Investors target Board Directors for cyber security incidents

Investors are growing concerned that directors are ill prepared for cyber security incidents and technological challenges.

Investors are growing concerned that directors are ill prepared for cyber security incidents and technological challenges.

Facebook has been hit with a fine, a slowdown in user growth and a fall in its share price since news of the Cambridge Analytica data scandal broke in March.

In the months since, the social media company’s handling of the scandal — where data was improperly obtained from up to 87m users — has been heavily scrutinised by regulators, politicians and users.

Facebook chief operating officer Sheryl Sandburg last week testified before Congress, facing hours of questioning from the Senate Intelligence Committee. She said the company was “strengthening our defences” against targeted hacking and data collection.

It is also being closely watched by corporate governance specialists at big asset managers who are increasingly concerned that senior management and board directors at listed businesses across the world are ill-prepared for potential data breaches and other technology problems.

“We see cyber security as a key emerging risk,” says Rupert Krefting, head of corporate finance and stewardship at M&G Prudential, which oversees £342 billion in assets. “It is hard for us to judge if management and board directors at listed businesses really do know the technology risks because they are not prepared to talk about it.”

Now a growing number of investors are demanding that directors ensure they are well versed in the technology issues their companies could face.

number cyber data breaches by company type

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Leon Kamhi, head of responsibility at Hermes Investment Management, says the asset manager is engaging “heavily” on the issue. “Cyber security risk is a big issue,” he says. “IT skills on boards can be really important in order to challenge what a head of IT is doing at the inside. Boards need to be on top of it.”

“We want the board to be tech savvy, but we wouldn’t just want it to be a tech board. Our fear is they appoint a tech expert but then no one else on the board is engaged. We want to understand the extent to which all the board is competent.”

The introduction of stringent European data protection rules earlier this year has also prompted investors to ask tough questions about how well companies are coping with technological changes. The General Data Protection Regulation, which came into effect in the EU in May, has reshaped how companies can collect, use and store personal information. Companies face fines of up to 4 per cent of global turnover or €20m, whichever is greater, if they fall foul of GDPR.

Mr Kamhi says that if companies do not step up on cyber security issues there is a risk they will be hit with even more legislation.

Many investors believe the potential issues companies could face linked to technology are far reaching. As well as being “disrupted” — meaning technological solutions could be developed that upend their business model — companies that hold consumer information are at risk of data breaches. There are also concerns about hacks or cyber attacks which could damage business brands and cost businesses millions of dollars.

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Cyber security criminals outspend businesses in security battles

Cyber security criminals are spending 10 times more money finding weaknesses in the cyber defences of organisations than the organisations they target are spending on protecting against attack.

Cyber security criminals are spending 10 times more money finding weaknesses in the cyber defences of organisations than the organisations they target are spending on protecting against attack.

Research from Carbon Black carried out in August also asked 250 UK-based CIOs, CTOs and CISOs about the attacks they faced over the past 12 months.

In total, 92% of UK businesses have had cyber security breaches in the past year and nearly half off those reported falling victim to multiple breaches (three to five times in the past year).

A total of 82% of respondents said they have experienced more attacks this year than last year. In the financial services sector, 89% said this is the case, while 83% of government organisations and 84% of retailers had also experienced an increase in the number of attacks.

Malware was the most common attack on the UK organisations surveyed, with about 28% experiencing at least one such attempted breach. Ransomware was the next most common, with 17.4% reporting at least one attack.

“Following a global trend, cyber attacks in the UK are becoming more frequent and more sophisticated, as nation state actors and crime syndicates continue to leverage fileless attacks, lateral movement, island hopping and counter incident response in an effort to remain undetected,” said the report. “This issue is compounded by resources and budgeting. Not only is there a major talent deficit in cyber security, there is also a major spending delta.”

The report found that IT leaders believe Russia and China to be the source of the vast majority of cyber attacks, but it identified North America as the starting point for more attacks than Iran and North Korea combined.

