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Posts tagged MSSP

Tuesday, July 27, 2010

The Perfect Night Out

By Jill Knesek, Chief Security Officer, BT Global Services

Before I became a CSO, I thought the perfect night out was dinner and a movie. Now, while I still like to see a good movie, the opportunity to get together with my peers and talk about issues at work — the ones that keep me up at night — beats any Hollywood blockbuster.

This Wednesday evening, July 28^th, I will be hosting a dinner for Chicago-area CSOs to talk about these very issues. I know that I’m looking forward to finding out how others are dealing with risk management issues, success you are having with getting a seat at the boardroom table, how cloud computing is changing how you allocate security resources, and sharing my experiences and successes in protecting data and managing risk at a global level.

To register for the event, please contact Kurt Luporini, BT’s security specialist in the Chicago area. If you’re not able to join me for dinner on Wednesday, why not connect with me on LinkedIn either directly or through the Security Leaders Group.

Thursday, July 22, 2010

Is a hack into our nation’s domestic infrastructure possible?

By Toby Weir-Jones, Vice President of Product Development, Managed Security Solutions Group, BT Global Services

The National Security Agency recently unveiled a program to help secure the networks of crucial domestic infrastructure, including the networks of electrical companies and nuclear power plants. Called “Perfect Citizen,” the program is geared to bring attention to the possibility of grid hacking.

Interestingly, a recent Wired article asked, “…if it’s so easy to turn off the lights using your laptop, how come it doesn’t happen more often?” According to the article (“Hacking the Electric Grid? You and What Army?” (July 13, 2010):

Your average power grid or drinking water system isn’t analogous to a PC or even to a corporate network. The complexity of such systems, and the use of proprietary operating systems and applications that are not readily available for study by your average hacker, make the development of exploits for any uncovered vulnerabilities much more difficult than using Metasploit.

To start, these systems are rarely connected directly to the public Internet. And that makes gaining access to grid-controlling networks a challenge for all but the most dedicated, motivated and skilled — nation-states, in other words.

Let’s pretend for a moment that hackers were planning to attack the U.S. What would they need to do to gather enough information necessary to take out the electrical power in key parts of the country? They don’t want to fiddle at the edges, mind you. They want to have enough data to build the technical capability necessary to shut out the lights in Washington or New York or California at precisely the time and for exactly the duration they want.

For starters, they would need to know things like: Where are the power plants? What kind of plants are they? What sort of fuel do they use? Who built them and when? What sort of materials and technology were used when they were built? Who manufactured the generators, turbines and other key equipment? Whose SCADA software are they running? Who runs the plants? How does fuel, people, supplies get into or out of the plant? What sort of security do they have? And perhaps most importantly: which plants supply power to which parts of the country?

While the Wired article included a lot of questions that are interesting, we ask: Are foreign attacks on our nation’s crucial infrastructure possible? Our answer is absolutely. This is a real security threat and one that shouldn’t be taken lightly.

In fact, The New York Times reported last week that a new virus targets the computers used to manage large-scale industrial control systems used by manufacturing and utility companies. While the SCADA systems that run the software are not typically connected to the Internet, this specific virus spreads when an infected USB stick is inserted in the computer.

To assist these organizations, BT Managed Security Solutions Group offers a multi-layered, holistic approach to secure critical network infrastructure (CNI) and organizational monitoring. This offering enables any organization to have a view of its security posture as it relates to its critical infrastructure (substations, control centers, energy management systems) and its interconnectivity with the organization.

With a holistic approach, the footprints of an attack may be discovered across multiple systems or even across multiple operating areas. As organizations merge to achieve economies of scale, disparate geographic operating regions become interconnected via common enterprise environments.

In today’s regulatory-driven environment, an organization must consider its entire critical infrastructure – from the substation to the control center and out to the enterprise network – when making security monitoring decisions.

The fast and accurate detection of security-related events is an organization’s first line of defense against security intrusions. This can only be achieved through a holistic solution that provides enterprise-wide security by aggregating and correlating information from both critical network infrastructure and enterprise networks, providing organizations transparency into their security posture.

