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Assessing Risk of Swine Flu (H1N1)

Largest webinar ever was today on the current pandemic (Swine or H1N1) flu.  I was surprised at how many organizations participated and we reviewed the different areas that business need to review when a flu like this threatens. 

Last year we created six different pandemic flu assessment questionnaires, differing on whether the business is tagged as a “critical industry”; whethere is is domestic, or has international offices; whether it’s a hospital or healthcare provider and also sliced and diced by the state of their pandemic and emergency plans such as continuity of operations planning.   Disaster planning is not really the same because in disaster planning, you assume the rest of the world is constant, instead of in the state of flux a real pandemic would produce.

In Maryland, there are six cases, and three of those in this county — they closed a school this morning.  So it is of concern to employees and the webinar centered on the different decisions business execs need to make about:

1) communicating with their employees and suppliers

2) making plans for auxcillary workforce members

3) doing advance planning and creating mechanisms for people to work from home, if necessary.

4) looking at last-minute cross training and making sure that everyone knows how to do almost everything.

The other aspect was understanding that this flu, at least initially, looks relatively mild, and as such, it makes a great case to run preparedness drill when people are watching the media coverage.  Also probably a good time to get budget approved for things like back up supplies, face masks (if execs are planning travel), or the business is very customer facing.

Reviewing training and trade show plans for the summer and fall would be a useful exercise.   And I think it is a service to employees to explain how to create a family pandemic stash of medicine, toilet paper, food, water and all the other necessities of life that would hold a family over for 3-6 weeks of isolation in the house.

These basic planning elements are all over the web and all over the news, but sometimes still hard to assimilate.  One of things we have developed is a spreadsheet of the planning elements, and I’d be happy to send it to you, if you send me a request to this blog.

Building a Model for Security Governance, Risk and Compliance

I recently began to think about how to integrate security seamlessly into an organization — without having security activities and processes pigeonholed into a stovepipe like physical security (the 3 Gs, guns, guards and dogs); or in the rarified atmosphere of the IT Department.

Other business processes are already thought of as an integral part of a business.  Think personnel, finance, shipping, sales.  All basic parts of any organization, including government agencies (which are another kind of business), have these different categories but security is never mentioned as one of these basics.

Of course, my readers know that none of the other pieces would get very far without good, or even great security.  You can’t run an organization without locks on the doors.  You can’t run a network with security controls or it would just collapse into a heaping pile of spam within a few hours and become totally useless.

So if we wanted to integrate security and use the risk assessment process to do it — what are the pieces we would integrate?   One night over dinner with other security people, we started to build a security model, which could then by assessed and each category would have steps which could be combined to create THE PERFECT INTEGRATED SECURITY GOVERNANCE MODEL!!

I am open to suggestions about other aspects but here’s the list of the ones we started off with:

1.  Access Controls

2.  Accountability

3.  Budget/Fiscal Responsibility

4.  Compliance

5.  Information Technology

6.  Investigations

7.  Measurement/Evaluation

8.  Personnel Management

9.  Policies & Procedures (Ps & Ps)

10. Risk Assessment & Management

11.  Security Planning

12.  Training and Awareness

In the model I’m proposing, each of these areas could by quantified into a 5-step program with zero meaning no progress in that area, and five meaning it has been integrated into the organization as a standardized, budgeted process.

Send me an email if you’d like to see a graphic of the model.  The point of a model is to get an idea of where you are on the pathway to integration of the security model into the business process.  For example, you could find out that you doing great on access control and technology, but not so good on accountability or awareness.  Then you could put more emphasis, or resources into those deficient areas.

If you’ve ever read this blog before, you know that my mantra is, “if you can’t measure it — you can’t manage it” (quote by the late, great Dr. Peter Drucker).

While listening to talk radio people discussing the problems of AIG, I heard another great line, “Companies that are ‘to big to fail’ … are probably ‘to big to manage’.   And that’s probably right, because those companies, with tentacles out into industries all over the world, are probably ALSO TOO BIG TO MEASURE!

So having metrics applies to all these corporate processes and managing security using metrics must be an idea whose idea has come.   Often the security departments in companies are isolated from the C-level and may not be included as often as other corporate or department managers are.    This is why the breakdown occurs that leads to weakness in compliance with regulations, which can destroy the entire organization, or, if you’re a bank, can lead at a CDO (Cease and Desist
Order).

Often these twelve critical security elements are absolutely essential to the running of the organization and that is why it is important to create a management model to measure how they are working in YOUR organization!

A New Model for Assessing Corporate Security

Corporate Security — that is, what the federal government calls “Physical Security” has long been treated as a uneducated stepchild by the information technologists.  The old perception that Corporate Security is just about guns, guards and dogs is just not true anymore.   Instead, physical security has taken full advantage of the computer revolution to create security controls that run on computer networks and do amazing things like creating electronic perimeters inside hospitals (for visitor management); ID visitors and track vehicles and biometrically identify individuals.

Corporate security directors I have known are invariably smart, savvy and computer literate.   Here’s a look at the difference between the OLD physical security operations and the NEW corporate security organizations.  The OLD PS operations usually operated out a guard shack or basement office and the main activity was badging in security guards and checking badges.  The NEW PS operations are run out of a high tech command and control center and the Security Directors often have authority for not only security but also Risk and often, information security.

