XenonStack Recommends

Cyber Security

Impact of Insider Threats in Cyber Security

Parveen Bhandari | 10 March 2023

Impact of Insider Threats in Cybersecurity

Introduction to Insider Threat

The threats originating from employees, contractors, and vendors working with an organization are known as insider threats. Generally, ex-employees and contractors of an organization perform an action that puts the organization's interests at risk due to various reasons. It can be negligence, greed, malicious intent, revenge, or making a profit. No matter the reason, an organization's reputation, and revenue are highly impacted.

According to the U.S. State of Cybercrime Report, 50% of Data Breaches and information leakage happened unintentionally due to employees' negligence. There are 40% of incidents where employee records were stolen and compromised for further attacks. In one-third of cases, customers' data was stolen, including emails, credit card information, and mobile numbers. In 32% of the incidents, intellectual property was stolen. Moreover, these incidents will keep on increasing as an organization grows.

Because the insiders have a high level of access across all the departments in an organization, there are multiple risks associated with insider threats. There are many scenarios in which an insider threat makes the organization vulnerable to many issues. Some of them are discussed below.

An Integrated Approach to Cloud-Native Security and Observability

What are the various Impacts of Insider Threats?

Following are the various impacts of insider threats that bring the dire need for enterprises to have strong organizational security posture 

Critical Data Loss

Insider threats put an organization's critical data at risk. Data associated with design, product code, valuable designs, etc., can be deleted permanently. As insider threat comes to light after the deed is done, recovery of critical data is very difficult. Sometimes, the insider with malicious intent steals hard disks or overwrites the existing critical data with garbage values, thus destroying the critical data.

To prevent critical data loss, a data loss prevention policy should be created in which two or more people should be required for authentication when critical data is being deleted. Involving multiple people can reduce the impact of a single person acting as an insider threat. Data should also be stored in distributed locations redundantly so that even if one server gets compromised and data is deleted, other servers could be used to recover the data.

Operational Impact

The operation of an organization can be highly affected by an insider threat if it is related to production. A virus can be installed in the production system by an insider hired by a rival organization, thus causing glitches in the production process, which will further create defective products. Some viruses are highly sophisticated and may not be caught for a long period of time. Due to this, the production capacity lowers, and the product market share of the victim organization is reduced.

To prevent operational impact, secure code compliance should be followed at every stage to prevent the inclusion of viruses. Production software should first run in a simulation environment with different configurations so that if a virus runs on some condition-based logic, it can be caught early.

Financial Impact

The financial impact due to insider threats is a major concern for companies nowadays. Due to an insider data breach, an organization's trade secrets can be revealed to outsiders, including selling quotes, bidding information, and confidential clients. This information can further hamper the organization's business and cause financial losses. Ransomware is also rampant nowadays. In most cases, a malicious file is shared by hackers to a careless employee using phishing emails. When the employee clicks on the attachment to open it, the ransomware gets downloaded and installed in the system, thus rendering the system unusable. Hackers charge hefty ransoms, which is in millions of USD, to remove the ransomware, thus impacting an organization financially.

Employees should be given training on do's and don't with a cyber security perspective to prevent financial impact. Zero trust policies should be followed across all departments.

Legal Impact

Legally, an organization must follow various government policies and procedures to continue its operations. However, due to insider threats, there will be an incompatibility with the policies and procedures. There are regulatory costs that an organization has to pay in case of non-compliance. For example, if a malicious employee uses AWS instances to run software in countries that have a ban on them, then the organization is legally liable for the non-compliance of the country's policy and may have to pay a fine for breaking the law as it is done by its employee.

Quarterly security compliance by a third-party vendor should be done without informing the internal departments to catch the existing loopholes in the system.

Loss of Competitive Edge

Due to insider threats, an organization's plans to excel in the competition can be revealed to rival organizations in the market or the public domain. This can cause all the efforts of the organization to go in vain. Other organizations present in the market can also use the data revealed by an insider, thus making the plan ineffective in competitive scenarios.

This impact occurs on a higher level in the organization. Top management should make contingency plans for all competitive information leakage scenarios to prevent it.

Loss of Reputation

An organization's reputation is also at stake because of the insider threat. There have been cases in which an organization employee with high-level administrative rights becomes an insider threat. Sometimes a network administrator abuses their access rights by stalking the employees in the organization on a personal level. In other cases, customer data is compromised by a malicious insider who uses it for personal gains. These cases come to light after a long period of time and degrade the organization's reputation in the market.

An organization should have a policy in place to deal with the loss of reputation due to insider threats. All systems should be patched up to date. Sharing of an organization's data should be limited. Regular scans regarding authentication anomalies should be done.

Intellectual Property Theft

In product-based companies, theft of intellectual property is highly disastrous. A lot of research and development efforts and money are spent developing an outstanding product. However, due to the theft, the product designs and codes are usually shared with rival organizations, or ex-employees create their own organizations using the intellectual property. This can cause harmful financial loss to an organization as the time and money spent gives zero return without an actual product release. In some cases, the new product is patented by someone else, and the original organization cannot take back the patent legally. In the field of arts, theft of songs, lyrics, drawings, scripts, etc., are regular scenarios. The theft happens due to insecure access to the intellectual property documents or due to an insider who is paid by the rival organization.

To prevent intellectual property theft, code, inventions, and other critical data should be obfuscated and encrypted. Multiple employees should be authenticated and authorized at the same time to decrypt the data.