Friday, July 16, 2010

To outsource or not? That is the security question

By Toby Weir-Jones, Vice President of Product Development, Managed Security Solutions Group, BT Global Services

Dramatic increases in vulnerabilities and threats coupled with growing compliance requirements have made security into one of the most challenging domains of IT management. How can organizations make the most of limited resources without sacrificing strategic business priorities? How can organizations deliver security management at scale, from day one?

Recent research from Enterprise Management Associates indicates that organizations are turning to managed security services to address these concerns. In fact, spending is on the rise as more businesses dedicate resources in this area over the next 12 months.

So what has driven this change? Typically, organizations have been wary of outsourcing in general, let alone giving up control when it comes to securing their more critical assets. One main driver is that organizations have to do more with less. As security threats continue to evolve and become more sophisticated; organizations have a better understanding of the implications to their business, yet they oftentimes lack the resources to effectively manage the threats internally.

While change is in the air, there is still some uncertainty on the option of outsourcing. So here is our take on the value provided:

Specialize and highly trained resources: The fact is that attacks evolve every day. Technologies to protect against these attacks need to evolve to meet the sophistication of new attacks. But tools alone can’t protect your organization. By outsourcing, organizations have access to highly trained analysts who utilize the most advanced tools and expertise. It is difficult for organizations, even at a global level, to maintain this type of internal resource.
Keeping on top of the latest: Ongoing training for specialists can be a drain on resources. Continuous professional development requirements should be a part of your MSSP’s responsibilities since threats, attack vectors, attack patterns, and technologies are changing constantly. When considering an MSSP, ensure that your vendor requires their teams to be certified and recertified on a regular basis.
A broader view: Ultimately, the greatest advantage of turning to an MSSP is that vendors have a broader view of events. An MSSP will see significantly more events than a single company and will have a global view of these events. This means MSSPs can detect patterns of attacks and see attacks develop in real-time, allowing for quick remediation and in some cases, prevention of an attack all together.

So when asked if an organization should outsource security or keep it inside, it may not be a simple answer, but each organization should evaluate options and determine which method is best for their needs. To learn more, go to http://bt.counterpane.com/managed-security-solutions.html

Wednesday, July 14, 2010

Kraken is Baaaaaaaack

By Senthil Venkatachalam, Product Manager, and Tom Le, Director of Research and Development, BT Managed Security Solutions Group

Botnets, in general, are very dangerous and difficult to extinguish. Within the past several weeks, we’ve learned the Kraken botnet has returned from the dead and is gaining strength yet again.

According to a recent Dark Reading article, the botnet—despite being dismantled last year — has recently compromised more than 318,000 systems. That is nearly half the number reported at Kraken’s peak!

How does Kraken work?

Kraken came to the fore in 2008, after infecting hundreds of thousands of computers and causing them to send enormous numbers of spam emails. While the authors of Kraken were arrested in 2009 and the network was disabled, the new Son-of-Kraken seems to be a variation which re-uses Kraken’s malicious code. This code is propagated by a botnet framework – or butterfly framework – which is known for its efficiency in spreading such malware. Some of you might remember another famous and large botnet, the Mariposa botnet, which also used the butterfly framework.

Detecting the “classic” Kraken

Botnets are difficult to prevent, and, once a network is infected, are even more difficult to detect. If you are using anti-virus tools, Kraken is nearly impossible to detect. AV defenses and anti-malware defenses are often disabled by bots during the original infection. Therefore, IT professionals must gain network level detection applications. Suspicious activities that can be used to detect a botnet include:

DNS lookups to certain domains
Traffic on unusual (typically high) port numbers
Connections (or attempts) to IPs in a known range
Network protocol violation in datagrams or sessions traversing firewall (e.g., encrypted traffic over port 80, or non-SSL over port 443)
Excessive outgoing emails or other activity not usually associated with business traffic

But to assume you don’t have a botnet infection because there are no visible symptoms is a mistake. Because bots seek to avoid detection, you need to constantly check firewall and IPS logs to unearth an infection.

Preparation is key

George Hulme said in a recent InformationWeek article, “One thing is certain: current methods of bot detection and remediation are not getting the job done.”

