Lecture 8: Risk Management Controlling Risk INFORMATION SECURITY MANAGEMENT Lecture 8: Risk Management Controlling Risk You got to be careful if you don’t know where you’re going, because you might not get there. – Yogi Berra

Introduction To keep up with the competition, organizations must design and create a safe environment in which business processes and procedures can function

Risk Control Strategies Choose one of four basic strategies: Avoidance Transference Mitigation Acceptance

Avoidance The risk control strategy that attempts to prevent the exploitation of the vulnerability Examples

Transference The control approach that attempts to shift the risk to other assets, other processes, or other organizations Examples

Mitigation The control approach that attempts to reduce the damage caused by exploitation of vulnerability Types of Mitigation Plans

Acceptance Do nothing to protect an information asset To accept the loss when it occurs This control, or lack of control, assumes that it may be a prudent business decision to examine the alternatives and conclude that the cost of protecting an asset does not justify the security expenditure

Managing Risk Risk appetite (also known as risk tolerance)

Managing Risk – Residual Risk Residual Risk is a combined function of: Threats, vulnerabilities and assets, less the effects of the safeguards in place

Managing Risk – Residual Risk Once a control strategy has been selected and implemented: The effectiveness of controls should be monitored and measured on an ongoing basis (remember our discussion on metrics and baselining) determines effectiveness and accuracy of the residual risk estimate

Managing Risk – Risk Control Risk control involves selecting one of the four risk control strategies Should the organization ever accept the risk?

Risk Acceptance Figure 9-2 Risk-handling action points Source: Course Technology/Cengage Learning

Feasibility and Cost-Benefit Analysis There are a number of ways to determine the advantage or disadvantage of a specific control The primary means are based on the value of the information assets that it is designed to protect Economic feasibility Evaluating the worth of the information assets to be protected and the loss in value if those information assets are compromised

Cost-Benefit Analysis: Cost Factors that affect the cost of a safeguard Cost of development or acquisition of hardware, software, and services Training fees Cost of implementation Service and maintenance costs

Cost-Benefit Analysis: Benefit The value to the organization of using controls to prevent losses associated with a specific vulnerability

Cost-Benefit Analysis: Asset Valuation The process of assigning financial value or worth to each information asset Involves estimation of real and perceived costs associated with the design, development, installation, maintenance, protection, recovery, and defense against loss and litigation

Cost-Benefit Analysis: Asset Valuation An organization must be able to place a dollar value on each information asset it owns Potential loss is that which could occur from the exploitation of vulnerability or a threat occurrence

Cost-Benefit Analysis Calculation CBA determines whether or not a control alternative is worth its associated cost CBAs may be calculated before a control or safeguard is implemented Or calculated after controls have been implemented and have been functioning for a time

Cost-Benefit Analysis Calculation CBA = ALE(prior) – ALE(post) – ACS ALE (prior to control) is the annualized loss expectancy of the risk before the implementation of the control ALE (post-control) is the ALE examined after the control has been in place for a period of time ACS is the annual cost of the safeguard

Example of Cost-Benefit Analysis Calculation Dropping an iPad and breaking the screen Asset value: $700 Exposure factor: 50% SLE = ? ARO = 25% chance of damaging ALE (prior) = ? Assume the ARO is reduced to 5% by using control ALE (post) = ? CBA (cost of case = $30) CBA = ALE(prior) – ALE(post) – ACS CBA = ?

Example of Cost-Benefit Analysis Calculation Unprotected customer database Asset value: $200,000 Exposure factor: 50% SLE = ? ARO = 75% chance of occurring ALE (prior) = ? Assume the ARO is reduced to 5% by using control ALE (post) = ? CBA (ACS = $5,000) CBA = ALE(prior) – ALE(post) – ACS CBA = ?

Other Methods of Establishing Feasibility Organizational feasibility analysis Operational feasibility Technical feasibility Political feasibility

Alternatives to Feasibility Analysis Benchmarking Due care and due diligence Best business practices Gold standard Government recommendations Baseline

Risk Management and Employees “Only two things are finite, the universe and human stupidity, and I’m not sure about the former.” - Albert Einstein Types of Employees and Security Knowledge Those who know Those who don’t Those who think they know but don’t