Tag Archives: Risk Taxonomy Standard

Introducing Two New Security Standards for Risk Analysis—Part II – Risk Analysis Standard

By Jim Hietala, VP Security, The Open Group

Last week we took a look at one of the new risk standards recently introduced by The Open Group® Security Forum at the The Open Group London Conference 2013, the Risk Taxonomy Technical Standard 2.0 (O-RT). Today’s blog looks at its sister standard, the Risk Analysis (O-RA) Standard, which provides risk professionals the tools they need to perform thorough risk analyses within their organizations for better decision-making about risk.

Risk Analysis (O-RA) Standard

The new Risk Analysis Standard provides a comprehensive guide for performing effective analysis scenarios within organizations using the Factor Analysis of Information Risk (FAIR™) framework. O-RA is geared toward managing the frequency and magnitude of loss that can arise from a threat, whether human, animal or a natural event–in other words “how often bad things happened and how bad they are when they occur.” Used together, the O-RT and O-RA Standards provide organizations with a way to perform consistent risk modeling, that can not only help thoroughly explain risk factors to stakeholders but allow information security professionals to strengthen existing or create better analysis methods. O-RA may also be used in conjunction with other risk frameworks to perform risk analysis.

The O-RA standard is also meant to provide something more than a mere assessment of risk. Many professionals within the security industry often fail to distinguish between “assessing” risk vs. “analysis” of risk. This standard goes beyond assessment by supporting effective analyses so that risk statements are less vulnerable to problems and are more meaningful and defensible than assessments that provide only the broad risk-ratings (“this is a 4 on a scale of 1-to-5”) normally used in assessments.

O-RA also lays out standard process for approaching risk analysis that can help organizations streamline the way they approach risk measurement. By focusing in on these four core process elements, organizations are able to perform more effective analyses:

  • Clearly identifying and characterizing the assets, threats, controls and impact/loss elements at play within the scenario being assessed
  • Understanding the organizational context for analysis (i.e. what’s at stake from an organizational perspective)
  • Measuring/estimating various risk factors
  • Calculating risk using a model that represents a logical, rational, and useful view of what risk is and how it works.

Because measurement and calculation are essential elements of properly analyzing risk variables, an entire chapter of the standard is dedicated to how to measure and calibrate risk. This chapter lays out a number of useful approaches for establishing risk variables, including establishing baseline risk estimates and ranges; creating distribution ranges and most likely values; using Monte Carlo simulations; accounting for uncertainty; determining accuracy vs. precision and subjective vs. objective criteria; deriving vulnerability; using ordinal scales; and determining diminishing returns.

Finally, a practical, real-world example is provided to take readers through an actual risk analysis scenario. Using the FAIR model, the example outlines the process for dealing with an threat in which an HR executive at a large bank has left the user name and password that allow him access to all the company’s HR systems on a Post-It note tacked onto his computer in his office in clear view of anyone (other employees, cleaning crews, etc.) who comes into the office.

The scenario outlines four stages in assessing this risk:

  1. .    Stage 1: Identify Scenario Components (Scope the Analysis)
  2. .    Stage 2: Evaluate Loss Event Frequency (LEF)
  3. .    Stage 3: Evaluate Loss Magnitude (LM)
  4. .    Stage 4: Derive and Articulate Risk

Each step of the risk analysis process is thoroughly outlined for the scenario to provide Risk Analysts an example of how to perform an analysis process using the FAIR framework. Considerable guidance is provided for stages 2 and 3, in particular, as those are the most critical elements in determining organizational risk.

Ultimately, the O-RA is a guide to help organizations make better decisions about which risks are the most critical for the organization to prioritize and pay attention to versus those that are less important and may not warrant attention. It is critical for Risk Analysts and organizations to become more consistent in this practice because lack of consistency in determining risk among information security professionals has been a major obstacle in allowing security professionals a more legitimate “seat at the table” in the boardroom with other business functions (finance, HR, etc.) within organizations.