It’s essential that companies ensure they have maximum and continuous early-warning security measures in place to protect the integrity of their assets and mitigate risks. For BT Managed Security Solutions Group (MSSG) customers, the good news is that a botnet detection module is a standard Managed Secure Monitoring service available to all customers.

BT MSSG has had significant success in using its customers’ firewalls to detect botnets through log analysis and event correlation. Based on a fundamental understanding of botnet behavior, the BT team reasoned that since every botnet needs to call home at some point in order to be activated, outbound messages traversing a firewall will create detectable patterns of behavior that accurately indicate botnet activity before it has the opportunity to take over your network.

One question remains — is your company prepared for the Son-of-Kraken?

Friday, July 9, 2010

Weaponization of Cyberspace — It’s not science fiction, it’s war

By Jim Tiller, Vice President, Security Professional Services, North America, BT Global Services

There are a number of folks in the security industry who have downplayed the realities of cyberwar. In some circles, the conversation of cyberwar will elicit some interesting reactions and many tend to deny its potency relative to traditional warfare and traditional weapons.

Moreover, many begin to blur the lines between cyberwar, cyberterrorism and other cyberattack scenarios, confusing the topic. In virtually every conversation of this nature, I’m the one who stands out as the lone voice saying they’re not only wrong, but woefully underestimating the situation.

Throughout history, advances in weapon technology have dramatically changed the battlefield. Everything and anything that can be used as a weapon that offers even the slightest advantage over your enemy will be developed and deployed.

Folks… it is war. Therefore, within this context, cyberspace has evolved from “advantage acquisition” to weaponization because the battlefield now includes the virtual domain.

Early uses of cyber assets mostly took the form of intelligence gathering to establish situational awareness and, of course, counter intelligence. Moreover, technologies were employed to advance communications and support accurate mobilization of resources. For example, the Joint Strike Fighter (JSF), as part of the next generation strike fighter, multi-variation platform F-35, has highly sophisticated computers and communications to align multiple forces for effective, real-time battlefield management. Cyber has allowed for air, sea and ground assets to work together so there is a unified view of battlefield conditions and enemy activity.

The move to weaponization of cyber technologies is in full swing. Initially, weaponization in cyberspace involved taking hacker tools and tactics and refining them to be more effective, not unlike riffling of cannon barrels. It is converting something that is reasonably dangerous and can be generally targeted into a manageable device that can be consistently developed, effectively deployed, and accurately directed at the target. And it produces the intended results by effectively exploiting vulnerabilities in the enemy’s defenses.

A simple example is malware, which comes in multiple forms with a wide range of impact potential. However, much of what we experience today is indiscriminant because a common hacker’s mission is to infect any system and as many as possible to build a botnet for dishing out spam or causing havoc. Clearly, the concept is sound but is not conducive to the ultimate role of a weapon.

A meaningful aspect of weaponization is refinement so that it can be accurately targeted and its impact controlled. Even malware in the wild has been weaponized, retaining its viral, self-propagating features; but it includes highly sophisticated methods to operate in a predictable manner and submit to in-flight commands to adjust to changes in the environment.

However, today’s weaponization has moved well into the development of completely new forms of cyberweapons. Things that have been researched, developed, tested, and refined from scratch, creating completely new types of weapons – not unlike the hydrogen bombs of WWII – they are game changers. These new weapons employ comprehensive targeting capabilities, have the ability to effectively navigate cyberspace, comprise a wide spectrum of impact control, and have multipurpose functionality that can change on command or autonomously, based on interpreted conditions.

Fundamentally, cyberweapons are no different from a guided missile. But instead of traversing the physical domain, they travel across the virtual domain. In fact, as I write this, DARPA (Defense Advanced Research Projects Agency) is developing (and have likely completed) a cyber range – an environment for test firing cyberweapons.

Make no mistake — weaponization of cyberspace is a reality.

Tuesday, June 29, 2010

BP Oil Spill Wakes Up Country to Need for Stronger SCADA Controls

By Toby Weir-Jones, Vice President of Product Development, Managed Security Solutions Group, BT Global Services

BP – a company name that’s on the minds of most Americans today and probably not in a good way. The crisis we face today with the major oil spill is catastrophic and a direct result of time and cost pressures brought about in response to our increasing demand for energy.

