Breach Will Cost Capita At Least £20m
Capita, the outsourcing group that is a major supplier to the UK government and runs crucial operations for the NHS and the British military disclosed last month that it has fallen victim to a cyber attack. The breach first came to light in March when the outsourcing firm revealed that hackers had accessed its systems for almost 10 days before the breach was discovered.
Capita is one of the UK government’s largest suppliers and holds contracts valued at £6.5bn for IT and other services. Its clients include the BBC, for which it collects the lisence fee, as well as many local authorities.
Capita now says that it expects to incur exceptional costs of about £20m, comprising specialist professional fees, recovery and remediation costs and investment to strengthen Capita’s cyber security defences.
However, the costs of the hack to Capita could well significantly increase if the British Information Regulator, the ICO, decides to impose a fine on the hapless company and there could be be other claims on Capita from its corporate cunstomers.
According to Stuart Poole-Robb, CEO of corporate security advisors KCSG: “It’s alleged that Capita paid a ransomware fee to a Russian hacking group the ‘Black Basta Gang’. The group emerged in 2022 and has been involved in a record-breaking 459 cyber attacks up to March 2023. “Organisations, like Capita, are required to implement robust security measures, encrypt sensitive data, use multi-factor authentication and carry out regular security audits."
Capita’s systems are used to administer pensions for about 450 organisations, including Royal Mail and Axa, covering millions of policyholders.
Around half a million members of the major UK university lecturers’ pension fund may have had their personal details stolen during the attack, generating a major potential third part liability and Britain's Financial Conduct Authority and the Pensions Regulator have both been in touch with Capita’s corporate clients, asking them to assess the impact on their end customers.
The Pensions Regulator has reportedly asked hundreds of pension funds that use Capita as an administrator to assess whether their client data may be at risk in the event that their customers, suppliers and staff data was accessed by hackers.
In comment, Paul Holland CEO at Beyond Encryption said “Pension schemes are already at a heightened risk of cyber-attacks, thanks largely to the significant amounts of sensitive data they hold. The Capita incident is just one of many in the long line of attacks and breaches we have witnessed this year and highlights that change is needed - and soon. Trustees must remember that they are ultimately accountable for the security of pension scheme assets, regardless of whether they have outsourced to a third party.... Capita will be feeling the ramifications of this attack for quite some time – both in terms of financial repercussions and the loss of customer trust. "
Capita said investigations about the attack that the data that was stolen comprise less than 0.1% of its server estate. It has also taken “extensive steps” to recover and secure the data contained within the affected server estate, and to “remediate any issues arising from the incident”. The firm is "working closely with all appropriate regulatory authorities and with customers, suppliers and colleagues to notify those affected and take any remaining necessary steps to address the incident”. It added: “Capita has also taken further steps to ensure the integrity, safety and security of its IT infrastructure to underpin its ongoing client service commitments.”
Organisations must remember that mitigating digital risk is far less financially damaging than waiting for an incident to occur and cleaning up the mess left behind. Looking forward to how data can be better protected in the future, it is past time that sufficient processes and controls were put in place to analyse supply chain risk and determine the security of third-party suppliers.”
It is now believed that information containing Capita data was circulating on the Dark Web after the breach in March, with reports suggesting this included home addresses and passport images.
Last week Capita said that its current trading remains in-line with expectations, amid ‘strong’ sales over the first four months of its financial year with revenues up 16 per cent year-on-year to £449million.
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