These Security Directors are very conscious of how to improve their department’s performance and they are getting involved with benchmarking and automating many of their functions, including their security risk assessments.  Not like the old site surveys you see on TV, where the person is walking through the dark high rise in the middle of the light, flashlight flashing. 

We have been working on a model that could easily show the main areas of corporate security and a model a company could use to track exactly where they are in the process of creating an optimum security organization.  We call it the “Corporate Security Governance Model” and it tracks twelve elements of security through five levels:

        1.  Just Starting (Incomplete) - No Commitment of resources to perform and manage this function.  No corporate sponsorship or awareness of it’s importance to the organization.       

        2.  Performing – Rudimentary start to incorporate this element into the security program.  Function may have been done once, but there is no repeatability or management commitment.

        3.  The organization has assigned a manager to create a process for this security element.  Funding  is available and management has been briefed.

        4.   The element is recognized formally in the corporate policy and has been funded. Training has been introduced and metrics identified.

        5.   The element has become part of the company culture as policy and has training and funding which occur automatically.

There are a nine elements which are tracked across the five levels above.   We need to add three more — so please send me your comments on what those should be.

As of today, here are the different elements:

1.  Access Control
2.  Compliance (Regulatory)
3.  Information Technology
4.  Loss Prevention
5.  Materials Management (looking for a better phrase for this)
6.  Personnel
7.  Policies and Procedures
8.  Risk Assessment & Management
9.  Training and Awareness

Each of these elements will be explained with the actions to be performed, or improved, at least level and the idea will be that a corporate security organization will work toward getting all 5’s across the board.  

What elements are we missing?   Please post your comments or email me directly at:  chamilton@riskwatch.com and I will send you a copy of the model, which is a work in progress.

I think a model like this can be populated and automated so that an organization can get a fast 10 minute read that gives a snapshot of the security governance of the organization under review.

The next step is creating fixes for each of the steps so that it makes moving along the continum easier and faster.

Take a Valentine Risk Assessment

I think they should make people do a risk assessment on their proposal relationship and turn it into the city office when they go to get a marriage license — I thought it would be appropriate to introduce it on Valentine’s Day!

So to design our risk assessment, first we need to create a list of assets — joint assets.  How about the 2 houses, the 2 cars, the children from the former marriage, the inlaws — actually all the relatives on both sides, and pets (dogs, horses, etc.) any cash including stocks, bonds and salaries.  Probably also insurance policies, household goods, jewelry, musical instruments and collections.

Now we can model the potential losses we could suffer if the relationship fails:  Death or personal injury, divorce, alienation of affection, compromise and loss of assets.    Now we can add in the threats that could cause one of the projected losses to occur.  Threats could include things like:   children, relatives, job loss, illness, death, affairs, theft, business travel, alienation, depression, substance abuse. 

Next are the vulnerabilites in the relationship that could sabotage the whole thing — here are some of the questions we might make the prospective marital participants ask:

Do you work out of town more than 1 month a year?

Do you have more than four children?

Will one spouse be staying at home?

Do you have two incomes?

Does each partner have a healthy asset to debt ratio?

Do the partners have the same religion?

Do the partners have more than two common interests?

Are the partners equal in education?

Are the partners equal in life experience?

Is there a history of mental illness in your family?

Is there  family history of major medical problems, i.e.,
       diabetes, cancer, respiratory problems, cardiac issues, etc.

Do the partners have the same political parties?

Do the partners have a shared vision for the future?

So once the questions are all answered — and possibly weighted for importance — for example, I would put higher weight on questions about family medical history and financial health.  

We link the elements together according to a pre-set algorithm and then we give the couple risk rating:

80 – 100% – chance for a healthy relationship

50 – 79%    – possibility of healthy relationship if vulnerabilities are fixed

30- 49%      – possibility of healthy relationship is doubtful

1 – 29%        - healthy relationship unlikely to be successful.

The answer would also indicate outstanding vulnerabilities (think of a
vulnerability as a window of opportunity for a threat to materialize),
for example, health, financial assets, illness, mental illness, alcohol abuse, drug abuse, obsessive compulsive disorder, responsibility, accountability, policies, romance, weight control etc.

Based on the outcome of the assessments — say the score comes in at
70%, then counteracting controls are recommended such as:

Start Exercise Program
See psychologist for extensive analysis
Schedule a date night once a week
Hire a financial counselor
Take yoga classes
Reduce stress
Quit your second job
Take a real vacation once a year

I think that using quantitative tools at the beginning of a marriage or serious relationship might be a great idea!  The city could charge another $20 for rating the assessment so it would not only save relationships but serve as a revenue generator for city and county government!

That’s your risk assessment for Valentine’s Day.  Please let me know if you’d like to fill out one of my prototype questionnaires, or maybe contribute to the model.   Enjoy the day!

Accountability and the Link to Senior Management Salaries – Can it be measured or assessed?

The recent Stimulus Bill passed in February 2009 called bank presidents up to Capital Hill to report how much they made and whether they took bonuses or not.  Most reported they made one million dollars a year and took no bonuses.   Of course, we might suspect that this was slight underreporting.

Is there a link we can assess between performance and compensation?  In a factory, where people are paid by piece work, that is, ten cents for each piece sewn, there is a direct correlation and you could probably provide other examples of direct pay for direct work.

Another place to look is sales compensation.  Again, salespeople are incentivized by commissions so there is the correlation — work harder, get paid more.  

