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AlphaCo Inc. is a global distributor of a diversified range of mechanical, electrical, and electronic systems and components such as semiconductors, liquid crystal displays, data communications equipment and supplies, electromechanical devices, mechanical and electrical power transmission products, bearings, conveyor components, electric motors, industrial computer products and subsystems, and so forth. It operates in 150 countries across Africa, Asia, Eurasia, Europe, Australia, North America, and South America. It has 105 distribution centers worldwide and sales offices or representatives in 95 countries. The firm is headquartered in the U.S.
AlphaCo operates in a highly competitive environment worldwide. It does business with manufacturers, distributors, and resellers who sell directly to end-users. AlphaCo has a very diverse product line. It markets and distributes more than 500,000 products from over 5000 suppliers. The diverse product line enables the firm to serve as a one-stop-shop for many customers. To provide quick order taking and fulfillment capabilities and consistent, timely and accurate delivery around the world, AlphaCo invested heavily in IT. The core IT infrastructure of the firm relies on mainframes. But it also includes a variety of IT hardware and operating system platforms that were inherited from mergers and acquisitions.
AlphaCo’s order management system provides service to manufacturers and resellers via the internet. It acts as a channel middle-man between manufacturers and resellers. The company’s business dependency on the internet requires maintaining assurance around the integrity of transactions. To address the security threats posed by e-commerce, AlphaCo uses Secure Socket Layer, which provides 128-bit encryption of packets to and from its e-commerce clients. Furthermore, all manufacturers and resellers are required to authenticate themselves as legitimate business partners.
In early 2002, the accounts receivable department of AlphaCo discovered a significant amount of uncollected accounts while performing an aging analysis. These accounts totaled in the millions and were tracked to shipments to an Aegean Island. Several of the accounts were listed under the same address. Further reviews revealed that the accounts were fraudulent. A hacker penetrated the online order management system of the firm, created fake accounts, and placed about 50 fraudulent orders over a period of three months and stole shipments totaling approximately $20 million.
AlphaCo’s Board quickly met to devise a plan of action. The Chief Information Officer urged management to increase the IT budget so they could undertake a full computer forensics investigation to identify and fix the IT security vulnerabilities of the firm. The Chief Financial Officer wanted the IT department to adhere to its current budget noting that the current budget was above the industry standard. The Director of Internal Audit reminded the board of two requirements the CEO and CFO would have to comply within alignment to Sarbanes-Oxley (SOX) Act of 2002:
The Director of Internal Audit informed the Board that her department recently adopted COSO and COBIT frameworks for thinking about internal controls around the firm’s business processes and the supporting IT systems. She emphasized her department would need more budget to implement the internal control best practices identified in these frameworks.
The Chief Information Officer, IT department, and a team of external consultants conducted varied scenarios to determine how the hacker penetrated AlphaCo’s order management system. They reasoned that the hacker initially penetrated AlphaCo’s online system by exploiting an unpatched service running on an exposed web server. The exploit gave the hacker root access, which was used to view connection strings to the order management system’s database. The database resided within AlphaCo’s internal network. Using the database connection strings and spoofing web server identity, the hacker was able to connect to the database and execute SQL statements. At that point, the hacker had the ability to create fake accounts from which to place the fraudulent orders. The network penetration did not stop there. Through the database, extended stored procedures were used to discover yet another unpatched service and install password sniffers, which were used to unauthorized virtual private network (VPN) connections. A reverse tunnel was created using the exploited service thus connecting the database server to the hacker’s local workstation. The database server was then used as a proxy to discover other critical servers on the network and the services they owned.
Despite the plausibility of this initial scenario, others were possible to explain the hacking incident. The Chief Information Officer wondered what else they needed to do to prevent hacking attempts and to detect an incident sooner if hackers manage to compromise their systems again in the future.
Source: Tanriverdi, H., Bertsch, J., Harrison, J., Hsiao, P., Mesuria, K., & Hendrawirawan, D. (2006). AlphaCo: A teaching case on information technology audit and security. Journal of Digital Forensics, Security and Law, 1(1), 45 – 68. https://doi.org/10.15394/jdfsl.2006.1001.Links to an external site.
For this assignment, you will submit a voice-over PowerPoint presentation. The presentation should include an introduction, conclusion, and reference slides. In addition, the presentation should include 5 to 7 slides of content based on supplemental research using scholarly resources. At a minimum, your presentation should answer the following questions. In addition, you should address two to three additional concepts based on your research. Site all references using APA formatting.
View RubricAssignment RubricAssignment RubricCriteriaRatingsPtsContent Qualityview longer description15 ptsFull MarksApply knowledge from coursework and/or outside resources in a manner that is coherent, thorough, and relevant to the topic. Clearly explain your argument/point. Provide evidence to support your argument/point.0 ptsIncomplete/not demonstrated/ 15 ptsOrganization and Presentationview longer description3 ptsFull MarksFollow basic rules of strong presentation skills, including a clear agenda, logical organization and transitions, clear and appealing slides, and recap of main points.0 ptsIncomplete/not demonstrated/ 3 ptsCitations and Spellingview longer description2 ptsFull MarksUse Proper APA formatting when citing your sources. Base your ideas on research or theory. When you use someone’s words exactly, quote, and cite. Check your document for proper grammar, formatting, and spelling.0 ptsIncomplete/not demonstrated/ 2 ptsTotal Points: 0
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