1. Security Risk Management Jamie Sharp CISSP Security Advisor Microsoft Australia

2. Session Overview Security Risk Management Concepts Security Risk Management Prerequisites Assessing Risk Conducting Decision Support Implementing Controls and Measuring Program Effectiveness

3. Agenda Security Risk Management Concepts Security Risk Management Prerequisites Assessing Risk Conducting Decision Support Implementing Controls and Measuring Program Effectiveness

4. Why Develop a Security Risk Management Process? Security risk management –A process for identifying, prioritizing and managing risk to an acceptable level within the organization A formal security risk management process can address the following: –Threat response time –Regulatory compliance –Infrastructure management costs –Risk prioritization and management

5. Critical Success Factors Executive sponsorship Well defined list of stakeholders Organizational maturity Open communication and teamwork Holistic view of the organization Security risk management team authority

6. Risk Management Strategies Reactive –A process that responds to security events as they occur Proactive –A process that reduces the risk of new vulnerabilities in your organization

7. Risk Assessment Methodologies BenefitsDrawbacks Quantitative Risks prioritized by financial impact; assets prioritized by their financial values Results facilitate management of risk by return on security investment Results can be expressed in management-specific terminology Impact values assigned to risks are based upon subjective opinions of the participants Very time-consuming Can be extremely costly Qualitative Enables visibility and understanding of risk ranking Easier to reach consensus Not necessary to quantify threat frequency Not necessary to determine financial values of assets Insufficient granularity between important risks Difficult to justify investing in control as there is no basis for a cost-benefit analysis Results dependent upon the quality of the risk management team that is created

8. Microsoft Security Risk Management Process Implementing Controls 3 Conducting Decision Support 2 Measuring Program Effectiveness 4 Assessing Risk 1

9. Agenda Security Risk Management Concepts Security Risk Management Prerequisites Assessing Risk Conducting Decision Support Implementing Controls and Measuring Program Effectiveness

10. Risk Management vs. Risk Assessment Risk ManagementRisk Assessment Goal Manage risks across business to acceptable level Identify and prioritize risks Cycle Overall program across all four phases Single phase of risk management program ScheduleScheduled activity Continuous activity Alignment Aligned with budgeting cycles Not applicable

11. Communicating Risk Well-Formed Risk Statement (Exposure) Well-Formed Risk Statement (Exposure) Impact What is the impact to the business? Probability How likely is the threat given the controls? Asset What are you trying to protect? Threat What are you afraid of happening? Vulnerability How could the threat occur? Mitigation What is currently reducing the risk?

12. Starting Points NIST http://www.nist.gov http://www.nist.gov –Security Self-Assessment Guide for Information Technology Systems (SP-800-26) IT Governance Institute http://www.isaca.org http://www.isaca.org –Control Objectives for Information and Related Technology (CobiT) ISO http://www.iso.org http://www.iso.org –ISO 17799 - ISO Code of Practice for Information Security Management SAI Global http://www.standards.com.au http://www.standards.com.au –AS/NZS 4360:2004 - Risk Management –AS/NZS 7799.2:2003 - Information Security Management Microsoft Security Risk Management Guide –http://www.microsoft.com/technet/security/guidance/secriskhttp://www.microsoft.com/technet/security/guidance/secrisk

13. Risk Management Maturity Self- Assessment LevelState 0 Non-existent 1 Ad hoc 2 Repeatable 3 Defined process 4 Managed 5 Optimized

14. ExecutiveSponsor “What's important?” IT Group “Best control solution” Information Security Group “Prioritize risks” Roles and Responsibilities Operate and support security solutions Operate and support security solutions Design and build security solutions Define security requirements Measure security solutions Measure security solutions Assess risks Assess risks Determine acceptable risk Determine acceptable risk

15. Agenda Security Risk Management Concepts Security Risk Management Prerequisites Assessing Risk Conducting Decision Support Implementing Controls and Measuring Program Effectiveness

16. Overview of the Assessing Risk Phase Implementing Controls 3 Conducting Decision Support 2 Measuring Program Effectiveness 4 Assessing Risk 1 Plan risk data gatheringPlan risk data gathering Gather risk dataGather risk data Prioritize risksPrioritize risks

17. Understanding the Planning Step The primary tasks in the planning step include the following: –Alignment –Scoping –Stakeholder acceptance –Setting expectations