Market Value Reduction

Insider threats can cause a data breach, sensitive data leakage, production loss, and organization reputation damage. Due to all these factors, the organization's image is negatively affected in an investor's mind. A case of insider threat implies that the organization is not secure enough. The data can be leaked, or the organization's employees are not trustworthy. In most cases, the insider threat makes news headlines that plummets an organization's share market stock price to low levels.

To prevent market value reduction, proper steps should be taken from day one of operations. Preventing cyber-attack by an insider threat should be the first priority. The overall IT infrastructure should be hardened from the inside out.

Increased Expenses

Organizations have to deploy various measures to prevent insider threats. Logging and monitoring of all the employees become mandatory in insider threat scenarios. Various software and devices are bought for this purpose. Although buying the employees' activities tracking software and devices is essential, the cost associated with it is considered an extra expense because it is not used in day to day operations of the organization, nor does it generate any revenue.

A combination of open-source software should be implemented in the organization. As there is no single tool in the market that can perform all security operations effectively, multiple software must ensure proper security.

Remediation Cost

If an organization's customer base is affected by insider threat, then depending on the county's law in which the organization is operating, the organization might have to pay heavy fines. Even a single customer can sue the organization if he has incurred losses due to the organization's insider threat which has negatively affected the customer's financial or mental health. Also, if the system or hard disk becomes unusable due to an attack, then the cost of replacement is an additional burden.

Risk transference can be done if the projected remediation cost is very high for an organization. If the main organization lacks expertise in the cyber security field, then a third-party vendor should be hired to maintain the organization's security posture.
Employees Distrust and Eroding of Morale

If an organization is large, there might be numerous individuals who can act as insider threats at some point in time. If multiple instances of such insider threats are revealed repeatedly in an organization, then the employees' distrust among each other grows. This negatively affects the organization's culture and erodes employee morale, thus decreasing employee productivity. Without trust, communication among the employees stagnates, and this might hinder the organization's process and services.

Proper communication with employees and employee feedback should be the first line of defense in such scenarios. Measures should be taken to remedy employees' problems and zero-trust cyber security policies.

Cyber Security Services
End-to-End Proactive Solutions for empowering Advanced Threat Protection and Intelligence with Real-Time Analytics, Cyber Security Services

Difficulty in Client Acquisition

As insider threats are mostly related to cases of data breaches and loss of reputation, it becomes difficult for an organization to acquire new clients in the market. Even old clients might choose to leave as association with a non-reputable and unsecure organization affects them negatively. Insider threats can also cause financial losses to vendors and clients, due to which the client acquisition rate becomes negative for an organization.

To prevent this, security solutions should be based on client needs and applications on production. Data encryption should be done for all data except data available in the public domain. Due to encryption, customers' and organizations' data would be safe even if there is a data breach.

Leakage of Customer Information

Some people act as insider threats and sell sensitive data to third parties. This scenario mostly happens in telecom industries where many customers' mobile numbers are sold to a third party in bulk. The third party then uses those mobile numbers for fraud calls or provides illegitimate loans. Sometimes due to employee negligence, customers' data is put in the public domain, which anyone can directly access through an internet connection.

Leakage of customer information should be prevented by making the process automated. No human intervention should be done at any stage, and as soon as an automated application receives data from the customer, it should be encrypted. Only very high-level people with admin privileges should be able to decrypt it.

Business Loss

Business losses due to insider threats in many industries and service sectors are in millions USD. Even though a company can make all the processes automated, some human factors are still needed for smooth operation. The insider can change the security settings to bypass them for his own usage. Ransomware, legal fees, and client distrust are major causes of business loss due to insider threats.

Proper training of people on cyber security guidelines should be done so that they would not disrupt the operation unintentionally. All the data received from outside the organization should be opened and executed in a sandbox virtual environment so that critical data on the existing system would not get compromised.

Misuse of Organizational Resources

Insider threats majorly do the misuse of organizational resources for profit purposes. There have been past cases where an organization's employee installed cryptocurrency mining software in an organization's systems to gain money, or an employee used the organization's devices for his personal purposes on a large scale. These kinds of resource abuses often go unnoticed as that are done by those employees who have the responsibility to maintain those resources. Unless an audit is done, it is very difficult to find out about the misuse of resources.
A weekly compliance testing should be conducted to know what software is running on every system via an automated script. Only authorized software used for business needs should be installed, and other third-party software should be blocked.

Data Tampering

Data tampering by insiders is a common scenario. Employees generally tamper with the punch in time to rectify their attendance or hackers gain system access, become an insider and then tamper with the data to gain further access or install a backdoor in the system for permanent access. Tampering the data to pass ineligible candidates in an exam or secretly manipulating the bid price of a tender by an insider so that the victim organization loses the contract has happened many times in the past.

Logging and monitoring of data should be done at every stage, and more than two persons should be involved if critical data needs to be changed. With different levels of approvals, it will be difficult for a single person to tamper with the data in the system.

Check out the best practices you must follow to secure your cloud


Although policies and procedures are in place for every organization, insider threats will remain a concern from a bottom-level perspective up to high-level personnel for an organization in the future. Zero trust policies, proper encryption of data, multiple levels of approvals, limited access, and strict authentication and authorization, are some of the ways which will prevent most of the impacts caused by insider threats.

Many commercial products are also available in the market for mitigating insider threats. The commercial products do employee monitoring, credentials verification, change in data, logging, and monitoring to reduce the threat of cyber attacks from inside an organization.

Insiders always have access to critical information within an organization and can bypass security control easily. Therefore, every organization needs to create an insider threat program and implement policies to reduce its effects.