Risk Management and Control in Information Security

2. Principles of Information Security, 3rd Edition 2  Define risk management, risk identification, and risk control  Understand how risk is identified and assessed  Assess risk based on probability of occurrence and impact on an organization  Grasp the fundamental aspects of documenting risk through the creation of a risk assessment Learning Objectives Upon completion of this material, you should be able to:

3. Principles of Information Security, 3rd Edition 3 Learning Objectives (continued) ‏  Describe the risk mitigation strategy options for controlling risks  Identify the categories that can be used to classify controls  Recognize the conceptual frameworks that exist for evaluating risk controls and be able to formulate a cost benefit analysis  Understand how to maintain and perpetuate risk controls

4. Principles of Information Security, 3rd Edition 4 Introduction  Risk management: process of identifying and controlling risks facing an organization  Risk identification: process of examining an organization’s current information technology security situation  Risk control: applying controls to reduce risks to an organization’s data and information systems

5. Principles of Information Security, 3rd Edition 5 An Overview of Risk Management  Know yourself: identify, examine, and understand the information and systems currently in place  Know the enemy: identify, examine, and understand threats facing the organization  Responsibility of each community of interest within an organization to manage risks that are encountered

6. Principles of Information Security, 3rd Edition 6 The Roles of the Communities of Interest  Information security, management and users, and information technology all must work together  Management review:  Verify completeness/accuracy of asset inventory  Review and verify threats as well as controls and mitigation strategies  Review cost effectiveness of each control  Verify effectiveness of controls deployed

7. Principles of Information Security, 3rd Edition 7 Risk Identification  Assets are targets of various threats and threat agents  Risk management involves identifying organization’s assets and identifying threats/vulnerabilities  Risk identification begins with identifying organization’s assets and assessing their value

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9. Principles of Information Security, 3rd Edition 9 Asset Identification, Valuation, and Prioritization  Iterative process; begins with identification of assets, including all elements of an organization’s system (people, procedures, data and information, software, hardware, networking) ‏  Assets are then classified and categorized

10. Principles of Information Security, 3rd Edition 10 Table 4-1 - Categorizing Components

11. Principles of Information Security, 3rd Edition 11 People, Procedures, and Data Asset Identification  Human resources, documentation, and data information assets are more difficult to identify  People with knowledge, experience, and good judgment should be assigned this task  These assets should be recorded using reliable data- handling process

12. Principles of Information Security, 3rd Edition 12 People, Procedures, and Data Asset Identification (continued) ‏  Asset attributes for people: position name/number/ID; supervisor; security clearance level; special skills  Asset attributes for procedures: description; intended purpose; what elements it is tied to; storage location for reference; storage location for update  Asset attributes for data: classification; owner/creator/ manager; data structure size; data structure used; online/offline; location; backup procedures employed

13. Principles of Information Security, 3rd Edition 13 Hardware, Software, and Network Asset Identification  What information attributes to track depends on:  Needs of organization/risk management efforts  Management needs of information security/information technology communities  Asset attributes to be considered are: name; IP address; MAC address; element type; serial number; manufacturer name; model/part number; software version; physical or logical location; controlling entity

14. Principles of Information Security, 3rd Edition 14 Information Asset Classification  Many organizations have data classification schemes (e.g., confidential, internal, public data) ‏  Classification of components must be specific to allow determination of priority levels  Categories must be comprehensive and mutually exclusive

15. Principles of Information Security, 3rd Edition 15 Information Asset Valuation  Questions help develop criteria for asset valuation  Which information asset:  is most critical to organization’s success?  generates the most revenue/profitability?  would be most expensive to replace or protect?  would be the most embarrassing or cause greatest liability if revealed?

