Improving Signal-to-Noise in Risk Management

One of the most important responsibilities of the information security professional (or any IT professional, for that matter) is to help management make well-informed decisions.  Unfortunately, this has been an illusive objective when it comes to risk.  Although we’re great at identifying control deficiencies, and we can talk all day long about the various threats we face, we have historically had a poor track record when it comes to risk.  There are a number of reasons for this, but in this article I’ll focus on just one — definition. 

You’ve probably heard the old adage, “You can’t manage what you can’t measure.”  Well, I’d add to that by saying, “You can’t measure what you haven’t defined.”  The unfortunate fact is that the information security profession has been inconsistent in how it defines and uses the term “risk.”  Ask a number of professionals to define the term, and you will get a variety of definitions. 

Besides inconsistency, another problem regarding the term “risk” is that many of the common definitions don’t fit the information security problem space or simply aren’t practical.  For example, the ISO27000 standard defines risk as, “the effect of uncertainty on objectives.”  What does that mean?  Fortunately (or perhaps unfortunately), I must not be the only one with that reaction because the ISO standard goes on to define “effect,” “uncertainty,” and “objectives,” as follows:

Effect: A deviation from the expected — positive and/or negative

Uncertainty: The state, even partial, of deficiency of information related to, understanding or knowledge of, an event, its consequence or likelihood

Objectives: Can have different aspects (such as financial, health and safety, information security, and environmental goals) and can apply at different levels (such as strategic, organization-wide, project, product and process)

NOTE: Their definition for ”objectives” doesn’t appear to be a definition at all, but rather an example. 

Although I understand, conceptually, the point this definition is getting at, my first concern is practical in nature.  As a Chief Information Security Officer (CISO), I invariably have more to do than I have resources to apply.  Therefore, I must prioritize and prioritization requires comparison and comparison requires measurement.  It isn’t clear to me how “uncertainty regarding deviation from the expected (positive and/or negative) that might affect my organization’s objectives” can be applied to measure, and thus compare and prioritize, the issues I’m responsible for dealing with. 

This is just an example though, and I don’t mean to pick on ISO because much of their work is stellar.  I could have chosen any of several definitions in our industry and expressed varied concerns. 

In my experience, information security is about managing how often loss takes place, and how much loss will be realized when/if it occurs.  That is our profession’s value proposition, and it’s what management cares about.  Consequently, whatever definition we use needs to align with this purpose. 

The Open Group’s Risk Taxonomy (shown below), based on Factor Analysis of Information Risk (FAIR), helps to solve this problem by providing a clear and practical definition for risk.  In this taxonomy, Risk is defined as, “the probable frequency and probable magnitude of future loss.” 

The elements below risk in the taxonomy form a Bayesian network that models risk factors and acts as a framework for critically evaluating risk.  This framework has been evolving for more than a decade now and is helping information security professionals across many industries understand, measure, communicate and manage risk more effectively. 

In the communications context, you have to have a very clear understanding of what constitutes signal before you can effectively and reliably filter it out from noise.  The Open Group’s Risk Taxonomy gives us an important foundation for achieving a much clearer signal. 

I will be discussing this topic in more detail next week at The Open Group Conference in Newport Beach.  For more information on my session or the conference, visit: http://www.opengroup.org/newportbeach2013. 

Jack Jones has been employed in technology for the past twenty-nine years, and has specialized in information security and risk management for twenty-two years.  During this time, he’s worked in the United States military, government intelligence, consulting, as well as the financial and insurance industries.  Jack has over nine years of experience as a CISO, with five of those years at a Fortune 100 financial services company.  His work there was recognized in 2006 when he received the 2006 ISSA Excellence in the Field of Security Practices award at that year’s RSA conference.  In 2007, he was selected as a finalist for the Information Security Executive of the Year, Central United States, and in 2012 was honored with the CSO Compass award for leadership in risk management.  He is also the author and creator of the Factor Analysis of Information Risk (FAIR) framework.