BP is in the news today, but if demand growth for oil continues at this rate and supplies continue to dwindle, the oil spill we face today may seem small in comparison to future accidents.

With the industry trying to keep up with demand, network operations have been centralized, requiring distant controls to be managed over a wide variety of networking technologies, with all the attendant gateways such a model implies.

While this approach can reduce costs and improve efficiency, it can also open the door to attacks by hackers and cyber terrorists. This is a very real threat faced by oil and gas companies today. Researchers have directly warned oil companies across the globe that offshore rigs are highly vulnerable to attacks. In fact just last year, a contractor in California was charged in federal court for hacking into a digital network in an attempt to disable an offshore rig, after allegedly being angry about not being hired as a full-time employee. The attack – against a SCADA control system – was illustrative of the types of threats which, if successful, could have grave consequences. Legacy thinking and a frequent lack of third-party testing and review all combine to create a classic system of unexpected complexity. These are the most likely to suffer compromise, whether malicious or accidental, resulting in catastrophic outcomes.

A multi-layered approach is critical to securing SCADA networks. Each of the following layers plays a role in securing mission-critical, real-time control systems:

Perimeter Controls (Internet or Corporate Perimeter Defense)
People, Policies, Procedures (Business Continuity, Disaster Recovery)
Network Architecture (Firewalls, Routers, Switches)
Network Operating Systems (Domain Security, Active Directory, etc.)
Host Security (Operating systems of servers and workstations)
Application Security (SCADA, EMS, Database, Web, and more)
Unique Secure Requirements for what is being protected (Plant equipment, RTUs, PLCs, etc.)

Each layer requires ongoing testing and evaluation to determine the vulnerabilities that exist in these systems. Oil and gas companies must consider a holistic approach to their security to avoid a potential cyber attack. This approach includes:

Building a road map for security and regulation compliance – what systems are in place and how are they integrated?
Assessing vulnerabilities – identify and understand current vulnerabilities in the security of physical, IT and SCADA controls
Penetration testing – the only way to know if a hacker can get into your network or facility is to actually test the vulnerabilities found with an assessment
Developing an emergency response and disaster recovery plan – as we have seen with BP, there is a need to have a plan for the unexpected. Having a such a plan allows an organization to quickly recover and restore critical operational functions after an unexpected event
Gathering evidence – when critical assets come under attack, quick action is required to gather digital evidence and then use the evidence to prosecute

While this “to do” list for full SCADA security may seem overwhelming, engaging with a professional services organization that can assist in the execution and delivery of these steps — particularly penetration testing and BCDR plan development — can radically simplify the task list. Learn more about how BT helps companies secure their critical infrastructure.

Wednesday, June 23, 2010

Part 2 — Cyberwar vs. cyberattack

By Jim Tiller, Vice President, Security Professional Services, North America, BT Global Services

Cyberwar is not your typical hacker attack. The difference — cyberwar is when a cyberattack is launched or condoned by a country, as opposed to being performed by a group, such as a terrorist group or cyber-criminals performing acts of vigilantism or some skewed version of patriotism.

A cyberwar is considered a “hack” – using the term very loosely – by a nation, government, and/or military to harm other countries. Granted, the lines are very blurry, especially when governments permit cyber-criminals to operate in their country or turn a blind eye, which can be construed as supporting the effort. But in general, cyberwar is considered a military action funded and driven by an established government.

Cyberwar is sometimes confused with the recent advent of counties using cyberwar-like tactics for various purposes – such as espionage or general disruption. For example, there is some evidence that the Chinese government was behind Project Aurora against Google and other companies. Or the formation of China’s GhostNet, where more than a thousand computers in more than a hundred countries were infected, with more than 30% considered high-valued targets, such as computers in embassies, international organization, news media and ministries of foreign affairs, among others. These are examples of the escalation to cyberwar — blatant attacks against digital assets around the world. It’s easy to see how these are examples of initial planning, testing of cyberweapons and information gathering.

Regardless, what we’re seeing today is not what I would call cyberwar, but more so cyberattacks that are testing the bounds of what is possible. In some discussions, I’ve referred to attacks of this nature as live-fire weapons testing.

