interrupt their internet and application exploration. We have written in the past about ideological differences that societies face about the collection of personal data and implied surveillance.

Source: Jefferies Millennial Habits Survey Series Phase II

Millennials and Generation Z-ers are willing to accept potential consequences in exchange for access to a website or application. Many also do not approach privacy policies with attentiveness or care. In 2017, researchers at University of Connecticut exemplified this emblematic lack of awareness by creating a fake social media app, crafting an egregious terms and services agreement for users, and placing it within an app store. The agreement included a disclosure that users give up their first-born child as payment, and that anything users shared would be passed along to the NSA. 98% of participants agreed. As much as we hold our data collectors and holders to high standards, we need to become more aware of our personal data exhaust.

5. The Final Hack Is Privacy Dead? – Financial Times – 10 Minute Read New legislation is putting social networks in the crosshairs – The Verge – 15 Minute Read

Rich's Thoughts: We have written in the past about ideological differences that societies face about the collection of personal data and implied surveillance. The extremes range from constant surveillance in Northwest China to complete data collection opt-out solutions in Europe. There will most likely never be a final data hack, but will we ever see an era in which we are unguarded about how our personal data flows within a society?

Source: Financial Times / European Patent Office

The second most “surveilled” city in the world is London, a surprise to us here at Jefdata, but it is a potential queue that the rhetoric is shifting towards a data sharing economy.

Source: Financial Times / Brookings

Data collection within our handheld devices is at a historical peak, and some smart cities are already in beta mode. Lapses in morality such as the ones outlined in “The Great Hack” will hinder our journey to a world where data collection is trusted, protected, and use cases are considered universally righteous. Will we one day arrive at a final hack?