16. Principles of Information Security, 3rd Edition 16 Figure 4-3 – Example Worksheet

17. Principles of Information Security, 3rd Edition 17 Information Asset Prioritization  Create weighting for each category based on the answers to questions  Calculate relative importance of each asset using weighted factor analysis  List the assets in order of importance using a weighted factor analysis worksheet

18. Principles of Information Security, 3rd Edition 18 Table 4-2 – Example Weighted Factor Analysis

19. Principles of Information Security, 3rd Edition 19 Data Classification and Management  Variety of classification schemes used by corporate and military organizations  Information owners responsible for classifying their information assets  Information classifications must be reviewed periodically  Most organizations do not need detailed level of classification used by military or federal agencies; however, organizations may need to classify data to provide protection

20. Principles of Information Security, 3rd Edition 20 Security Clearances  Security clearance structure: each data user assigned a single level of authorization indicating classification level  Before accessing specific set of data, employee must meet need-to-know requirement  Extra level of protection ensures information confidentiality is maintained

21. Principles of Information Security, 3rd Edition 21 Management of Classified Data  Storage, distribution, portability, and destruction of classified data  Information not unclassified or public must be clearly marked as such  Clean desk policy requires all information be stored in appropriate storage container daily; unneeded copies of classified information are destroyed  Dumpster diving can compromise information security

22. Principles of Information Security, 3rd Edition 22 Threat Identification  Realistic threats need investigation; unimportant threats are set aside  Threat assessment:  Which threats present danger to assets?  Which threats represent the most danger to information?  How much would it cost to recover from attack?  Which threat requires greatest expenditure to prevent?

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24. Principles of Information Security, 3rd Edition 24 Vulnerability Identification  Specific avenues threat agents can exploit to attack an information asset are called vulnerabilities  Examine how each threat could be perpetrated and list organization’s assets and vulnerabilities  Process works best when people with diverse backgrounds within organization work iteratively in a series of brainstorming sessions  At end of risk identification process, list of assets and their vulnerabilities is achieved

25. Principles of Information Security, 3rd Edition 25 Risk Assessment  Risk assessment evaluates the relative risk for each vulnerability  Assigns a risk rating or score to each information asset

26. Principles of Information Security, 3rd Edition 26 Likelihood  The probability that a specific vulnerability will be the object of a successful attack  Assign numeric value: number between 0.1 (low) and 1.0 (high), or a number between 1 and 100  Zero not used since vulnerabilities with zero likelihood removed from asset/vulnerability list  Use selected rating model consistently  Use external references for values that have been reviewed/adjusted for your circumstances

27. Principles of Information Security, 3rd Edition 27 Risk Determination  For the purpose of relative risk assessment, risk equals:  Likelihood of vulnerability occurrence TIMES value (or impact) ‏  MINUS percentage risk already controlled  PLUS an element of uncertainty

28. Principles of Information Security, 3rd Edition 28 Identify Possible Controls  For each threat and associated vulnerabilities that have residual risk, create preliminary list of control ideas  Residual risk is risk that remains to information asset even after existing control has been applied

29. Principles of Information Security, 3rd Edition 29 Access Controls  Specifically address admission of a user into a trusted area of organization  Access controls can be :  Mandatory access controls (MAC): give users and data owners limited control over access to information  Nondiscretionary controls: managed by central authority in organization; can be role-based or task-based  Discretionary access controls (DAC): implemented at discretion or option of data user

30. Principles of Information Security, 3rd Edition 30 Documenting the Results of Risk Assessment  Final summary comprised in ranked vulnerability risk worksheet  Worksheet details asset, asset impact, vulnerability, vulnerability likelihood, and risk-rating factor  Ranked vulnerability risk worksheet is initial working document for next step in risk management process: assessing and controlling risk

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32. Principles of Information Security, 3rd Edition 32 Risk Control Strategies  Once ranked vulnerability risk worksheet complete, must choose one of four strategies to control each risk:  Apply safeguards (avoidance)  Transfer the risk (transference) ‏  Reduce impact (mitigation) ‏  Understand consequences and accept risk (acceptance) ‏