18. Facilitated Data Gathering Elements collected during facilitated data gathering include: –Organizational assets –Asset description –Security threats –Vulnerabilities –Current control environment –Proposed controls Keys to successful data gathering include: –Meet collaboratively with stakeholders –Build support –Understand the difference between discussing and interrogating –Build goodwill –Be prepared

19. Identifying and Classifying Assets An asset is anything of value to the organization and can be classified as one of the following: –High business impact –Moderate business impact –Low business impact

20. Organizing Risk Information Use the following questions as an agenda during the facilitated discussions: –What asset are you protecting? –How valuable is the asset to the organization? –What are you trying to avoid happening to the asset? –How might loss or exposures occur? –What is the extent of potential exposure to the asset? –What are you doing today to reduce the probability of the extent of damage to the asset? –What are some actions that you can take to reduce the probability in the future?

21. Estimating Asset Exposure Exposure: The extent of potential damage to an asset Use the following guidelines to estimate asset exposure: –High exposure: severe or complete loss of the asset –Medium exposure: limited or moderate loss –Low exposure: minor or no loss

22. Estimating Threat Probability Use the following guidelines to estimate probability for each threat and vulnerability identified: –High threat: Likely—one or more impacts expected within one year –Medium threat: Probable—impact expected within two to three years –Low threat: Not probable—impact not expected to occur within three years

23. Scenario 1: Facilitating a Risk Discussion at Woodgrove Bank Woodgrove Bank is a consumer financial institution in the process of conducting a Security Risk Management project –Task One: Determining Organizational Assets and Scenarios Interest Calculation Systems Customer Personally Identifiable Information (PII) Reputation Consumer financial data—High Business Impact (HBI)

24. Scenario 1: Facilitating a Risk Discussion at Woodgrove Bank Woodgrove Bank is a consumer financial institution in the process of conducting a Security Risk Management project –Task Two: Identifying Threats Threat of a loss of integrity to consumer financial data

25. Scenario 1: Facilitating a Risk Discussion at Woodgrove Bank Woodgrove Bank is a consumer financial institution in the process of conducting a Security Risk Management project –Task Three: Identifying Vulnerabilities Theft of financial advisor credentials by trusted employee abuse using non-technical attacks, for example, social engineering or eavesdropping Theft of financial advisor credentials off local area network (LAN) hosts through the use of outdated security configurations Theft of financial advisor credentials off remote, or mobile, hosts as a result of outdated security configurations

26. Scenario 1: Facilitating a Risk Discussion at Woodgrove Bank Woodgrove Bank is a consumer financial institution in the process of conducting a Security Risk Management project –Task Four: Estimating Asset Exposure Breach of integrity through trusted employee abuse: –Damaging, but not severe. Each financial advisor can only access customer data that he/she manages. Breach of integrity through credential theft on LAN hosts: –May result in a severe, or high, level of damage. Breach of integrity through credential theft on mobile hosts: –Could have a severe, or high, level of damage. The discussion group notes that the security configurations on remote hosts often lag behind LAN systems.

27. Scenario 1: Facilitating a Risk Discussion at Woodgrove Bank Woodgrove Bank is a consumer financial institution in the process of conducting a Security Risk Management project –Task Five: Identifying Existing Controls and Probability of Exploit Agreement that their remote hosts, or mobile hosts, do not receive the same level of management as those on the LAN.

28. Scenario 1: Facilitating a Risk Discussion at Woodgrove Bank Woodgrove Bank is a consumer financial institution in the process of conducting a Security Risk Management project –Task Six: Summarizing the Risk Discussion Risk Assessment Facilitator summarizes the discussion and highlights the assets, threats, and vulnerabilities discussed.