But the farther you go up management food chain, the harder it is to see the relationship between production and/or success of the enterprise and the salary of senior management. 

A recent study by the Health Services Research found that doctors who were paid more for higher quality care did improve their performance. It examined whether patients seeing physicians participating in a “pay-for-performance” incentive program receive better care than those who saw non-participating physicians. The health plan that was examined reimburses physicians based on the quality of care they provide. 

What about in other industries?  In another study, they analyzed the 100 largest technology companies finds that those with the highest-paid CEOs in 2005 had the worst returns.    DolmatConnell & Partners, an executive compensation consulting firm based in Waltham, Mass., found there was an inverse correlation between tech CEO pay and shareholder returns over a one-year period.    Companies analyzed in the study included Cisco Systems, Dell, EMC, Google, Hewlett-Packard, IBM,  and Oracle, as well as telecommunications providers, technology services companies and products distributors.

Perhaps the answer lies in the amount of PERSONAL ACCOUNTABILITY the senior managers have in the success of the organization.  If high paid managers are isolated and insulated from the operations of the company, they may not be in a position to directly affect its success, whether you define success as higher stock price, profitability, improved EBITA or some less quantitative standard, such as, are the employees happier?

Organizations where management stays involved with the day to day operations and can use their influence and wisdom to influence the progress, might be able to make a bigger impact on success of the organization.

Credit Unions and NCUA regulators

According to several companies that track such things — the number one thing that NCUA regulators are asking credit unions for this year is a copy of their risk assessment.

With fifty-five new regulators planned for 2009, the NCUA also announced it’s plan to move to a twelve-month examination cycle.  This is in contrast to the previous 18-24 month examination cycle, and has prompted a written complaint by the Credit Union National Association (CUNA) which objects to adding new regulators, as well as objecting to the new examination cycle.

In fact, CUNA wrote, “We find this draconian and believe there is a more cooperative way in which NCUA and the state regulators can discuss this issue …”.   It may turn out to be more prudent than draconian, because these risk areas, which should be detailed in the risk assessment, are areas that many credit unions have ignored, or have managed to ‘get by’ with a homemade spreadsheet, which does little to identify or quantify risk.

In a risk adverse environment with regulator issues on television every day, CUNA did state that  “given the economic crisis and the need for NCUA to be able to continue reporting to Congress that it is handling problems well, CUNA is not opposing this change [the 12-month cycle]“, and continued, “Even so, we strongly support a reasonable phase-in period that focuses on problems and risk first.”

Looking at this, it seems that part of the problem is a disconnect between the financial regulators and the credit union senior management.  Management and the Board looks at these requirements as annoyances that have to be completed and keep them from more important work — like getting new members or new loans, instead of looking at the risk assessment as a support to their business process.

When viewed as an integral part of a business process, it is clear that the risk assessment supports management by providing a quantitative view of the entire IT program, or the entire operational processes of the credit union.   It supports management decisions directly by providing real justification for the controls that management and the Board need to implement; and by giving the NCUA regulators visibility into those decision processes.

It shows the logic of the decision process, i.e., why management decided to use biometrics on their laptops; or why they need to shift some of the security controls to their outsourced vendors and making the vendors more directly responsible for security.   This allows the regulators to give better advice, and support to the credit union, because there is a rational process that can be discussed and examined, to the overall benefit of improved operations for the credit union.

The intent of increased regulation is not always to aggrevate or criticize the credit union management, but can be positive force which allows the credit union to advance, gain new members and be more profitable.

TARP Risk

What is the risk associated with taking TARP money from the federal government?   If the government is going to create difficult milestones and lots of requirements — like limiting of CEO salaries and banning bonuses — it might not be the bonanza everyone seems to think.

We recently were contacted by a company that is turning into a bank just to get their share of the TARP and Stimulus dollars.  Of course, they may not understand the downside of being a bank which would include heavy regulatory compliance AND the ‘mark to market’ problems.

Thinking about a risk assessment for the TARP took another direction — what kind of formal risk process could be used by feds to judge whether a particular bank or company was TARP-worthy.   After you throw out all the joke lines — e.g., do they own corporate Gulfsteam jets?, then what would you look for?   Here’s a list of possible factors:

Value of company to overall economy
Ratio of bonuses to overall revenue
Ratio of CEO pay compared to overall revenue
Number of ‘retreats’ taken annually
Growth potential
Analysis of potentially impacting threats

These would be all mapped against the perceived value of the company in terms of dependencies, i.e., is the company the sole industry in its community or region?  

Is the company a critical element in the military industrial complex — does it have Defense implications?

Does it represent an underrepresented or endangered industry?

Past record for regulatory compliance.  It might be interesting to see how compliant the company was with previous regulations, as an indicator as to whether they would comply with all TARP/Stimulus bill requirements.

Obviously there might be a subjective edge to these ratings and the Government Accountability Office (GAO) would have to be the agency to administer these risk assessments.

Probably the hardest part would be ensuring that the recommendations made by GAO would be honored by the legislators.   But I like the risk model applied to the TARP.

Risks that Derail

I have been neglecting my blog, but I have a very good excuse.  I have just survived one of the worst experiences someone can have — watching a dear sister die unexpectedly from a brain tumor. 

It brings up lots of issues — one is, “Gee, maybe all that about cell phones and brain tumors is really true!”.   Another relation has two small children and they BOTH have had a brain tumor, and they under five years old.   If I lived in their neighborhood, I would check the water supply first.