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Money transfer frauds are top aim of business email cyber attacks

Tricking recipients into transferring money to cyber criminals is the top objective of business email compromise (BEC) attacks.

Tricking recipients into transferring money to cyber criminals is the top objective of business email compromise (BEC) attacks.Business email compromise is increasingly popular with cyber criminals to steal money and information as well as spread malware, security researchers find

The second most popular objective is to get the recipient to click on a malicious link aimed at stealing information or spreading malware, according to an analysis of more than 3,000 BEC attacks by Barracuda Networks.

BEC attacks are also known as whaling or CEO fraud because attackers typically compromise the email accounts of CEOs and other top executives so those accounts can be used to send messages to more junior staff members, tricking them into taking some action by impersonating the email account holder.

This tactic is extremely effective in manipulating employees as well as partners and customers of targeted businesses because few organisations have processes in place for checking or verifying instructions ostensibly received from a top executive in an email message sent from a genuine account.

In most cases, cyber criminals focus efforts on employees with access to company finances or payroll data and other personally identifiable information(PII).

The study shows that PII is another top target for BEC attackers, accounting for 12.2% of the attacks studied. Another 12.2% were aimed at establishing a rapport with recipients, which in most cases was followed up with a request for a money transfer.

The effectiveness of this attack method has made it extremely popular with cyber criminals, as is indicated by an 80% increase in the number of BEC attacks in the second quarter of 2018 compared with the first quarter, according to a recent report by email management firm Mimecast.

The Barracuda study reveals that in 46.9% of the cases studied, the objective was to trick employees into transferring business money into accounts controlled by the attackers, while in 40.1% of the cases, the aim was to trick them into clicking on a malicious link.

According to Barracuda, email is the top threat vector facing organisations due to the growing number of email-related threats, which include ransomware, banking trojans, phishing, social engineering, information-stealing malware and spam, as well as BEC attacks.

Not surprisingly, the analysis shows that CEO email accounts are the most commonly impersonated (42.95%), followed by other C-level account holders (4.5%), including the CFO (2.2%), and people in the HR and finance departments (2.2%).

CFOs are among the top recipients of BEC emails, representing 16.9% of recipients in the attacks studied, on a par with the finance and HR departments in general and compared with 10.2% received by other C-level execs.

However, the analysis shows that most recipients of BEC emails are in more junior roles, with 53.7% holding roles outside the C-level, underlining the need for regular, ongoing user awareness training.

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How SMEs can outsource cyber security issues to a Virtual CISO

Top things Small Businesses SMEs should consider when outsourcing cyber security to a Virtual CISO.

 

Outsourcing cyber security operations to a Virtual CISO (Chief Information Security Office) is not only possible, but highly attractive – especially in the face of increasing complexity, the continual evolution of the cyber threat and the current shortage of skilled cyber practitioners.

However, there are some elements that Small Business SMEs and businesses cannot do – outsource the associated business risks and regulatory responsibilities, such as those under the General Data Protection Regulation (GDPR).

While Service Level Agreements (SLAs) governing security services will exist, suppliers are unlikely to provide unlimited liability for consequential losses as the result of a cyber attack, or privacy breach.

You therefore need to be able to make judgements on the services you are being provided and make informed decisions on what is sensible to outsource for your business.

At a business level a CISO will need to retain overall control and management of the organisation’s security policy, disaster recovery, regulatory aspects such as GDPR and high-level incident and media management, but it would be perfectly feasible to outsource the underlying support – such as the actual incident response and aspects of disaster recovery.

However, a full time CISO may not be affordable for small to medium enterprises (SMEs), so an alternative solution that is growing in popularity is to employ a “Virtual CISO”.

These are skilled and experienced CISOs who can provide independent support, to ensure regulatory requirements are being met and that outsourced providers are fulfilling the necessary service levels, at a fraction of the cost of a full-time employee.

Typical security services that can be outsourced include protective monitoring, vulnerability management, firewall management, antivirus etc. How you decide to outsource may depend on whether you already outsource your IT provision or if you use cloud services.