29. Scenario 1: Facilitating a Risk Discussion at Woodgrove Bank Woodgrove Bank is a consumer financial institution in the process of conducting a Security Risk Management project –Task One: Determining Organizational Assets and Threats –Task Two: Identifying Threats –Task Three: Identifying Vulnerabilities –Task Four: Identifying Asset Exposure –Task Five: Identifying Existing Controls and Probability of Exploit –Task Six: Summarizing the Risk Discussion

30. Defining Impact Statements Impact data includes the following information:

31. Scenario 2: Defining an Impact Statement For Woodgrove Bank Asset Name Asset Class DID Level Threat Description Vulnerability Description ER (H,M,L) IR (H,M,L) Consumer financial investment data HBIHost Unauthorized access to consumer data through theft of Financial Advisor credentials Theft of credentials of managed LAN client via outdated security configurations HH Consumer financial investment data HBIHost Unauthorized access to consumer data through theft of Financial Advisor credentials Theft of credentials off managed remote client via outdated security configurations HH Consumer financial investment data HBIData Unauthorized access to consumer data through theft of Financial Advisor credentials Theft of credentials by trusted employee abuse, via non-technical attacks LM

32. Understanding Risk Prioritization End of risk prioritization Detailed level risk prioritization Conduct detailed- level risk prioritization Review with stakeholders Summary level risk prioritization Conduct summary- level risk prioritization Start risk prioritization

33. Conducting Summary-Level Risk Prioritization The summary-level prioritization includes the following: 1.Determine impact level 2.Estimate summary-level probability 3.Complete the summary-level risk list 4.Review with stakeholders 1 High. Likely—one or more impacts expected within one year Medium. Probable—impact expected within two to three years Low. Not probable—impact not expected to occur within three years 2 4 3

34. Scenario Three: Summary-Level Risk Prioritization at Woodgrove Bank Task One: Determine Impact Level –Trusted Employee Theft Impact HBI asset class *Low Exposure = Moderate Impact –LAN Host Compromise Impact HBI asset class *High Exposure = High Impact –Remote Host Compromise Impact HBI asset class *High Exposure = High Impact

35. Scenario Three: Summary-Level Risk Prioritization at Woodgrove Bank Task Two: Estimate Summary-Level Probability –Trusted Employee Theft Probability Low –LAN Host Compromise Probability Medium –Remote Host Compromise Probability High

36. Scenario Three: Summary-Level Risk Prioritization at Woodgrove Bank Task Three: Complete the Summary-Level Risk List –Trusted Employee Theft Risk Moderate Impact *Low Probability = Low –LAN Host Compromise Risk High Impact *Medium Probability = High –Remote Host Compromise Risk High Impact *High Probability = High –Enter Results in the Impact Statement Spreadsheet

37. Scenario Three: Summary-Level Risk Prioritization at Woodgrove Bank Task Four: Review With Stakeholders –Trusted Employee abuse risk is rated as Low in the summary level risk list and does not need to graduate to the detailed level risk prioritization step –LAN and remote host compromise risks are both rated as high and so are then prioritized at the detailed level

38. Scenario Three: Summary-Level Risk Prioritization at Woodgrove Bank Task One: Determine Impact Level Task Two: Estimate Summary Level Probability Task Three: Complete the Summary-Level Risk List Task Four: Review With Stakeholders

39. Conducting Detailed-Level Risk Prioritization The following four tasks outline the process for building a detailed-level list of risks: 1.Determine impact and exposure 2.Identify current controls 3.Determine probability of impact 4.Determine detailed risk level Use the Detailed-Level Risk Prioritization template (SRJA3-Detailed Level Risk Prioritization.xls)

40. Scenario Four: Detailed-Level Risk Prioritization at Woodgrove Bank Task One: Determine Impact and Exposure –LAN Host Compromise Exposure Rating: 4 (80%) HBI = 10 Impact Rating: 10 *80% = 8 –Remote Host Compromise Exposure Rating: 4 (80%) HBI = 10 Impact Rating: 10 *80% = 8 –Impact Range = Between 7-10 which compares to High

41. Scenario Four: Detailed-Level Risk Prioritization at Woodgrove Bank Task Two: Identify Current Controls –Financial Advisors can only access accounts they own; thus, the exposure is less than 100 percent. –E-mail notices to patch or update hosts are proactively sent to all users. –Antivirus and patch updates are measured and enforced on the LAN every few hours. This control reduces the time window when LAN hosts are vulnerable to attack.

