The Financial Impact of Cyber Risk 50 Questions Every CFO Should Ask ANSI Homeland Security Standards Panel (ANSI-HSSP) October 2, 2008 3:00 to 4:15 PM U.S. Chamber of Commerce

Presenters Moderator  Ty R. Sagalow, President, American International Group (AIG) Product Development, and Workshop Leader Panelists Michael Castagna, Chief Information Security Officer, U.S. Department of Commerce Larry Clinton, President, Internet Security Alliance (ISA) Harrison Oellrich, Managing Director, Guy Carpenter & Company, LLC Regan Adams, Former Assistant Privacy Counsel, Goldman Sachs

Agenda Background: Setting the Scene Development of an Action Guide to analyze, manage, and transfer financial risk for cyber security Questions and Answers

Background Setting the Scene Cyber security is vital to the economic well-being of the U.S. What does cyber security really mean? No standard definition, but one interpretation is the protection of any computer system, software program, and data against unauthorized disclosure, transfer, modification, or destruction, whether accidental or intentional Cyber security attacks can come from internal networks, the Internet, or other private or public systems

Background (continued) Corporations use cyber systems for multiple purposes Real-time tracking of supply chains Inventory management Improvement of employee efficiency Generation of on-line commerce Twenty-five percent of America’s economic value – up to $3 trillion a day – moves over network connections each day

Background While corporations appreciate the benefits of the Internet, they have often failed to properly account for its financial risks 50% of Senior Executives said they did not know how much money was lost due to an attack Congressional Research Service estimates that the economic impact of cyber attacks on business has grown to over $226 billion annually Total average cost of a data breach grew to approximately $200 per record compromised in 2007

Background There is a substantial body of work dealing with the technical standards of cyber security Plenty of attention paid to important technical issues, such as data encryption and best-in-class security technologies BUT...to date, there has not been any comprehensive methodology for understanding and mitigating the financial losses associated with cyber risk

Net Financial Risk Formula

What Are Some of the Costs? Failure of security can have costly consequences Civil and criminal lawsuits Lost trade secrets Breach of contract, breach of privacy Reputation damage Business interruption, lost income

Development of Financial Risk Action Guide To promote understanding of financial risk, the American National Standards Institute’s (ANSI) Homeland Security Standards Panel (HSSP) and the Internet Security Alliance (ISA) launched a workshop

Development of Financial Risk Action Guide The Goal Create an Action Guide to analyze, manage, and transfer financial risk for Cyber Security The Team More than 30 industry leaders and governmental partners The key to understanding the financial risks of cyber security is to fully embrace its multi-disciplinary nature, covering many areas of a company

Resolve: Multidisciplinary Feed to CFO A CFO needs to know the key questions to ask to the major stakeholders in all corporate domains, including: General Counsel Chief Risk Officer Chief Compliance Officer Chief Technology Officer Heads of Corporate Communications, Investor Relations, and Customer Service Head of Human Resources

Time Table The Timetable First Workshop held in March 2008 Draft Action Guide prepared by teams representing the different disciplines Subsequent Workshops held in May and July Action Guide finalized in early August Publication is being released this month, “National Cyber Awareness Month”

Action Guide: How to get it The Financial Impact of Cyber Risk 50 Questions Every CFO Should Ask Release date: October 20, 2008 Register in advance for a free electronic copy of the document to be e-mailed to you early that morning: webstore.ansi.org/cybersecurity