The current trend amongst SMEs is for cloud-based solutions, as they lower the overhead of having your own IT and security management teams, especially when using storage and software services as security controls – like patching and back-ups – are included in the subscription.

Deciding what to outsource to a Virtual CISO is often driven by the need for specialist staff (who are currently in high demand), threat knowledge and the practicality of maintaining your own capability.

As illustration, on occasion you may need an incident response team of several experts covering incident management computer forensics, network forensics, malware analysis, etc. But having these professionals on the payroll full-time, “just in case”, would be too expensive, assuming you could retain their interest.

Also, effective protection depends on a good level of up-to-date threat intelligence,  so unless you have specialists engaged in threat hunting and gathering threat intelligence, it will be difficult to defend your systems. Incident response and security monitoring, closely followed by vulnerability monitoring, are therefore the first things to consider.

Patching, firewall management and access management are more routine, so may be kept in house, but if this is the case, any protective monitoring provider must be aware of the current configuration to meet their SLAs.

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LORCA identifies top priorities for cyber security innovation

The top priorities for cyber security innovation are identity management, patch management and configuration management.

The top priorities for cyber security innovation are identity management, patch management and configuration management.

“These are basic components of cyber security, but failure to do them well is still responsible for the bulk of cyber attacks that we are seeing.”said the new LORCA CEO  Hannigan

Identity is one area where the UK is particularly strong, with some great companies focused on it, he said, particularly in the academic “pre-company” sector, where universities are doing some “really innovative things” around identity management and authentication.

“Identity is key to cyber security, and if we can get a product out there that beats others, the sky is the limit, especially for the export market, and it will be about who gets there first with a viable solution,” he said.

Hannigan believes the internet of things (IoT) and cloud computing are two more areas where cyber security entrepreneurs should be focusing their efforts.

He said cloud computing is “problematic” because it makes it harder for companies to understand what the perimeters of their networks are.

“Even for those companies that have worked out what their cyber security policy is and managed the risks, suddenly to do all their processing and storage in the cloud complicates that,” said Hannigan. “It is not terminal, but it means they need to rethink their risks and mitigations.”

He advised organisations to look at the guidance on security in the cloud from the National Cyber Security Centre (NCSC).

IoT is ripe for innovation

The IoT is “ripe for innovation”, said Hannigan, because it is unlikely that regulation or government guidelines will address the immediate risks.

“It is going to be a long time before security by default is achieved, so in the meantime we need to find ways to mitigate potential disasters, with billions of devices connecting to the internet,” he said.

In terms of going to market, Hannigan advises cyber security entrepreneurs to spend some time considering things from the customer’s perspective.

“In the UK, companies are more likely to be conservative in their cyber security investments and stick with well-established suppliers than countries like the US and Israel, so startups need to take that into consideration,” he said.

Hannigan believes Lorca has a role to play here in helping startups to think through how their technology will integrate with existing IT environments, making it as easy as possible with minimal disruption.

Time and skills required by businesses

Although businesses do not necessarily need to spend a fortune on cyber security, it does require some time and sometimes skills that may be lacking in-house, said Hannigan.

“I do have sympathy for small businesses, but many are doing more than they used to in the past and are using things like Cyber Essentials and the small business guide because they are seeing how cyber attacks are affecting companies or because their insurance companies have told them to,” he said.

Hannigan believes there is a need for effective managed security services for small and medium-sized businesses. “A regular complaint I get is that managed security services suppliers are not really appropriate for small businesses and aren’t necessarily that effective, so there is a challenge there to the industry to come up with managed security services that really work and that don’t just dump the problem back onto the client, but actually do something about it,” he said.

LORCA to help drive UK cyber exports

LORCA – the new London cyber security innovation centre will help to boost exports of UK cyber security expertise.

LORCA - the new London cyber security innovation centre will help to boost exports of UK cyber security expertise.

A key part of the ambition for London’s £13.5m government-funded cyber innovation centre is that it will help drive UK exports, according to Robert Hannigan, former head of GCHQ.