42. Scenario Four: Detailed-Level Risk Prioritization at Woodgrove Bank Task Three: Determine Probability of Impact –LAN and remote hosts: Likely that all vulnerability attributes in the High category will be seen inside and outside Woodgrove’s LAN environment in the near future. Vulnerability value = 5 for both risks –Control Effectiveness: LAN: Result of Control Effectiveness Questions = 1 Remote: Result of Control Effectiveness Questions = 5 –Total Probability Rating: (Sum of Vulnerability and Control Effectiveness) LAN = 6 Remote = 10

43. Scenario Four: Detailed-Level Risk Prioritization at Woodgrove Bank Task Four: Determine Detail Risk Level –Impact Rating *Probability Rating LAN: 8 *6 = 48 Remote Hosts: 8 *10 = 80 Both rate an overall risk of High

44. Scenario Four: Detailed-Level Risk Prioritization at Woodgrove Bank Task One: Determine Impact and Exposure Task Two: Identify Current Controls Task Three: Determine Probability of Impact Task Four: Determine Detail Risk Level

45. Quantifying Risk The following tasks outline the process for determining the quantitative value: –Assign a monetary value to each asset class –Input the asset value for each risk –Produce the single-loss expectancy value (SLE) –Determine the annual rate of occurrence (ARO) –Determine the annual loss expectancy (ALE)

46. Scenario Five: Quantifying Risk For Woodgrove Bank Task One: Assign Monetary Values to Asset Classes –Using 5% Materiality Guideline for valuing assets –Net Income: $200 Million annually –HBI Asset Class: $10 Million (200 *5%) –MBI Asset Class: $5 Million (based on past spending) –LBI Asset Class: $1 Million (based on past spending)

47. Scenario Five: Quantifying Risk For Woodgrove Bank Task Two: Identify the Asset Value –Consumer financial data = HBI Asset Class –HBI = $10 Million –Asset Value = $10 Million

48. Scenario Five: Quantifying Risk For Woodgrove Bank Task Three: Produce the Single Loss Expectancy Value (SLE) 80% Exposure Value $8 SLE 4 4 Exposure Rating $10 Asset Class Value LAN Host Risk ($ in millions) Remote Host Risk ($ in millions) Risk Description High Business Impact Value = $MExposure RatingExposure Factor % 5100 Asset Class480 HBI Value$ M360 MBI Value$ M / 2240 LBI Value$ M / 4120 Estimated Risk Value =Asset Class Value * Exposure Factor % = SLE

49. Scenario Five: Quantifying Risk For Woodgrove Bank Task Four: Determine the Annual Rate of Occurrence (ARO) –LAN Host ARO: Based on the qualitative assessment of Medium probability, the Security Risk Management Team estimates the risk to occur at least once in two years; thus, the estimated ARO is 5. –Remote Host ARO: Based on the qualitative assessment of High probability, the Security Risk Management Team estimates the risk to occur at least once per year; thus, the estimated ARO is 1. Qualitative Rating DescriptionARO rangeDescription Examples HighLikely>=1 Impact once or more per year MediumProbable.99 to.33 At least once every 1-3 years Low Not probable.33 At least once greater than 3 years

50. Scenario Five: Quantifying Risk For Woodgrove Bank Task Five: Determine the Annual Loss Expectancy (ALE) (SLE *ARO) Risk Description Asset Class Value Exposure Rating Exposure Value SLEAROALE LAN Host Risk ($ in millions) $10480%$80.5$4 Remote Host Risk ($ in millions) $10480%$81

51. Scenario Five: Quantifying Risk For Woodgrove Bank Task One: Assign Monetary Values to Asset Classes Task Two: Identify the Asset Value Task Three: Produce the Single Loss Expectancy Value (SLE) Task Four: Determine the Annual Rate of Occurrence (ARO) Task Five: Determine the Annual Loss Expectancy (ALE) (SLE *ARO)

52. Assessing Risk: Best Practices Analyze risks during the data gathering process Conduct research to build credibility for estimating probability Communicate risk in business terms Reconcile new risks with previous risks

53. Agenda Security Risk Management Concepts Security Risk Management Prerequisites Assessing Risk Conducting Decision Support Implementing Controls and Measuring Program Effectiveness

54. Overview of the Decision Support Phase Implementing Controls 3 Conducting Decision Support 2 Measuring Program Effectiveness 4 Assessing Risk 1 1.Define functional requirements 2.Identify control solutions 3.Review solution against requirements 4.Estimate degree of risk reduction 5.Estimate cost of each solution 6.Select the risk mitigation strategy

55. Identifying Output for the Decision Support Phase Key elements to gather include: –Decision on how to handle each risk –Functional requirements –Potential control solutions –Risk reduction of each control solution –Estimated cost of each control solution –List of control solutions to be implemented