My sister Linda was my baby sister, two years younger than me.  We were as close as twins and even had our own language.  I spent two weeks up at Lake Tahoe with her this summer.   Ten days after that she attended a wedding in Minneapolis and collapsed at the wedding.  Of course, she was perfectly healthy, married to a doctor, swam two miles a day in the lake, only ate healthy food, flossed constantly — you get the idea.  

After her collapse, it was four months until she died in a coma.  The decline was fierce and frightening.  And it took my nuclear family which was five people only a few years ago, down to two left — just me and my younger brother.  Nothing like getting shoved in front of the generational train.

So I did my risk assessment four months ago and decided that I should spend as much time with my sister as possible, so I have been flying back and forth from Annapolis to Davis, California (in the vast Central Valley), since the 8th of September.     And now I’m back.

It did give me a new appreciation of the problems of carrying medical records around and having them available for the next healthcare provider.  Just one rotate-able brain scan takes up almost two CDs — files too big to email, almost too big to fit in my oversized purse.

Having done everything I could, but left with the inevitable result, I am back to thinking about risk and consequences.  And thinking about loss, and how to avoid it in the future.

And how to encourage others to avoid it, too.   Loss Prevention through Risk Assessment — that’s going to be my mantra in 2009.  That and remembering my wonderful sister, Linda Lee .

I hope you will take the journey with me.

 

                                                   — Caroline Hamilton

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JACADIS Thought

What you can’t see or don’t know will hurt you.

 

 

http://thought.jacadis.com/

Hurricanes and Risk – Unexpected Consequences

Murphy’s Law states that anything that can go wrong — will go wrong.  Natural disasters like earthquakes, power outages and hurricanes always seem to prove that this old axiom is still true.

Many people are allergic to change and when their environment starts to change drastically, as it will in a natural disaster — say a hurricane. And when the environment and familiar patterns start to break down, people get anxious, anxiousness turns into nervousness and in a state of anxiety, bad decisions are made.

The continual push to have emergency responders train, train and train some more, the importance of doing drills and testing emergency plans reflects the importance of people feeling COMFORTABLE and FAMILIAR with the disaster operations and steps toward recovery.   Almost every requirement, whether it is for a physical security standard like FEMA 426 (How to Protect Buildings from Terrorist Attacks), to a bank standard like the FFIEC (Federal Financial Institutions Examination Council) the requirements requires disaster plan testing, and training for the personnel who will be affected by the disaster. The better and more frequent the testing and training, the better the plan will perform during an actual disaster.

Stories keep making the rounds about the South Street Seaport outage in lower Manhattan, and the emergency vehicles who raced to the scene and found there was no electricity to plug into. 

If we put aside the original disaster, then you will often find peripheral activities that are thrown off and do not behave as planned.  When I first moved to the DC area, we had a major power outage in the high rise office I off the beltway.  No problem — the building manager had a diesel generator up on the roof.  But he had stored the diesel fuel in the basement, and it was about 88 degrees that day.  He managed to carry the fuel up the 16 flights of stairs to the waiting emergency generator, but he was hot and tired and when he poured the diesel, he slopped it over the side and it spilled down the outside the building and then soaked into the walls, and we had diesel leaking out of the electrical outlets!   If you ever drive by the “Darth Vadar” building right at Route 50 and the Beltway — you can still see the stain on the building.

So when hurricanes are heading west, north and east, all at the same time, it’s a good idea to encourage your associates to breathe deeply, calm down, and take extra time to make sure that things get done correctly. 

One of my friends is leaving Brownsville to get away from Hurricane Ike as I am writing this.  And I had Hurricane Hanna visiting Annapolis less than a week ago.

Stay safe.

School Security Assessments & Children

My children are out of schools now, but I am always shocked at what I see on CNN’s Nancy Grace Show — all the terrible people who are snatching little girls on their way home from school.  And what about the janitorial staff in some schools who don’t take time for the routine background check and find later that these men just rotate through the different schools looking for young victims.

I have been discussing this with some of my ASIS friends who do these types of assessment and they agree that  sometimes it seems like the school management is not interested in a REAL security assessment, but instead just wants to punch the ticket so they can say it’s been done. 

Conversely, they also find organizations who want to justify an expensive camera system, but totally ignore the basics….One of my friends wrote to me and said, “I have  yet to see a school that has not spent a few thousand on detection systems to  protect a few thousand dollars of computers but nothing on educating the staff  and students on how to respond to critical events in conjunction with the  first responders”.  

He continued…. “ 99% of all of the school vulnerability assessments I have performed shows
is this:  CCTV and Access Control systems are truly useful tools,  but they follow the principle of responding after the horse has left the barn, when they should be putting time and smaller amounts of money into such  things as fencing and meaningful emergency exercises to prevent and mitigate  the threats.  Dependence upon electronics is lulling the schools into a  false sense of security – the real assets aren’t the computers – the real  assets are the kids and staff.  An effective true vulnerability risk assessment would show the way to making more informed decisions”.

The same thing happens to organizations who want to spend money on fancy, shiny, IT stuff, instead of doing boring things like:

1.  Making sure the staff gets enough training.
2.  Making sure that security plans are updated annually.
3.  Updating the background checks.