33. Principles of Information Security, 3rd Edition 33 Avoidance  Attempts to prevent exploitation of the vulnerability  Preferred approach; accomplished through countering threats, removing asset vulnerabilities, limiting asset access, and adding protective safeguards  Three common methods of risk avoidance:  Application of policy  Training and education  Applying technology

34. Principles of Information Security, 3rd Edition 34 Transference  Control approach that attempts to shift risk to other assets, processes, or organizations  If lacking, organization should hire individuals/firms that provide security management and administration expertise  Organization may then transfer risk associated with management of complex systems to another organization experienced in dealing with those risks

35. Principles of Information Security, 3rd Edition 35 Mitigation  Attempts to reduce impact of vulnerability exploitation through planning and preparation  Approach includes three types of plans:  Incident response plan (IRP)  Disaster recovery plan (DRP) ‏  Business continuity plan (BCP) ‏

36. Principles of Information Security, 3rd Edition 36 Mitigation (continued) ‏  DRP is most common mitigation procedure  The actions to take while incident is in progress is defined in IRP  BCP encompasses continuation of business activities if catastrophic event occurs

37. Principles of Information Security, 3rd Edition 37 Acceptance  Doing nothing to protect a vulnerability and accepting the outcome of its exploitation  Valid only when the particular function, service, information, or asset does not justify cost of protection  Risk appetite describes the degree to which organization is willing to accept risk as trade-off to the expense of applying controls

38. Principles of Information Security, 3rd Edition 38 Selecting a Risk Control Strategy  Level of threat and value of asset play major role in selection of strategy  Rules of thumb on strategy selection can be applied:  When a vulnerability exists  When a vulnerability can be exploited  When attacker’s cost is less than potential gain  When potential loss is substantial

39. Principles of Information Security, 3rd Edition 39 Figure 4- 8- Risk Handling Decision Points

40. Principles of Information Security, 3rd Edition 40 Feasibility Studies  Before deciding on strategy, all information about economic/noneconomic consequences of vulnerability of information asset must be explored  A number of ways exist to determine advantage of a specific control

41. Principles of Information Security, 3rd Edition 41 Cost Benefit Analysis (CBA) ‏  Most common approach for deciding on information security controls is economic feasibility of implementation  CBA is begun by evaluating worth of assets to be protected and the loss in value if those assets are compromised  The formal process to document this is called cost benefit analysis or economic feasibility study

42. Principles of Information Security, 3rd Edition 42 Cost Benefit Analysis (CBA) (continued) ‏  Items that affect cost of a control or safeguard include: cost of development or acquisition; training fees; implementation cost; service costs; cost of maintenance  Benefit is the value an organization realizes by using controls to prevent losses associated with a vulnerability  Asset valuation is process of assigning financial value or worth to each information asset; there are many components to asset valuation

43. Principles of Information Security, 3rd Edition 43 Cost Benefit Analysis (CBA) (continued) ‏  Once value of assets is estimated, potential loss from exploitation of vulnerability is studied  Process result is estimate of potential loss per risk  Expected loss per risk stated in the following equation: Annualized loss expectancy (ALE) equals Single loss expectancy (SLE) TIMES Annualized rate of occurrence (ARO) ‏  SLE is equal to asset value times exposure factor (EF) ‏

44. Principles of Information Security, 3rd Edition 44 The Cost Benefit Analysis (CBA) Formula  CBA determines if alternative being evaluated is worth cost incurred to control vulnerability  CBA most easily calculated using ALE from earlier assessments, before implementation of proposed control: CBA = ALE(prior) – ALE(post) – ACS  ALE(prior) is annualized loss expectancy of risk before implementation of control  ALE(post) is estimated ALE based on control being in place for a period of time  ACS is the annualized cost of the safeguard

45. Principles of Information Security, 3rd Edition 45 Evaluation, Assessment, and Maintenance of Risk Controls  Selection and implementation of control strategy is not end of process  Strategy and accompanying controls must be monitored/reevaluated on ongoing basis to determine effectiveness and to calculate more accurately the estimated residual risk  Process continues as long as organization continues to function