56. Considering the Decision Support Options Options for handling risk: ATAM –Accept –Transfer –Avoid –Mitigate

57. Security risk management team Securitysteeringcommittee Step 1: Define Functional Requirements Select the risk mitigation Select the risk mitigationstrategy 6 Mitigationowner Identify control solutions Identify control solutions 2 2 Define Definefunctionalrequirements 1 Estimate Estimate cost of each solution 5 Estimate degree of risk reduction 4 Review solutions against requirements 3

58. Step 2: Identify Control Solutions Security risk management team Securitysteeringcommittee Select the risk mitigation Select the risk mitigationstrategy 6 Mitigationowner Identify control solutions Identify control solutions 2 Define Definefunctionalrequirements 1 Estimate Estimate cost of each solution 5 Estimate degree of risk reduction 4 Review solutions against requirements 3

59. Step 3: Review Solutions Against Requirements Security risk management team Securitysteeringcommittee Select the risk mitigation Select the risk mitigationstrategy 6 Mitigationowner Identify control solutions Identify control solutions 2 Define Definefunctionalrequirements 1 Estimate Estimate cost of each solution 5 Estimate degree of risk reduction 4 Review solutions against requirements 3

60. Step 4: Estimate Degree of Risk Reduction Security risk management team Securitysteeringcommittee Select the risk mitigation Select the risk mitigationstrategy 6 Mitigationowner Identify control solutions Identify control solutions 2 2 Define Definefunctionalrequirements 1 Estimate Estimate cost of each solution 5 Estimate degree of risk reduction 4 Review solutions against requirements 3

61. Step 5: Estimate Cost of Each Solution Security risk management team Securitysteeringcommittee Select the risk mitigation Select the risk mitigationstrategy 6 Mitigationowner Identify control solutions Identify control solutions 2 Define Definefunctionalrequirements 1 Estimate Estimate cost of each solution 5 Estimate degree of risk reduction 4 Review solutions against requirements 3

62. Step 6: Select the Risk Mitigation Strategy Security risk management team Securitysteeringcommittee Select the risk mitigation Select the risk mitigationstrategy 6 Mitigationowner Identify control solutions Identify control solutions 2 Define Definefunctionalrequirements 1 Estimate Estimate cost of each solution 5 Estimate degree of risk reduction 4 Review solutions against requirements 3

63. Conducting Decision Support: Best Practices Assign a security technologist to each risk Set reasonable expectations Build team consensus Focus on the amount of risk after the mitigation solution

64. Agenda Security Risk Management Concepts Security Risk Management Prerequisites Assessing Risk Conducting Decision Support Implementing Controls and Measuring Program Effectiveness

65. Implementing Controls 3 Conducting Decision Support 2 Measuring Program Effectiveness 4 Assessing Risk 1 Implementing Controls Seek a holistic approachSeek a holistic approach Organize by Defense- in-DepthOrganize by Defense- in-Depth

66. Organizing the Control Solutions Critical success determinants to organizing control solutions include: –Communication –Team scheduling –Resource requirements

67. Organizing by Defense-in-Depth Network Host Application Data Physical

68. Implementing Controls 3 Conducting Decision Support 2 Measuring Program Effectiveness 4 Assessing Risk 1 Measuring Program Effectiveness Develop scorecardDevelop scorecard Measure control effectivenessMeasure control effectiveness

69. Developing a Security Risk Scorecard for Your Organization A simple security risk scorecard organized by the Defense-in-Depth layers: FY05 Q1FY05 Q2FY05 Q3FY05 Q4 Physical HM Network MM Host MM Application MH Data LL Risk Levels (H, M, L)

70. Measuring Control Effectiveness Methods for measuring the effectiveness of implemented controls include: –Direct testing –Submitting periodic compliance reports –Evaluating widespread security incidents

71. Summary Decide on risk management methodology Determine your maturity level Conduct risk assessment Conduct decision support Implement controls & measure effectiveness

72. Next Steps Australia Security Portal http://www.microsoft.com/australia/security Microsoft Security Risk Management Guide http://www.microsoft.com/technet/security/guidance/secrisk MOF - Security Management http://www.microsoft.com/technet/itsolutions/cits/mo/smf/mofsmsmf.mspx Additional security tools and content http://www.microsoft.com/security/guidance