Controls that cost less than $1000 are usually ignored for big purchases like digital color camera systems.  We had one incident I remember where the organization had already paid for and installed the fancy camera system, but no one was available to do the monitoring!

Training in how to use new systems is also another area that often gets neglected and it is probably the SINGLE, MOST IMPORTANT PART of any new system.   More than one organization didn’t keep using the new visitor management system because the staff never took the training and didn’t understand how to use it.  Without that training, you might as well save your money.

And while we’re on schools – I actually got a letter from a big inner-city school district, and it was on letterhead and it said, “We regret that we cannot do a security risk assessment but we feel that if we identified particular risks, we might be liable if we did not fix them in a timely manner.”

YES – if you identify a terrible security problem and don’t fix it – you could be held responsible – but what if you have three teachers killed, or three students – Security shouldn’t just be about liability.  It should actually FIX something.

One of the more successful schools assessment projects I have seen lately is down in Florida, where one of the schools is involving parents, as well as staff, in the school security program.  There are online security guides that parents have to view, and they actually track it to make sure the parents are taking the online security training.  

I got re-interested in the schools when I saw an HBO documentary on a Baltimore school that was having problems complying with the No Child Left Behind legislation, it’s called “Hard Times at  Douglass High”. It outlined many of the problems that large city schools have to face, and although the documentary didn’t focus on security, security is always an issue.

Again, it’s the risk assessment that can give a school, whether it’s a public school, private school, magnet school or charter school a good overview of the security controls they have in place and what they need to do to improve.   By setting up a program that REGULARLY assesses the school’s security profile, and does a cost benefit analysis on potential controls, the school will go a long way in protecting the interests of the students, the staff and the parents.

The Latest Risk – Data Center Theft

In November of 2007, a co-location data center with state-of-the-art technological controls in place on all of its equipment was broken into for the fourth time. The burglars simply took a masonry saw and cut out a section of the concrete wall. According to a letter from officials — the night manager was repeatedly tazered and struck with a blunt instrument. After violently attacking the manager, the intruders stole equipment belonging to the data center and its customers and at least 20 data servers were stolen.

So does this mean that we have crossed the threshold where the information is more important than the equipment on which it resides? Even more amazing is that this particular co-location center has experienced more than FOUR break-ins! That’s certainly some kind of record.

My theory is that whenever the economy takes a downturn, robbery, burglary and other petty crimes start going up. White collar crime also starts to increase as employees start feeling that their job may not be secure as they thought – and start helping themselves to whatever the company has given them access to, maybe paperclips, maybe something more interesting.

There’s so much talk about “convergence”, the fusion of physical and information security. I think it is still typical in most companies to handle these two types of security completely separately and when the crime rate is increasing, that’s when you have to make sure that the correct physical controls are in place. In the same vein, the background checks on key personnel should be done more often and certainly should be done for all new employees.

A time-honored mantra for security people has always been “the insider threat is always worse than the outsider threat”. You can see the logic in this immediately, because the trusted insider has access to lots of information and with the use of a thumb drive or memory stick, its easy to get information out of a facility. Many organization ban thumb drives for this reason, but they are also not searching the purses, gym bags and other paraphernalia an employee may bring to work.

Data breaches disclosed by Hannaford Bros Supermarket Chain, GE Money, and Georgetown University are just some of the 167 breaches reported during the first quarter of 2008, up 1/3 over the previous quarter, according to the non-profit Identity Theft Resource Center (ITRC). This is more double the first quarter of 2007 (which was 76 breaches). It is an easy theft with a big upside and you can just sell the information to a sort of electronic fence so you don’t have to do much yourself.

Many of the investigations I have been involved with have uncovered employees doing another kind of theft – capacity theft. They are running their own businesses on the organizations boxes, basically stealing capacity and storage, plus the loss of their time and energy while they are engaging in these practices. This can extend from running sex rings which we have seen in state government data centers as well as a recent incident with Congress, to taking the client lists and selling them to spammers.

So with the external environment making lots of people think they could use a few extra bucks, it is probably a good time for improving access control systems, doing background checks on a more frequent basis, and generally improving the facilities security of your data center. Of course, it goes without saying that you should be doing your risk assessments on a more frequent basis.

Besides doing the security checks, a side benefit is that if you publicize the fact that you are doing an assessment, employees will back off their extracurricular activities on your systems. Once again — the risk assessment is a win-win.

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Assessing PCI Compliance — World’s Biggest Standard

Everyone has a credit card these days.  Ever take it out and take a good look at that little magnetic strip on the back of a credit card?  It’s only about 2 1/2 inches long and quite thin.  That little strip contains all the personal information about you — your name, address, password, mother’s maiden name, perhaps your social security number and your financial account number and even more information about your account.

Who wrote the program that ended up on that magnetic strip? Are there copies of that magnetic strip information stored somewhere?  And this is only ONE card; you probably have a wallet full of them.

These payment cards (PC= Payment Card Industry) are the biggest deal in information security these days because of a new standard call the PCI-DSS standard (Payment Card Industry- Data Security Standard).  The PCI Security Standards Council, which created the standard, was founded by American Express, Discover Financial Services, JCB International, MasterCard Worldwide, and Visa Inc.

Credit card companies want you to charge it and they know that concerns about identity theft might possibly slow down your card use — so it is in their best interests to make sure that a solid security standard is in place to protect you.  The standard has turned into a requirement for everyone who takes a credit card and that turns out to be literally millions of grocers, retailers, online retail outlets, government agencies, convenience stores, utilities — almost everyone.  So the PCI-DSS standard may be the most widely applied information (data) security standard in the world.

