Types of Biometric Systems

Biometric systems refer to technology that uses unique physical or behavioural characteristics to identify and authenticate individuals. There are two main types of biometric systems:

Physical biometrics, and
Behavioural biometrics.

Physical biometrics rely on the unique physical traits of an individual to authenticate their identity. Common examples of this would be thumbprints, facial recognition, iris scans and voiceprints. These biometric systems compare captured physical data to a stored set of an individual’s biometric information to confirm their identity.

Behavioural biometrics are based on unique patterns of behaviour that an individual exhibits. Examples of this can include voice input, typing speed, mouse movements and even the way an individual walks. Behavioural biometrics analyze these patterns to create a profile that is unique to the individual and can be used to authenticate their identity.

What are Biometric Risks for a Business?

Biometric authentication technology has been rapidly gaining popularity in recent years due to the promise of enhanced security and increased convenience. However, as with adopting any new technology, these systems are not without their risks, as outlined below.

Data and privacy breaches

Data breaches are one of the most significant biometric risks for businesses. The theft or compromise of biometric data can have severe consequences for a business and their clients, including identity theft, financial fraud and reputational damage. Hackers may target biometric data to steal personal information which can be used for various means by bad actors.

For example, in 2019, the U.S. Customs and Border Protection announced that a subcontractor had suffered a data breach compromising tens of thousands of travellers’ facial recognition data. The breach raised concerns about the government’s use of biometric data and the security measures in place to protect it.

Fraud

Another risk associated with biometric systems is fraud, including spoofing and identity theft.

Identity theft involves stealing someone’s biometric data and using it to gain access to sensitive information or conduct fraudulent activities. Spoofing involves the use of fake biometric data (such as a fake fingerprint or facial mask) to trick a system into authenticating an unauthorized user.

For example, in 2018, a group of fraudsters in China were caught using ‘deepfakes’ to set up a fake shell company, and then issued tax invoices amounting to over $76 million USD. The fraudsters used an app to manipulate images purchased on the black market and create ‘deep fake videos’, making it appear that faces were opening their mouths, nodding and blinking.

Lack of accuracy

Lack of accuracy is another significant biometric risk for businesses. Biometric systems rely on accurate data to authenticate users, but errors can occur for various reasons, including technical issues and changes to an individual’s physical or behavioural characteristics. Inaccurate biometric data can result in false negatives, where an authorized user is denied access, or false positives, where an unauthorized user is granted access.

In 2019, a group of researchers found that some facial recognition systems were more likely to misidentify BIPOC people and women, raising concerns about potential bias in these systems.

System failures

Finally, system failures are a significant biometric risk for businesses. Biometric systems can suffer from technical issues or malfunctions that can result in access failures or downtime. This can be particularly problematic for businesses that rely on biometric systems for critical operations or services.

In 2019, it was revealed that Suprema, a security company responsible for the Biostar 2 biometrics lock system, had a data breach resulting in a large amount of biometric data becoming publicly accessible. Suprema is used by defence companies, banks, and the police force in the United Kingdom. Information leaked included facial recognition information, passwords and usernames. It was discovered that Biostar 2’s database was largely unencrypted.

How to Mitigate Biometric Risks in your Business

Businesses must take steps to mitigate risks associated with biometrics and ensure the safe and responsible use of data. Key mechanisms for this include:

Robust security measures

The first step in mitigating biometric risks is to implement robust security measures to protect against data breaches and cyber-attacks.

Examples of this include: ensuring that biometric data is encrypted and stored securely, limiting access to sensitive data, and regularly monitoring systems for potential security threats. Businesses should also implement multi-factor authentication processes and consider using biometric data in combination with other authentication factors, such as passwords or PINs.

Quality control of the systems in place

Another key consideration in mitigating biometric risks is ensuring the accuracy and quality of biometric data. Businesses should implement regular checks and audits to ensure that biometric systems are working as intended and that data is accurate and current.

This includes monitoring for changes in biometric data (for example, such as aging or injury) which could impact the accuracy of the system.

Have a contingency plan in place

Businesses should develop a contingency plan in the event of system failures or data breaches. This includes implementing backup authentication processes and having a plan in place to respond quickly and effectively in the event of a security incident.

Insurance

No strategy is foolproof. Businesses should consider purchasing insurance to protect against the financial impact of a data breach or cyber-attack.

There are different types of insurance which can provide businesses with protection in the event of a security incident, including coverage for legal fees, damages and other costs associated with a breach.

What insurance coverage exists for loss caused by biometric risks?

No business is completely immune to cyber threats, no matter how much they invest in security measures. Even with robust system security and best practices in place, there is still a risk of a data breach or attack on a business’ biometric systems.

Insurance can provide an additional layer of protection against the financial impact of such incidents. This includes the following:

Cyber insurance

Cyber insurance is a type of insurance that can provide coverage for losses arising from a data breach or cyber-attack.

This type of insurance can provide coverage for costs associated with the loss or theft of biometric data, including legal fees, settlements or judgments and other expenses. Cyber insurance policies may also provide coverage for business interruption losses resulting from a data breach or cyber-attack.

If a business’s biometric data is stolen or compromised in a cyber-attack, cyber insurance can provide coverage for the costs associated with investigating the breach, notifying affected users and restoring the business’s systems.

Cyber insurance policies may also provide coverage for claims arising from cyber extortion or ransomware attacks. For example, if a business’s biometric data is held hostage by cybercriminals, who demand a ransom payment in exchange for releasing the data, cyber insurance can provide coverage for the ransom payment and associated expenses. Cyber insurance can also provide coverage for reputational damage resulting from a data breach or cyber-attack.

Technology Errors and Omissions (E&O) insurance

Technology E&O insurance is designed to protect businesses that provide technology-related products and services against claims of professional negligence, errors or omissions and other related risks.

This type of insurance can provide coverage for losses arising from claims that a biometric system did not perform as expected or failed to meet a certain standard of performance. For example, if a biometric authentication system fails and results in a data breach, the affected users could sue for damages.

Directors & Officers Liability Coverage (D&O) insurance

D&O insurance policies protect directors and officers against claims of wrongful acts such as breach of fiduciary duty or negligence. In the context of biometric risks, D&O insurance can provide coverage for claims against a business and its executives resulting from the mishandling of biometric data.

D&O may also provide coverage for claims arising from regulatory violations. For example, if a business is found to have violated data protection regulations related to biometric data, the affected individuals or regulatory bodies could sue the business for damages. D&O insurance can provide coverage for the costs associated with this.

Product Liability insurance

Product liability insurance is a type of insurance that can provide coverage for businesses that manufacture and sell biometric technologies. This type of insurance can protect businesses against claims that their products caused harm or injury to third parties.

In the context of biometric risks, product liability insurance can provide coverage for claims resulting from the failure or malfunction of biometric technologies.

Looking for Insurance to Protect your Business Against Biometric Risks?

There are several types of insurance policies available to protect businesses from the potential financial losses resulting from biometric risks. In order to determine which coverage is right for you, an assessment of your organization’s unique risks will help in selecting the appropriate policies. With the correct protections in place, businesses can mitigate these risks and focus on leveraging the benefits that biometric technology can offer.

It’s important to work with an experienced insurance broker who understands the complexities of biometric risks and can work with you to identify and assess your organization’s exposures to help select the most suitable coverage options for your business.

If you’re a business owner looking to mitigate biometric risks and protect your assets, don’t hesitate to get in touch with the risk and insurance experts at Axxima. As experienced insurance brokers, we help you find the right policy for your business needs and provide guidance on managing biometric risks effectively. Get in touch with our team today to get the conversation started.