“We hope that companies founded and given a boost and support in going to market will also go to market overseas,” he said at the official opening of the centre – to be known as the London Office for Rapid Cybersecurity Advancement (Lorca).

“The government’s ambition is very clearly to make the UK a leader in cyber security exports, and I see massive potential out there in countries around the world that need a variety of different solutions,” said Hannigan, who will lead Lorca’s industry advisory board.

“We know we have great talent, potential and possibilities, and bringing it all together was the challenge for government and what has led to this [cyber security innovation] centre,” he said.

The centre will play an important role in bringing together the many good innovators and incubators across the UK and provide a focal point for interacting with government, said Hannigan.

Lorca will also bring together cyber security innovators with academics in the field, with various industry sectors – starting with the cyber security-leading finance sector, with other technical and non-technical disciplines, and with international partners.

“This centre has links to the US, Israel and Singapore, and convening the three most prominent cyber security industry centres in the world is going to be very powerful in magnifying the value of this centre,” said Hannigan.

Commenting further on the potential for cyber security exports, Hannigan said there is a “massive market” out there because there are many economies that are some way behind the cyber security technology front-runners that are looking for solutions.

“There is massive potential, we have got some great companies, the UK has a good reputation and we should capitalise on that because if we put all that together and get it right, we will have a booming cyber security export industry,” he said.

“There is a lot of private sector capital looking to invest in cyber. So there is no shortage of capital, it is all about finding the right vehicle, and Lorca will help with that. But there is no reason why, in the future, there shouldn’t be more initiatives along the same lines.”

For this reason, Hannigan believes there is room for many more initiatives aimed at supporting cyber security entrepreneurs.

“There is no competition between incubators and accelerators within the UK – the more the merrier,” he said, explaining that each has something different to offer, with Lorca being more industry-focused with international links, for example, and the GCHQ accelerator and innovation centre in Cheltenham being more focused on national cyber security.

The government funding for Lorca will also promote its role as a convening body for other accelerators and incubators as a “useful way of amplifying the UK’s overall cyber security offering, particularly overseas, said Hannigan.

Fifth of businesses would pay ransoms rather than in security

One fifth of UK business executives from non-IT functions would pay hackers’ ransom demands to cut costs rather than invest in information security.

One fifth of UK business executives from non-IT functions would pay hackers’ ransom demands to cut costs rather than invest in information security.

According to the latest report commissioned by NTT Security they say that businesses are still making the same mistakes, failing to make any progress in crucial areas such as cyber security awareness and preparedness

The report shows that a further 30% in the UK are not sure whether they would pay or not, suggesting that only about half are prepared to invest in security to proactively protect the business.

This means many businesses are still stuck in a reactive mindset when it comes to cyber security.

The findings are particularly concerning, the report said, given the growth in ransomware, as identified in NTT Security’s Global Threat Intelligence Report (GTIR), published in April. According to the GTIR, ransomware attacks surged by 350% in 2017, accounting for 29% of all attacks in Europre, the Middle East and Africa and 7% of malware attacks worldwide.

Levels of confidence about being vulnerable to attack also seem unrealistic, according to the report, with 41% of respondents in the UK claiming that their organisation has not been affected by a data breach.

More realistically, 10% of UK respondents expect to suffer a breach, but nearly one-third (31%) do not expect to suffer a breach at all.

More worrying, the report said, is the 22% of UK respondents who are not sure whether they have suffered a breach or not.

Given that just 4% of respondents in the UK see poor information security as the single greatest risk to their business, this is unsurprising, the report said. Only 14% regard Brexit as the single greatest business risk; the list of concerns was topped by competitors taking market share (24%) and budget cuts (18%).

When considering the impact of a breach, UK respondents are most concerned about what a data breach will do to their image, with almost three-quarters (73%) concerned about loss of customer confidence and damage to reputation (69%), which are the highest figures among the countries polled.

The estimated loss in terms of revenue is 9.72% (compared with 10.29% globally, up from 9.95% in 2017). .