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47. Principles of Information Security, 3rd Edition 47 Quantitative versus Qualitative Risk Control Practices  Performing the previous steps using actual values or estimates is known as quantitative assessment  Possible to complete steps using evaluation process based on characteristics using nonnumerical measures; called qualitative assessment  Utilizing scales rather than specific estimates relieves organization from difficulty of determining exact values

48. Principles of Information Security, 3rd Edition 48 Benchmarking and Best Practices  An alternative approach to risk management  Benchmarking is process of seeking out and studying practices in other organizations that one’s own organization desires to duplicate  One of two measures typically used to compare practices:  Metrics-based measures  Process-based measures

49. Principles of Information Security, 3rd Edition 49 Benchmarking and Best Practices (continued) ‏  Standard of due care: when adopting levels of security for a legal defense, organization shows it has done what any prudent organization would do in similar circumstances  Due diligence: demonstration that organization is diligent in ensuring that implemented standards continue to provide required level of protection  Failure to support standard of due care or due diligence can leave organization open to legal liability

50. Principles of Information Security, 3rd Edition 50 Benchmarking and Best Practices (continued) ‏  Best business practices: security efforts that provide a superior level of information protection  When considering best practices for adoption in an organization, consider:  Does organization resemble identified target with best practice?  Are resources at hand similar?  Is organization in a similar threat environment?

51. Principles of Information Security, 3rd Edition 51 Problems with the Application of Benchmarking and Best Practices  Organizations don’t talk to each other (biggest problem) ‏  No two organizations are identical  Best practices are a moving target  Knowing what was going on in information security industry in recent years through benchmarking doesn’t necessarily prepare for what’s next

52. Principles of Information Security, 3rd Edition 52 Baselining  Analysis of measures against established standards  In information security, baselining is comparison of security activities and events against an organization’s future performance  Useful during baselining to have a guide to the overall process

53. Principles of Information Security, 3rd Edition 53 Other Feasibility Studies  Organizational: examines how well proposed IS alternatives will contribute to organization’s efficiency, effectiveness, and overall operation  Operational: examines user and management acceptance and support, and the overall requirements of the organization’s stakeholders  Technical: examines whether or not organization has or can acquire the technology necessary to implement and support the control alternatives  Political: defines what can/cannot occur based on consensus and relationships between communities of interest

54. Principles of Information Security, 3rd Edition 54 Risk Management Discussion Points  Organization must define level of risk it can live with  Risk appetite: defines quantity and nature of risk that organizations are willing to accept as trade-offs between perfect security and unlimited accessibility  Residual risk: risk that has not been completely removed, shifted, or planned for

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56. Principles of Information Security, 3rd Edition 56 Documenting Results  At minimum, each information asset-threat pair should have documented control strategy clearly identifying any remaining residual risk  Another option: document outcome of control strategy for each information asset-vulnerability pair as an action plan  Risk assessment may be documented in a topic-specific report

57. Principles of Information Security, 3rd Edition 57 Recommended Risk Control Practices  Convince budget authorities to spend up to value of asset to protect from identified threat  Final control choice may be balance of controls providing greatest value to as many asset-threat pairs as possible  Organizations looking to implement controls that don’t involve such complex, inexact, and dynamic calculations

58. Principles of Information Security, 3rd Edition 58 Summary  Risk identification: formal process of examining and documenting risk in information systems  Risk control: process of taking carefully reasoned steps to ensure the confidentiality, integrity, and availability of components in organization’s information system  Risk identification  A risk management strategy enables identification, classification, and prioritization of organization’s information assets  Residual risk: risk remaining to the information asset even after the existing control is applied

59. Principles of Information Security, 3rd Edition 59 Summary (continued)  Risk control: four strategies are used to control risks that result from vulnerabilities:  Apply safeguards (avoidance)  Transfer the risk (transference) ‏  Reduce impact (mitigation)  Understand consequences and accept risk (acceptance) ‏