Understanding the Top Cyber Threats Faced by the Retail Industry

By: Beaconer, Jun 21, 2024

Understanding the Top Cyber Threats Faced by the Retail Industry

Retail businesses encounter a varied form of risk related to cyber attacks compared to other companies in the higher-at-risk sectors, such as healthcare or financial services. It is not about data breach incidents that target retailers; the major retail businesses are growingly public-centric compared to the other firms, indicating successful cyberattacks targeting them and heading onto the front page news.

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In such a fierce operational space, retailers should always undertake the required steps to mitigate the risk of data breaches that result in operational, financial, and reputational damages. Third party risk management plays an intricate part in retail cybersecurity. Retail businesses’ vendors and partners should follow security standards that notably minimize the chances of any data breach.

Common Cyber Threats in the Retail Industry

Retailers encounter a series of cyber threats, each with a possible cause behind the notable damage to their finances and reputation. Reportedly, about 70% of the attacks across the retail sectors are driven by customer data theft. These threats are transitioning to becoming more targeted and sophisticated, making it important for retail businesses to stay informed and highly proactive in their defensive strategies.

Knowing about such threats is the initial step towards mitigating such risks. The complete visibility of the common forms of cyber threats with retailers who implement well-targeted security measures and best practices to safeguard their customer data or information and operations. Furthermore, remaining informed regarding the evolving threats and cybersecurity trends enables retailers to adapt and evolve security strategies in response to the changes in cyber threats.

One of the major complexities across the retail sector is the growing volumes of transactions and the key sensitive data that gets processed daily, making retailers the most alluring targets for cybercriminals. The evolving intricacy of the supply chains, as well as the dependency across digital technologies, introduces new cyber threats. Retailers should always adopt extensive cybersecurity approaches that include employee training and a strong IT infrastructure.

Point-of-Sale (POS) System Attacks

The POS systems are the most favored target for cybercriminals, especially due to the key payment-related data they are handling. The risks across the systems get exploited to steal credit cards and other personal data. There were instances of major breaches like the Target Breach of 2013 that resulted in the data theft of 40 million credit card credentials and the 2014 Home Depot breach that impacted 56 million payment cards, highlighting the important requirement for strong retail risk management and the measures towards retail cybersecurity measures.

These breaches not only resulted in notable financial losses but also damaged the loyalty of customers, leading to expensive regulatory and legal repercussions. For the prevention of POS system attacks, retailers should routinely update their POS and tprm software, conduct frequent security audits, and employ encryptions for identifying and rectifying the risks. Companies should deploy effective retail risk management strategies that include extensive retail cybersecurity rules that are key to protecting against notable threats.

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Phishing and Social Engineering Attacks

Attacks related to phishing involve deceiving customers or employees into offering sensitive data through fake websites or emails. The techniques involving social engineering manipulate people who break the security protocols, making such retail cybersecurity attacks more effective and complex to detect. The prevention and mitigation of such attacks need regular training for the employees in terms of identifying the phishing attempts, using MFA or multi-factor authentication for adding a security layer with the use of highly advanced email filtering options for blocking these fake emails.

Furthermore, retailers should encourage a culture of security awareness where employees stay vigilant while reporting suspicious activities. Robust strategies for managing third party risk can minimize the rate of such attacks. Retailers should also make their customers aware of identifying every phishing attempt to reduce any risk.

Ransomware Attacks

Ransomware is the form of malware encrypting the data of the victims with the attackers who claim a ransom for restoring access. Retailers with a sea of customer data are specifically alluring to the targets. Safeguarding against ransomware as effective retail cybersecurity involves the routine backup of data while ensuring the backups are not connected to the primary network, making use of anti-malware or antivirus software to detect and prevent the attacks while educating employees about the possibility of methods and risks of the delivery of ransomware.

Furthermore, implementing network segmentation would restrict the spread of ransomware in the company. Third party risk management remains at the forefront, ensuring that vendors and associates are not becoming entry points for ransomware. Retailers should build and update incident response plans that instantly address ransomware attacks if they occur while reducing data loss and downtime.

Credential Stuffing

In retail cybersecurity, credential stuffing primarily involves the use of stolen usernames with passwords from one breach to enter into the accounts present on other systems. Considering these widespread practices of the reuse of passwords makes the method more damaging and effective. Strategies towards safeguarding against credential stuffing involve the encouragement towards the use of strong, unique passwords for every account, along with the implementation of MA, adding another step to verify the account while monitoring the login attempts for any suspicious activity while enforcing the policies towards account lockout after several failed attempts.

Effective Retail risk management strategies should include methods for fighting credential stuffing that protect both the employee and customer accounts. Retailers should even deploy the right tools for detecting and preventing automated login tries, which further boosts their defenses against attacks related to credential stuffing.

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Importance of Third Party Risk Management in Retail Cybersecurity

Third-party vendors play a key part across the retail supply chain, offering key services involving the management of inventories and payment processing. However, such relationships come with associated cybersecurity risks. Identifying and evaluating third-party risks needs complete background checks, thorough security audits, and following robust security frameworks. Adhering to the best practices is essential to ensure that the third-party vendors have a strong cybersecurity measure. Implementation of third-party risk management processes will notably boost the cybersecurity structure of the retailer and safeguard the key data from possible cybersecurity risks.

Identifying and Assessing Third-Party Risks

Third-party vendors pose significant risks, which should be identified at all costs by managing third-party risk. The practices that retail businesses should include are complete background checks that need detailed security assessments and audits while using tools and secured frameworks. These tools can help ensure that the vendors are following strong security practices, reducing the risk of data breaches. Furthermore, the ongoing evaluations and effective monitoring of the third-party vendors remain essential to maintain a higher level of security. Furthermore, the implementation of extensive third party risk management programs helps retailers identify and mitigate the risks linked with the partners and vendors safeguarding the whole supply chain. 

Best Practices for Managing Third-Party Risk

Retail risk management best practices involve the vendors and suppliers complying with the different security standards that involve the security needs in the vendor contracts, conducting regular assessments and audits of the vendor security measures while offering vendors proper security training and resources. The constant monitoring and assessment of the strategies remain at the core that needs constant monitoring of the activities of the vendors and accessing the key data by regularly updating the risk assessments reflecting upon the changes to the threat landscapes and the implementation of the automated tools for tracking the vendors are complying to detecting all sort of anomalies. Managing third party risks is a constant process that calls for vigilance and better adaptability.

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Conclusion

Retailers are encountering several cyber threats, ranging from POS system attacks to ransomware and phishing. To protect businesses against threats, proactive measures for effective retail risk and third-party risk management are important. Retailers need to emphasize cybersecurity while investing in extensive risk management strategies for securing their core operations and protecting customers’ data and other core information.

Author Bio

Nagaraj Kuppuswamy

Nagaraj Kuppuswamy is the Co-founder and CEO of Beaconer, an esteemed enterprise specializing in managed third-party risk using the cloud native AI based solution. With an extensive portfolio of accolades and industry certifications, Nagaraj stands out as a seasoned expert, boasting over 16 years of dedicated involvement in the field of Cybersecurity. Throughout the course of their career, he has predominantly focused on elevating the realm of third-party risk assessment.

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