The report found there is no clear consensus on who is responsible for day-to-day security, with 19% of UK respondents saying the CIO is responsible, compared with 21% who said the CEO, 18% the CISO and 17% the IT director.

A key area of concern, according to the report, is whether there are regular boardroom discussions about security, with 84% of UK respondents agreeing that preventing a security attack should be a regular item on the board’s agenda. Yet only about half (53%) admit that it is and a quarter do not know.

With a lack of cohesion at the top, organisations are still struggling to secure their most important digital assets, the report said.

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UK small business cyber security spend low despite breaches

The UK is the most breached country in Europe, but business’ IT cyber security spend remains low compared with other countries in the region, a report reveals

UK small business cyber security spend low despite breaches

More than a third of UK businesses reported cyber security attacks in the past year, which was higher than any other country in Europe, according to the European edition of the 2018 Thales data threat report.

However, despite a 24% increase in the number of attacks compared with the previous year, UK firms claimed to feel less vulnerable to data threats, compared with those across Germany, Sweden and the Netherlands, and consequently invested less in cyber security.

While more organisations across Sweden (78%) and the Netherlands (74%) admitted to being breached in the past, compared with just 67% of organisations in the UK, the report said it was a different story in the past 12 months.

Thales data shows that while 37% of businesses across the UK were breached, the figures were lower for Germany (33%), Sweden (30%) and the Netherlands (27%).

Despite the rise in attacks, just 31% of UK organisations said they feel “very” or “extremely” vulnerable to data threats, leaving the majority (69%) feeling “somewhat” or “not at all” vulnerable. Businesses across Sweden claimed to feel the most vulnerable (49%), followed by the Netherlands (47%) and Germany (36%).

Although 69% of UK organisations reported an overall increase in their IT security spending, with 15% saying it was much higher’ than the previous year, the report said the increase is still less than spend in Sweden, where 75% of businesses have upped their budgets to offset threats, and Germany where 76% have increased their IT security budgets.

While 72% of organisations polled have dedicated more money to IT security, UK businesses appeared to still fall short compared with their European counterparts, with 39% of Swedish respondents saying their budget was “much higher” than the previous year and an additional 36% claiming it was ‘somewhat higher’, and spending said to be “a lot more” by 29% of firms in the Netherlands and 24% in France.

The report also reveals that despite the two year bedding in period allowed for compliance with the EU’s General Data Protection Regulation (GDPR), 49% of companies in Sweden failed data security audits in the past year, followed by the Netherlands (38%), Germany (33%) and the UK (19%).

Aside from the UK, all other European countries showed decline in their efforts to meet compliance, which the report said was “worrying” in the light of the fact that there are so many changes to standards and regulations. Despite this drop, respondents across the board all cited compliance as being effective when it comes to preventing data breaches.

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Skills shortage a major cyber security risk for small businesses

Cyber security skill shortages remain a major risk to small businesses who are still struggling to defend against cyber breaches, an new survey shows.

Cyber security skill shortages remain a major risk to small businesses who are still struggling to defend against cyber breaches, an new survey shows.

The proportion of information security professionals who feel organisations are getting worse at defending against major cyber security breaches has leapt from 9% to 18% in the past three years, the survey by not-for-profit industry body, the Institute of Information Security Professionals (IISP) has revealled.

Security industry leaders are increasingly putting emphasis on cyber resilience based on good detection and response capabilities, rather than relying mainly on defence technologies and controls.

“These results reflect the difficulty in defending against increasingly sophisticated attacks and the realisation breaches are inevitable – it’s just a case of when and not if,” said Piers Wilson, director at the IISP.

“Security teams are now putting increasing focus on systems and processes to respond to problems when they arise, as well as learning from the experiences of others.”

When it comes to investment, the survey suggests that for many organisations, the threats are outstripping budgets in terms of growth. The number of businesses reporting increased budgets dropped from 70% to 64% and businesses with falling budgets increased from 7% up to 12%.