Cyberwar is scary because of a few interesting attributes that are a little different from traditional warfare as we generally understand it, making it somewhat complicated:

There is a great deal of anonymity, generally referred to in cyberwar circles as the “attribution problem,” representing the deniability of the attacker. Although there are technologies that help to identify the source of a cyberattack, they do not provide indisputable evidence, at least not in the eyes of the international community. This attribute represents fundamental counterattack challenge. In conventional war, the source point of a fired weapon or the location of a threatening weapon system is rapidly identified and quickly targeted for destruction. In cyberwar, the attribution problem makes effective combatant identification nearly impossible. You may be able to determine what systems are attacking and from what location, but this is not enough to attribute to the real enemy.
Force multiplication uses resources that are not directly related to the attacking country. For example, in conventional warfare there are tanks, planes and other assets directly associated with the attacking force and are therefore quantifiable targets. In cyberwar, a country will likely take control of computing resources, such as hundreds of thousands or millions of personal computers around the world from which to launch an attack. This too makes a counterattack extraordinarily complex and fraught with risk. If not planned and executed with acute accuracy, a force could inadvertently take down a neutral country or ally.

These two simple and basic codependent features create an environment that is difficult to fully engage. For example, assume that the United States imposes additional strict sanctions against North Korea as a result of the recent sinking of a South Korean vessel; and in retaliation, the North Korean government wages a cyberattack against the American financial system. In doing so they utilize a vast network of commandeered computers in Brazil, Argentina, South Africa, France, Italy, Saudi Arabia, Ireland, the Netherlands, and Belarus to launch a well-planned attack through a complex web of command and control systems spread across a number of other counties.

Within minutes, the financial system begins to strain, automatic financial controls become engaged. Within the next 24 hours the system fails. The U.S. government has few options, if any, for an offensive. Resources are directed to defensive tactics to stem the tide, establish protective measures to thwart the attack as much as possible and start recovery processes. In short, the attacker is everywhere, including inside your environment.

You can’t simply start taking down systems because they may be owned by allies or may be your own systems working against you. Meanwhile, the impact to the U. S. is not unlike if a bomb were dropped in the middle of a major city. Therefore, in cyberwar there is a great deal of ambiguity and uncertainty, yet the level of impact is, on a very fundamental level, not all that different from an equally well-formed conventional attack.

This reality does impose a sense of fear that if truly understood and acknowledge throughout society would equal or even surpass levels of fear experienced during the cold war and the threat of nuclear annihilation. It’s ultimately based on the feeling of helplessness and the inability to respond. However, this is not entirely the situation that is evolving today.

In the coming weeks, we’ll continue on this topic. In the meantime, please share your thoughts on this important topic.

For more on Jim’s thoughts on cyberwar, see: Cyberwar is a reality, but what exactly is it?

Monday, June 21, 2010

Cyberwar is a reality, but what exactly is it?

By Jim Tiller, Vice President, Security Professional Services, North America, BT Global Services

You can’t pick up a paper, read a news article or scan a blog without something about cyberwar in there somewhere. Moreover, there are a number of books surfacing and, conservatively speaking, a great deal of activity in the government sector concerning cyberwar. While I’m working on a series of posts on this topic, I thought we should first try to define it.

In short, cyberwar is the use of technology to render some form of harm against an enemy. Suffice it to say that we’re not talking about your typical hacker trying to steal credit card numbers.

Cyberwar is technically more of a statement of condition as opposed to a specific act, such as a battle or attack. The term encompasses all the different forms of attacks, defenses and counter attacks that occur in the digital domain over time. You hear some in the government make statements such as, “we’re in a cyberwar,” referring to the vast number of attacks against government and private networks and systems from distant entities. These forms of attacks are on the rise, and the United States is clearly making the necessary political and military adjustments to address such threats (more on this in future posts).

On the other hand, you hear a more accurate representation of a cyberwar as a future condition where cyberattacks will have devastating results that are analogous to what we would see in conventional warfare. In many cases, experts will refer to situations where an attacking force would use “cyber weapons” to bring down the power grid, financial systems, communication networks and the like (e.g., critical infrastructure), rendering them unusable.

