INFORMATION SECURITY MANAGEMENT L ECTURE 8: R ISK M ANAGEMENT C ONTROLLING R ISK You got to be careful if you don’t know where you’re going, because you.

INFORMATION SECURITY MANAGEMENT

LECTURE 8: RISK MANAGEMENTCONTROLLING 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

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

Source: Course Technology/Cengage Learning

Figure 9-2 Risk-handling action points

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

• 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: Asset Valuation

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 screenAsset 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 databaseAsset 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