According to the IISP, economic pressures and uncertainty in the UK market are likely to be restraining factors on security budgets, while the demands of the General Data Protection Regulation (GDPR) and other regulations such as Payment Services Directive (PSD2) and Networks and Information Systems Directive (NISD) are undoubtedly putting more pressure on limited resources.

The survey report highlights the problem of skills shortages with the proportion of respondents reporting a dearth of skills as a challenge growing to 18%, up from just 8% in 2015.

While acting as a potential brake on capability, the skills shortage is also driving job prospects year-on-year, reflected in a growth of respondents in all the higher salary bands and in those reporting good job and career prospects.

“This year’s survey further highlights the continued need for industry, government, academia and professional bodies like the IISP to continue to work to resolve these shortages in skills across all levels and disciplines,” said Amanda Finch, general manager at the IISP.

“We have seen AI and machine learning used in defensive security systems for some time and this is now starting to become part of a wider automation approach,” said Wilson. “But like the IoT, AI can also be exploited by cyber criminals, so we need to have the people and technologies to respond and mitigate these emerging risks.”

The IISP represents more than 8,000 individuals across private and government sectors, 41 corporate member organisations and 22 academic partners.

As well as surveying its members, the IISP opened the survey up to non-member security professionals, representing a wide range of ages, experience and industry sectors.

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Data protection is critical for all small businesses

Small businesses that misuse data or fall victim to breaches not only risk financial loss, but also reputational damage.

Small businesses that misuse data or fall victim to breaches not only risk financial loss, but also reputational damage.

A study from Gigya showed that 69% of consumers have reservations about brands handling their personal information, while nearly half of UK firms were affected by a data breach in 2017.

By failing to implement sufficient mechanisms to protect customer data, companies not only risk incurring financial loss by having to pay hefty fines and mitigate damage caused by breaches, but they also risk reputational damage.
Facebook, for instance, has been criticised for taking a lacklustre approach to data privacy after it was discovered that that the social media site somehow let marketing firm Cambridge Analytica gain unauthorised access to an estimated 87 million user accounts.

With the compliance deadline for the EU’s General Data Protection Regulation (GDPR) on 25 May 2018, most firms should be considering what they can do to boost and improve their data protection procedures and prevent breaches.

Customer trust is paramount for small businesses

As the compliance deadline for the GDPR looms, firms have increasingly been exploring ways they can improve their security mechanisms. Businesses that fail to adhere to the law face having to pay up to €20m in fines.

Such a sum of money would be damaging for most firms, but reputational damage would be more catastrophic to companies. Consumers put their faith in firms that conduct good data practice.

Businesses must be more transparent at disclosing not only policies and terms and conditions, but exactly how the data will be used. They need to be more specific in terms of what data is being collected and detail the intended use. Many companies are asking customers for their permission to harvest data, but opt-in mechanisms are vague.

Consumers are becoming more aware about data privacy concerns, mainly because of news headlines. A key example is the Facebook and Cambridge Analytica debacle.

Data protection is a constant operation

Many businesses are failing to implement appropriate mechanisms to protect this information.

Personal data is considered to be one of the most sensitive categories of data an organisation has access to, and perhaps it is the most valuable. As the value of personal data increases, so should the controls needed to protect it.

Personal data should be processed only with clear consent given by the data owner, with a transparent agreement and an organisation-wide focus on preventing data theft or misuse.

To identify misuse, firms should constantly analyse their businesses procedures and operations to ensure they are compliant with the latest data protection safeguards. Firms should not assume that once they have installed or developed a system to protect customer data, they have nothing else to do.

With the GDPR compliance deadline looming, UK organisations should be in the final stages of educating their workforce and deploying the appropriate technology to manage the large swathes of information they hold.

As masses of devices continue to connect to the internet, it is clear companies will have access to an ever-growing amount of data. If they put the right data protection and management mechanisms in place, they can gain a lot of potential from customer information. But without sufficient safeguards, the risks will keep on growing and firms could find themselves in all sorts of trouble.

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