In this future, the difference between a cyberattack and a traditional attack is that the physical infrastructure remains generally intact. For example, a bomb blowing up a critical power station clearly hinders the ability to distribute electricity until it is rebuilt, consuming time and resources. Conversely, a cyberattack will render the deeply integrated computing systems temporarily useless, also hindering the ability to distribute electricity. Although the physical asset is unaffected in this scenario, the end result is very similar to a physical attack – electricity cannot be delivered to homes, businesses and other utilities for a period of time.

Of course, we have to acknowledge that a well-formed cyberattack can make computers perform dangerous acts that can manifest themselves as physical destruction. An example would be opening waste gates on a sewer system to dump raw sewage into the environment; or redirecting trains, placing them on a collision course; or channeling electricity in a manner that overloads systems, such as lines and transformers, causing them to explode or become completely inoperable; or disrupting air and ground controls, greatly increasing the potential for a devastating accident.

The list is very long. Think of all the computer controlled elements in our lives and about how the “logic” of their control could be manipulated to cause physical damage.

More importantly, we have to understand the condition and sensitivity of today’s major countries. During World War 2, it took a bomb to destroy an asset — such as a train, manufacturing plant, airfield, roads and bridges — to disrupt the stability of the enemy. However, today there is far more sensitivity to disruption.

Let’s go back to the power station attack example. If power was lost for an extended period of time, say two weeks, in key locations, such as New York, Chicago, San Francisco, Dallas, Atlanta, Boston, and the like, the United States would be brought to its knees. Financial systems would strain to a point of failure, emergency services would rapidly become overloaded, products couldn’t be delivered, trains wouldn’t run, hospitals would be overrun, impassable traffic would form and people – many of them – would die. Imagine if this occurred in the middle of winter or even summer – it would be a catastrophe. Therefore, a cyberattack against the power grid doesn’t have to physically destroy the power grid to cause massive damage and disruption because there is very little resilience in how our society functions. One critical aspect goes missing for a short period and the entire fabric begins to come apart.

This concept was demonstrated in the recent Icelandic volcano eruption that virtually halted all air traffic between the United States and Europe for weeks. This cost airlines millions, disrupted the travel plans of hundreds of thousands of people, and stopped the delivery of perishable resources, such as donated organs. The total cost in money and lives will never truly be known. Therefore, an attack against something like the power grid can cause mass disruption well beyond the targeted environment.

In the coming weeks, I will continue this series on cyberwar by writing about the “weaponization” of cyberspace and the cyber cold war. And then I will elaborate on the future “theater of war,” setting the foundation for sharing views of what World War 3 could look like.

Thursday, June 17, 2010

Part 2: What is your risk appetite? Counting security calories won’t help

By Jim Tiller, Vice President, Security Professional Services, North America, BT Global Services

The term risk appetite is used frequently as a method to generally convey the level of criticality that must ultimately be interpreted, but rarely is this explored deeply. There is a great deal of effort in defining risk and creating models as opposed to providing equal or greater focus on defining appetite, which is arguably the tipping point that determines the overall value of risk management to the organization. The industry is so intensely focused on risk management theories and methods that it has virtually ignored the most important aspect – which is how the results will be digested.

For example, a risk report expresses several high, medium and low risk conditions. However, risk appetite governs which of those risks actually mean something to the company, group or person. A low risk could be of great importance to one group and cursory at best to another. Moreover, that condition may reverse in a short period due to business dynamics.

What I find interesting is risk acceptance — a formal confirmation from the business that the identified risk is absorbed. But rarely are risk acceptance forms reevaluated, much less done so on a timeline that is reflective of the criticality level of the identified risk – a factor which completely ignores the importance of appetite and change in appetite over time.

A risk appetite model needs to be developed that defines a process by which appetite can be quantified relative to business conditions and deeply incorporated into the risk management paradigm. Today, this mostly surfaces as evidence used in general discussion of appetite, such as policy statements and regulatory demands. However, these can be seen as surrogates for appetite.