With such a widespread and critical standard, there is confusion about how to meet the standard because just doing a self-assessment isn’t enough — you are also required to do penetration tests on your systems that handle and transmit this electronic customer information and ATTEST that you use the standard in your information systems.  

This includes having strong firewalls that protect cardholder data and making sure to remove
the generic vendor-supplied passwords; using good storage devices for sensitive customer information and encrypting data that flows over your network.  In addition, the card manager has to use anti-virus software, and also build secure systems.  Once proper controls are in place, these controls need to be monitored and tested. 

Doing a full compliance and vulnerability assessment annually is the best way to make sure that you can prove you have done all the specific activities required in the PCI-DSS standard.  The assessment actually breaks the entire standard down into smaller, manageable chunks and then each one is monitored, or validated, with an audit trail, so that is easy to prove that you have evaluated your organization’s compliance with the PCI-DSS standard.

The PCI-DSS standard is actually mild, as information security standards go, and not as far-reaching or intrusive as, for example, the HIPAA standard (Healthcare Insurance Portability and Accountability Act) which has completely revised the way healthcare organizations do business.  Nor is it as complicated as the BSA (Bank Secrecy Act) or the International Standards Organization’s 27001 standard (ISO 27001 and 27002).  

After the infamous TJMAXX identify theft incident — consumers should welcome the PCI standard and retailers and others affected by it should be grateful that is just another way of encouraging good information security practices.

Regularly Monitor and Test Networks

Requirement 10: Track and monitor all access to network resources and cardholder data
Requirement 11: Regularly test security systems and processes

Maintain an Information Security Policy

Requirement 12: Maintain a policy that addresses information security

Fear of Risk Assessment!

Why are people INTIMIDATED by risk assessments?  Is it because they seem overwhelming with their arrays of lists and categories? (At last count – I categorized over 1.572 million combinations of the 44 asset categories, 58 threat categories, 55 vulnerability categories, 7 loss categories and 160 control categories)!

Part of the trepidation of manager tasked with a risk assessment seems to be that they are anxious about making key assumptions and assigning importance to different areas of the business or agency.  Of course, part of this is political – the risk analyst has the power to build up the importance of one part of an organization and reduce the stature of another – or EVEN AFFECT THEIR BUDGETS!! 

In practice however, it seems like the exercise of doing a risk assessment affords a level of protection which is related to how many other people actually contribute to the risk assessment results.   Using the compliance survey as a participatory measure takes the onus of absolute responsibility away from the manager and distributes it throughout the organization where it belongs.

Besides – how can one person know enough to do the entire risk assessment by their self?  They would have to be everywhere at once – in the morning, late at night, on the weekends, and also be able to channel the work of everyone from the newest tech support person to the director of the data center.   And the inclusion of a variety of individuals adds weight and power to the risk assessment.

While the analysts may be accountable for the report of potential risk, the responsibility for any action that needs to be taken is up at the C level, or with the Board.  In fact, in the FFIEC IT Handbook, they spell out, “The Board is responsible for holding senior management accountable”.  Often we have found that the actual President of a bank or credit union doesn’t always KNOW that he is going to be held responsible – this information is down another level in the organization.

The analyst should not be afraid of making assumptions in the risk assessment; auditors make assumptions all the time.  One could say that the world runs on assumptions.   So making an assumption about how long it would take to replace the personnel or web applications of a specific part of the organization is not too difficult.   Always remember that each component of the risk assessment can be vetted before with relevant management so that senior management does take the responsibility for validating the choices the analyst makes.

Personally, I advocate getting management to sign off, in writing, on the assumptions they accept, in the course of completing the risk assessment – and of course, on the final reports. There’s nothing like a signature on  piece of paper to foster a climate of accountability.

 Caroline R. Hamilton is the Founder of RiskWatch, Inc., the original top-rated risk assessment software.  Hamilton served on the NIST Model-Builder’s Workshop on Risk Management from 1988-1995 and on the National Security Agency’s Network Rating Workshop.  In addition, she was a member of the U.S. Department of Defense’s Defensive Information Warfare Risk Management Model and has worked on a variety of risk assessment and risk management groups, including the ASIS Information Technology Security Council and the IBM Data Governance Council, created by Steven Adler.  Hamilton also received the Maritime Security Council’s Distinguished Service Award and has written for a variety of books and magazines including the CSI Alert, the Computer Security Journal, the ISSA Newsletter, The HIPAA Compliance Handbook, Defense News, Security & Design, Cargo Security and many other publications.  Based in Annapolis, Maryland, Hamilton is a graduate of the University of California.

Threat Assessments & the Maryland Storms

June 4, 2008, Annapolis, Maryland

Threat Assessments are one of the key areas of a security risk assessment.  Whether it’s information technology or physical security — having good threat information is a major component of any risk assessment.

Threat data is also very difficult to get and to keep updated.  Part of the problem is that if you look at ‘current’ threat data — you will find that this year, for example, we have had an unusual amount of rain and an unusually high number of storms and ‘conditions that are favorable for tornado (tornadic  sp?) activity in Maryland.

