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The Internet of Things (IoT) has greatly benefited businesses worldwide. From optimizing operations to enhancing customer experiences, IoT devices have become valuable assets to various industries. Yet, these technologies have hidden security challenges that make companies vulnerable to cyber attacks, making fraud a great concern.
Whether it is a smart thermostat or a connected light bulb in a conference room, these everyday items may seem harmless. However, they have become gateways for cyber threats and fraud concerns. Therefore, it is important to understand these vulnerabilities and the risks that come with them.
What Is IoT and What Do Businesses Use It For?
IoT is a network of interconnected devices that collect and exchange data, making everyday objects “smart.” In essence, IoT brings inanimate objects to life. These include home appliances, lighting, vehicle systems and other ordinary things. Each item is embedded with sensors and software that enable them to communicate with each other and people.
Businesses across various sectors use IoT to streamline their operations and improve
decision-making. For instance, manufacturers use IoT devices to track machinery and predict when maintenance is required. This way, they avoid costly breakdowns and operational disruptions.
Retailers also use IoT for inventory management. These devices ensure shelves are loaded with enough products for customers to purchase efficiently. In agriculture, IoT sensors track soil moisture, allowing for precise irrigation and optimizing crop yields.
As you can see, IoT usage in business is vast. Yet, it benefits industries in various ways, from increased efficiency to better customer experiences. However, these opportunities also come with challenges, especially concerning security and fraud.
Types of Cyber Threats and Fraud Concerns in IoT
As IoT continues to help businesses improve their processes, more of them will increase their adoption. Therefore, the surface for potential cyber threats and fraud concerns expands. Here are some of the primary problems associated with IoT:
- Device hijacking: Cybercriminals can take control of an IoT device and use it for malicious activities like launching DDoS (Distributed Denial of Service) attacks or infiltrating connected networks.
- Eavesdropping: Attackers tap into unsecured IoT devices to gather sensitive information from a business’s data.
- Physical tampering: Some IoT devices are vulnerable to physical attacks, allowing intruders to change their functions or extract data directly from the device.
- Man-in-the-middle attacks: Attackers intercept communications between two IoT devices, manipulating the data for stealing information and other malicious purposes.
- Device spoofing: Fraudsters can create fake devices or replicate genuine ones. Doing this allows them to feed misleading data into a network or systems, leading to incorrect business decisions or operational disruptions.
- Insecure interfaces: Many IoT devices are managed through web interfaces. If these are not properly secured, they can be easy gateways for cybercriminals to gain access.
- Outdated software: IoT devices that do not have regular software updates are vulnerable to hackers.
Business owners should understand the different threats that come with IoT to devise a defensive strategy. IoT may provide significant benefits, but ensuring the security of connected devices should be a top priority.
Why IoT Devices Are Easy Targets
IoT devices offer many conveniences for business owners. However, these devices are vulnerable to hackers for several reasons.
Lack of Built-In Security
Many IoT devices are designed with functionality and user experience in mind rather than security. Therefore, they lack basic security features like encryption or strong password requirements, making them easy for cybercriminals to breach.
Vast Ecosystem
Since IoT makes up many devices, each of them comes with its own set of standards. A diverse ecosystem like this has no security protocol, creating weak links for cybercriminals to exploit.
Always Online
Most IoT devices are continuously connected to the internet. This gives attackers a window of opportunity to find vulnerabilities and launch attacks.
Limited Update Capabilities
Some devices are challenging to update with new firmware or security patches. With these limitations, objects remain exploitable because a vulnerability will always be discoverable.
Inadequate User Awareness
Many users — including businesses — are unaware of the security threats associated with IoT devices. This lack of awareness leads to lax security practices, including using default passwords. With a lack of understanding despite many businesses relying heavily on the technology, hackers have more room for opportunity to hack.
Strategies for Boosting IoT Security and Mitigating Fraud Concerns
Since IoT devices have many security issues and fraud concerns, companies must take certain steps to reduce these risks. Here are the top three strategies to start implementing.
1. Network Segmentation
One of the most effective strategies for enhancing IoT security is network segmentation. Creating separate networks for IoT devices enables businesses to prevent attackers from moving laterally to more critical systems, even if one device is compromised.
This tactic involves designating specific parts of your network for IoT devices, segregating them from sensitive information or crucial operations. For instance, a smart thermostat could be on one web while financial data and customer records are on another.
Isolating different types of traffic may limit the potential damage of a breach. Yet, it also provides clearer monitoring to identify suspicious activities faster.
2. Regular Firmware Updates and Patch Management
Ensuring your IoT devices have the latest firmware and software devices is crucial. Manufacturers often release updates that address unknown vulnerabilities. Yet, because many IoT devices lack an easy update mechanism, they remain susceptible to hackers.
Businesses should prioritize a rigorous patch management routine. This involves regularly checking for device updates, applying them promptly, and maintaining all IoT inventory. That way, businesses stay updated and protect their devices from widely known threats.
3. Multi-factor Authentication and Strong Password Policies
They may be a basic security measure, but strong passwords remain on the frontline defense against breaches. By default, IoT devices often come with generic passwords that make them prime targets for attackers. Changing these default passwords to strong, unique credentials is essential.
In addition to changing to a strong password, companies should implement multi-factor authentication (MFA). MFA provides an additional security layer, making it challenging for attackers to gain access. With MFA, a cybercriminal may compromise a password but still need another verification form to access the device.
Typically, MFA requires biometric verification or a text message code. With these strategies intact, businesses reduce unauthorized access risks and ensure their IoT devices remain secure.
Addressing Fraud Concerns in IoT
In IoT, the line between opportunity and risk is thin. While IoT devices offer exciting advancements and efficiencies, they also come with a list of fraud concerns. Therefore, proactive strategies, awareness and security practices are essential. When managers know about the vulnerabilities and implement protective measures, they can reap the benefits of IoT while keeping their business safe.
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