For example, how an executive interprets risk (their appetite) is “trumped” by a regulation because there are tangible impacts, such as fines or going to jail. But not all risk results cleanly fit into these situations. What happens today is often less focus on broad risks and stronger focus on divisional risk so that the results can be interpreted by one person that makes the final judgment call on appetite. This process essentially avoids the problem by reducing the number of people who need to “make the call” and isolate responsibility. In fact, this practice is typically the security group transferring political risk to a single person who actually makes a decision.

Security groups need to tackle risk appetite measurement as other industries have – specifically, the financial industry concerning risk appetite for investors, which is very interesting and has some meaningful formulas that could be used as the basis for security appetite measurement. There have been what I would call attempts in security, such as ISACA’s case study using CobiT to define risk appetite.

But as you can see, it’s still about measuring risk (i.e., high, medium, low), not necessarily specifically the interpretation of risk. In other security circles it has been suggested to use Myers-Briggs, which is a very interesting starting point. But others have suggested a litmus test using hypothetical scenarios to capture a perspective of risk relative to appetite.

While I agree with the concept, how the test is performed will determine the value of the data. If the test candidates know they are being tested, the results will be skewed – and I’m not too sure executives want to be treated as lab rats.

Nevertheless, the point is simple — today’s risk management practices are good, but they can be a lot better if appetite is seen as important as threat, vulnerability, likelihood, and impact. The good news is that people are thinking in these terms, but it has yet to take on legs.

If you are aware of any models in the works, please let me know.

For more on Jim’s thoughts on risk management and risk appetite, see Part 1: What is your risk appetite? Counting security calories won’t help

Tuesday, June 15, 2010

Part 1: What is your risk appetite? Counting security calories won’t help

By Jim Tiller, Vice President, Security Professional Services, North America, BT Global Services

Anyone who knows me or has subjected themselves to my writings knows I have some uneasiness with today’s role of risk. It’s not the process, but more of how there is so much focus on risk as if it were a science – but it’s not. Not even close.

Risk management is, of course, extraordinarily important to a security program, but I regularly see it positioned as “the” security program — with all things stemming from risk measurements as if it were an absolute. One of the things I hear a lot is “risk appetite,” and I’ve even used this phrase myself many, many times. But what is it?

Risk management is a tool that can help take in vast amounts of information and process it to a point where you can begin to make sense of it. From there, it can support decisions, actions and investments. Risk management boils down to finding a balance between threats and assets by the allocation and management of controls. That balance is ultimately based on risk appetite, or more specifically, the amount of risk you are willing to accept for a given potential event. And the level of risk appetite will inexorably govern the response, not necessarily only the level of risk measured.

Therefore, one could argue that risk management is not much more than an exercise without a quantified understanding of risk appetite.

Security risks are subjective and as such, they cannot be objectively rationalized or accurately measured. The problem is far too fluid and unbounded; there is imperfect knowledge with security risks, and, more importantly, they don’t present any actuarial data to derive any form of meaningful predictability. Although certain elements can be forecasted with some reasonableness to determine general impact from specific experience, there remains the framework of the formation of estimates and rankings. Therefore, not only is risk open to interpretation, but the very risk model chosen for evaluation will greatly impact the outcome. Risk – at best – is a guess.

I must state that this does not mean that risk management is completely pointless — far from it. In lieu of anything better and more accurate, today’s risk processes are what they are. However, risk must be used cautiously since there is significant room for error.

So what is appetite, really? In short, it is an opinion — and an opinion at a point in time. It is individualistic and mostly related to internalized (i.e., your own) risk philosophy. The oldest example used in discussions of this nature is the fear of flying, and a preference for driving as an alternative, when driving clearly represents substantially more risk. In other words, risk is very personal.

For example, if you say that there is a risk that could lead to an executive going to jail as opposed to something that represents far greater risk overall, the level of risk appetite will be far less with the former because it hits closer to home. Additionally, risk philosophy can apply to groups creating scenarios where each layer of the business will experience different levels of risk appetite for the same risk — and no two shall be the same.

Further exacerbating the issue is the interpretation of risk treatments. Even when there appears clear alignment between an identified risk and a security control, the interpreted effectiveness of the control will influence risk appetite a great deal.

Check back on this SecureThinking site later this week for Part 2 of this article, in which we’ll briefly cover gaining more visibility into risk appetite and emerging examples for measurement.