Take yesterday for example.  I had to take one of my beagles to the vet.  As I got into my car, my son called to say there was a very severe storm with a possible tornado heading toward us.   (He is in Virginia so he gets the storms first).  I actually saw the storm in my rear view mirror as I headed across the 4 mile Bay Bridge and rode out the storm in the vet’s office.  All my power was out when I finally got home and hundreds of trees were down.  There was so much flooding that I had to take off my shoes and pull up my dress to get to my car in the parking lot of the vet’s office.

So with these storms, tornados, rain and flooding, should I increase my threat of storms, flooding and water damage?  NO.  In this case, as in others (like hurricanes), as a risk analyst, you are looking at long term trends.  Remember 2005?  It was the busiest hurricane season on record,  with 27 named storms and 11 federal disaster declarations and the unforgettable trio – Katrina, Wilma and Rita?  Everyone thought this was the signal of a new problem with hurricanes, but 2006 was quiet.  In fact,  no hurricanes made landfall in the U.S. in 2006; and in 2007 there was only 15 named storms.

What insurance companies have known for years is that these things occur in cycles, and if you change your disaster plans to focus on hurricanes, next year you may instead get wind, or wildfires.  So the smart risk assessor will look at 20 or even 50 year cycles, and will normalize those cycles into an annual number and that annual number will be a better predictor of what actually happens year by year.

For a risk assessment, I always look at what is called an “All-Hazards” threat approach.  Even for an IT risk assessment, you need to look at the statistics for natural disasters, and related crime stats, as well as IT threats such as disclosure, viruses, malware, phishing, etc.  The impact of a hurricane or flood on a data center is just as damaging, if not more damaging, than a virus brought in by an employee.

There are several threat sources you can refer to, if you are attempting to create your own threat matrix for a risk assessment.  In the U.S., the National Weather Service (www.noaa.gov), has good threat data for natural phenomena, and the FBI publishes good crime data — the uniform crime reports (http://www.fbi.gov/ucr/ucr.htm).  For looking at IT threat data, there is a wide variety of sources including the CERT at Carnegie Mellon (www.cert.org).

Of course, the best, and most localized is either from your internal data, or from industry data.  This includes incident response tracking, incident reports, penetration and scanning test results which can be combined to give a good overall threat profile for your organization to in the risk assessment.  The threat assessment probabilities are going to contribute to the risk calculation by seeing what level of protection different assets need according the threats that can impact them. 

Caroline R. Hamilton is the Founder of RiskWatch, Inc., the original top-rated risk assessment software.  Hamilton served on the NIST Model-Builder’s Workshop on Risk Management from 1988-1995 and on the National Security Agency’s Network Rating Workshop.  In addition, she was a member of the U.S. Department of Defense’s Defensive Information Warfare Risk Management Model and has worked on a variety of risk assessment and risk management groups, including the ASIS Information Technology Security Council and the IBM Data Governance Council, created by Steven Adler.  Hamilton also received the Maritime Security Council’s Distinguished Service Award and has written for a variety of books and magazines including the CSI Alert, the Computer Security Journal, the ISSA Newsletter, The HIPAA Compliance Handbook, Defense News, Security & Design, Cargo Security and many other publications.  Based in Annapolis, Maryland, Hamilton is a graduate of the University of California.

Return On Investment (ROI) Risk Assessment Relationship

The relationship between the Risk Assessment and the Return On Investment for good security is very important to management because it creates a business case for further investment and “appropriate investment” in the IT security program.  Return On Investment is that ratio that tells you if you invest so much, you’ll get so much back in return. 

IT security directors should also be interested in Return On Investment because it has the side benefit of cost justifying the security budget and making sure you get the controls you need to support your infrastructure.

Cost justification based on the results of the risk assessment is a requirement for financial institutions and the healthcare industry — especially with the FFIEC and the DHS’ HIPAA requirement.   For example, for banks, the FFIEC Examiner’s Handbook for IT Security says, “A risk assessment provides a foundation for the remainder of the security process by guiding the selection and implementation of security controls and the timing and nature of testing those controls.”  

The selection of the appropriate security controls for an organization is based on several factors:

1.  The percent of the control that is currently in place.

2.  The cost of increasing the implementation of the control to 100%.

3.  The cost of maintaining and auditing the control over time.

Again, the idea of the Return on Investment is that the most needed controls are funded by the organization first, so that money is not applied to less critical areas, leaving the very sensitive areas, like protection of customer information, exposed.  The main components of calculating a Return On Investment are the value of the assets, and that includes not only the replacement value, but also the sensitivity and confidentiality of the information — especially the potential loss to the asset of an incident.  For example, the reputation cost of a high profile identity theft could be devastating to a bank or credit union.

To estimate asset value, the confidentiality, integrity and availability (CIA) are values that have to be included in the risk assessment because these can all cause a devastating loss to a organization.   Adding identify theft to the already long list of other threats (which also have to be factored into the ROI equation), has been addressed by the FDIC and NCUA with the new Red Flag (FACT) CFR (Federal Registry).  

Take a look at the controls your organization is planning to add to your IT infrastructure and see if they pass the ROI test. 