For our profession to evolve and grow, consistency and accurate measurement is key. Issues and solutions must be identified consistently and comparisons and measurement must be based on solid foundations, as illustrated below.

Risk2

Chained Dependencies

O-RA can help organizations arrive at better decisions through consistent analysis techniques as well as provide more legitimacy within the profession.  Without a foundation from which to manage information risk, Risk Analysts and information security professionals may rely too heavily on intuition, bias, commercial or personal agendas for their analyses and decision making. By outlining a thorough foundation for Risk Analysis, O-RA provides not only a common foundation for performing risk analyses but the opportunity to make better decisions and advance the security profession.

For more on the O-RA Standard or to download it, please visit: https://www2.opengroup.org/ogsys/catalog/C13G.

Jim Hietala, CISSP, GSEC, is the Vice President, Security for The Open Group, where he manages all IT security and risk management programs and standards activities. He participates in the SANS Analyst/Expert program and has also published numerous articles on information security, risk management, and compliance topics in publications including The ISSA Journal, Bank Accounting & Finance, Risk Factor, SC Magazine, and others.

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Introducing Two New Security Standards for Risk Analysis—Part I – Risk Taxonomy Technical Standard 2.0

By Jim Hietala, VP Security, The Open Group

At the The Open Group London 2013 Conference, The Open Group® announced three new initiatives related to the Security Forum’s work around Risk Management. The first of these was the establishment of a new certification program for Risk Analysts working within the security profession, the Open FAIR Certification Program.  Aimed at providing a professional certification for Risk Analysts, the program will bring a much-needed level of assuredness to companies looking to hire Risk Analysts, certifying that analysts who have completed the Open FAIR program understand the fundamentals of risk analysis and are qualified to perform that analysis.

Forming the basis of the Open FAIR certification program are two new Open Group standards, version 2.0 of the Risk Taxonomy (O-RT) standard originally introduced by the Security Forum in 2009, and a new Risk Analysis (O-RA) Standard, both of which were also announced at the London conference. These standards are the result of ongoing work around risk analysis that the Security Forum has been conducting for a number of years now in order to help organizations better understand and identify their exposure to risk, particularly when it comes to information security risk.

The Risk Taxonomy and Risk Analysis standards not only form the basis and body of knowledge for the Open FAIR certification, but provide practical advice for security practitioners who need to evaluate and counter the potential threats their organization may face.

Today’s blog will look at the first standard, the Risk Taxonomy Technical Standard, version 2.0. Next week, we’ll look at the other standard for Risk Analysis.

Risk Taxonomy (O-RT) Technical Standard 2.0

Originally, published in January 2009, the O-RT is intended to provide a common language and references for security and business professionals who need to understand or analyze risk conditions, providing a common language for them to use when discussing those risks. Version 2.0 of the standard contains a number of updates based both on feedback provided by professionals that have been using the standard and as a result of research conducted by Security Forum member CXOWARE.

The majority of the changes to Version 2.0 are refinements in terminology, including changes in language that better reflect what each term encompasses. For example, the term “Control Strength” in the original standard has now been changed to “Resistance Strength” to reflect that controls used in that part of the taxonomy must be resistive in nature.

More substantive changes were made to the portion of the taxonomy that discusses how Loss Magnitude is evaluated.

Why create a taxonomy for risk?  For two reasons. First, the taxonomy provides a foundation from which risk analysis can be performed and talked about. Second, a tightly defined taxonomy reduces the inability to effectively measure or estimate risk scenarios, leading to better decision making, as illustrated by the following “risk management stack.”

Effective Management


↑

Well-informed Decisions

Effective Comparisons


↑

Meaningful Measurements

Accurate Risk Model

The complete Risk Taxonomy is comprised of two branches: Loss Event Frequency (LEF) and Loss Magnitude (LM), illustrated here:

Risk1

Focusing solely on pure risk (which only results in loss) rather than speculative risk (which might result in either loss or profit), the O-RT is meant to help estimate the probable frequency and magnitude of future loss.