 

Caroline R. Hamilton is the Founder of RiskWatch, Inc., the original top-rated risk assessment software.  Hamilton served on the NIST Model-Builder’s Workshop on Risk Management from 1988-1995 and on the National Security Agency’s Network Rating Workshop.  In addition, she was a member of the U.S. Department of Defense’s Defensive Information Warfare Risk Management Model and has worked on a variety of risk assessment and risk management groups, including the ASIS Information Technology Security Council and the IBM Data Governance Council, created by Steven Adler.  Hamilton also received the Maritime Security Council’s Distinguished Service Award and has written for a variety of books and magazines including the CSI Alert, the Computer Security Journal, the ISSA Newsletter, The HIPAA Compliance Handbook, Defense News, Security & Design, Cargo Security and many other publications.  Based in Annapolis, Maryland, Hamilton is a graduate of the University of California.

Climate Change & Compliance

It’s a risky world now.  Mostly fueled by twenty-four hour media transmission so that Annapolis was on CNN a few weeks ago, when a dead construction worker dangled on a crane for over an hour.  And since then — we have watched the earthquake in China, the cyclone in Myanmar, the crane collapse in NYC, and much more. 

That being said — IT management worries less about natural disasters and more about their web site being hacked, phishing attacks, associates bringing viruses in from their home offices, and the regulators visiting them.   Regulators are often more feared than a cyclone or a tornado, because of the expense and havoc they can trigger.    As we continue to work with regulators in both finance and healthcare, you can understand why they continue to stress the risk assessment as the foundation of the IT security programs.

The risk assessment by itself does not magical and instant protection against security intrusions, but it does something more important — it provides a metric to measure against.  You can call it the cornerstone of a security program because it measures against an existing standard and see how your IT infrastructure stacks up.   Although different standards exist, such as FFIEC, SB 1386, FACT, GLBA, BSA, ISO 27001, HIPAA, PCI and many more — they have common components that look at how employees do their jobs, and how they use the security controls they have available to them.

I met Peter Drucker at Claremont University when he was about 88 years old (he died in 2005 at the age of 96), and he was the “father of modern management”.   He told me that security assessment should be integrated into the fabric of management because managers need numbers — and “if you can’t measure it, you can’t manage it”.  So that’s what the risk assessment provides — it provides a metric so the organization can start to measure its performance in these key areas. 

It’s just a plus that the risk assessments incorporate compliance assessments by using the measurement against a standard as the basis for the assessment.  This shows you where you are today, where you are going, and (sometimes) how fast, and how expensive it is going to be to get there.  

 

Caroline R. Hamilton is the Founder of RiskWatch, Inc., the original top-rated risk assessment software.  Hamilton served on the NIST Model-Builder’s Workshop on Risk Management from 1988-1995 and on the National Security Agency’s Network Rating Workshop.  In addition, she was a member of the U.S. Department of Defense’s Defensive Information Warfare Risk Management Model and has worked on a variety of risk assessment and risk management groups, including the ASIS Information Technology Security Council and the IBM Data Governance Council, created by Steven Adler.  Hamilton also received the Maritime Security Council’s Distinguished Service Award and has written for a variety of books and magazines including the CSI Alert, the Computer Security Journal, the ISSA Newsletter, The HIPAA Compliance Handbook, Defense News, Security & Design, Cargo Security and many other publications.  Based in Annapolis, Maryland, Hamilton is a graduate of the University of California.

Finishing my Pandemic Flu Preparations

I have heard so much about Pandemic Flu so I decided to set up my own pandemic flu plan for my home.  I have everything I need — including food, medicine, dog food, trash bags, extra water.  My sister-in-law just moved to southern California and her friends told her to get ready for the next earthquake — and she followed my pandemic flu personal checklist.  Now’s she’s also ready for anything.  The nice thing about being prepared for one potential disaster means you can be ready for all of them — earthquakes, power outages, hurricanes, OR pandemic flu.  We are now including the pandemic flu planning assessments in all our RiskWatch products.   But let me know if you’d like to review one of my checklists for your personal continuity plans.

 

Caroline R. Hamilton is the Founder of RiskWatch, Inc., the original top-rated risk assessment software.  Hamilton served on the NIST Model-Builder’s Workshop on Risk Management from 1988-1995 and on the National Security Agency’s Network Rating Workshop.  In addition, she was a member of the U.S. Department of Defense’s Defensive Information Warfare Risk Management Model and has worked on a variety of risk assessment and risk management groups, including the ASIS Information Technology Security Council and the IBM Data Governance Council, created by Steven Adler.  Hamilton also received the Maritime Security Council’s Distinguished Service Award and has written for a variety of books and magazines including the CSI Alert, the Computer Security Journal, the ISSA Newsletter, The HIPAA Compliance Handbook, Defense News, Security & Design, Cargo Security and many other publications.  Based in Annapolis, Maryland, Hamilton is a graduate of the University of California.

RiskWatch, Inc.

How We Assess Risk & Compliance

Most institutions are now required to conduct formal risk assessments of their IT and online security systems to ensure compliance with regulations such as: FFIEC, NERC, GLBA, BSA, NCUA, ISO 17799, ISO 27001 and many others. RiskWatch software allows the user to evaluate their risks and produces reports and graphs specifically detailing compliance within these regulations, or showing where controls are needed.

Assessment of organizations’ compliance with these risk requirements can be met in up to 80% less time with the use of RiskWatch software and online services:
• An evaluation of threats vs. vulnerabilities for the client
• Simplified data collection with easy-to-use, web-based compliance surveys
• In-depth, graphic reports that detail the recommended controls to mitigate risk including both Return on Investment and Loss Impact Analysis.

Have YOU Completed YOUR Risk Assessment?