Traditionally LM has been far more difficult to determine than LEF, in part because organizations don’t always perform analyses on their losses or they just stick to evaluating “low hanging fruit” variables rather than delve into determining more complex risk factors. The new taxonomy takes a deep dive into the Loss Magnitude branch of the risk analysis taxonomy providing guidance that will allow Risk Analysts to better tackle the difficult task of determining LM. It includes terminology outlining six specific forms of loss an organization can experience (productivity, response, replacement, fines and judgments, competitive advantage, reputation) as well as how to determine Loss Flow, a new concept in this standard.

The Loss Flow analysis helps identify how a loss may affect both primary (owners, employees, etc.) and secondary (customers, stockholders, regulators, etc.) stakeholders as a result of a threat agent’s action on an asset. The new standard provides a thorough overview on how to assess Loss Flow and identify the loss factors of any given threat.

Finally, the standard also includes a practical, real-world scenario to help analysts understand how to put the taxonomy to use in within their organizations. O-RT provides a common linguistic foundation that will allow security professionals to then perform the risk analyses as outlined in the O-RA Standard.

For more on the Risk Taxonomy Standard or to download it, visit: https://www2.opengroup.org/ogsys/catalog/C13K.

Jim Hietala, CISSP, GSEC, is the Vice President, Security for The Open Group, where he manages all IT security and risk management programs and standards activities. He participates in the SANS Analyst/Expert program and has also published numerous articles on information security, risk management, and compliance topics in publications including The ISSA Journal, Bank Accounting & Finance, Risk Factor, SC Magazine, and others.

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Improving Signal-to-Noise in Risk Management

By Jack Jones, CXOWARE

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.”

Taxonomy image

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 HeadshotJack 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.

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Security Forum Completes Third & Final Phase of Risk Management Project: Cookbook for ISO/IEC 27005:2005

By Jim Hietala, The Open Group

The Open Group Security Forum recently completed the last phase of our major risk management initiative with the publication of the Cookbook for ISO/IEC 27005:2005. The Cookbook is the culmination of the work the members of the Security Forum have undertaken over the past two and a half years — a comprehensive initiative aimed at eliminating widespread industry confusion about risk management among risk managers, security and IT professionals, as well as business managers.

The new Cookbook for ISO/IEC 27005:2005 is meant to be a “recipe” of sorts, providing a detailed description of how to apply The Open Group’s FAIR (Factor Analysis for Information Risk) Risk Taxonomy Standard to any other risk management framework to help improve the consistency and accuracy of the resulting framework. By following the “cookbook” example in the guide, risk technology practitioners can apply the example with significantly beneficial outcomes when using other frameworks of their choice.

We created the guide for anyone tasked with selecting, performing, evaluating, or developing a risk assessment methodology, including all stakeholders responsible for areas with anything risk related, such as business managers, information security/risk management professionals, auditors, and regulators (both policy-makers and as law-makers).

The initiative started in the summer of 2008 with Phase 1, the Risk Taxonomy Standard, which is based on the FAIR methodology and specifies a standard definition and taxonomy for information security risk, and how to apply this to perform risk assessments. A year later, we completed the second phase and published a technical guide entitled Requirements for Risk Assessment Methodologies, that describes key risk assessment traits, provides advice on quantitative versus qualitative measurements and addresses the need for senior management involvement. The Cookbook completes our project.

As we wrap up our work on this initiative and look at the current state of security, with escalating cyber threats, growing risks around mobile computing, and evolving government regulations, I can say with confidence that we have met our goals in creating comprehensive and needed guidance and standards in the area of risk analysis.

Looking ahead at the rest of 2011, The Open Group Security Forum has an active pipeline of projects to address the increasing risk and compliance concerns facing IT departments across organizations today. Be on the lookout for the publication of the ISM3 standard, revised Enterprise Security Architecture Guide, and ACEML standard in the late spring/early summer months!

Jim HietalaAn IT security industry veteran, Jim Hietala is Vice President of Security at The Open Group, where he is responsible for security programs and standards activities. He holds the CISSP and GSEC certifications. Jim is based in the U.S.

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