Are Your Risk Management Efforts Enabling Partnership Opportunities?

Chris McClean

Forrester's Security and Risk Management clients often describe the frustration they feel when they are not included in important initiatives until after decisions have been made. Lately, this situation has been especially pronounced among decisions to enter partnership agreements based on service, performance, and cost considerations... with risk management only brought in later to identify and mitigate potential points of exposure.

At the same time, Forrester's Sourcing and Vendor Management professionals find themselves facing their own challenges when it comes to managing the risk of partner relationships. In a Q3, 2011 suvey of 575 Sourcing and Vendor Management professionals, top concerns related at "X-as-a-service" relationships included the lack of recourse if a vendor fails or goes out of business, the lack of a clear way to assess risk of a third party, and inability to manage how providers are handling data. ( Source: Forrsights Services Survey, Q3 2011)

In order to bridge this gap, Security and Risk Management professionals need to deliver a streamlined way to insert risk identification, analysis, and evaluation steps within their organization's existing vendor management lifecycle. Forrester customers who have taken this approach - for example, by introducing short, 10-15 question surveys to determine whether more detailed vendor risk assessments are warranted - report better oversight of vendor risk and better involvement in the decision making process. In some cases, Security and Risk Management professionals have even reported casting a decisive thumbs-down vote to block a new vendor contract because it represents unacceptable risk.

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What’s Holding CISOs Back?

Stephanie Balaouras

According to our survey data dating back to 2008, despite year after year of high profile security breaches from Heartland Payment Systems to Wikileaks to Sony, security budgets have only increased by single digits. This is hardly enough to keep up with the increasing sophistication of attacks, the avalanche of breach notification laws and the changing business and IT environment.

The changing business and IT environment is perhaps the greatest concern. With a massive explosion of mobile devices and other endpoint form factors and an ever expanding ecosystem of customers, partners, clouds, service providers and supply chains, you increasingly have less and less direct control over your data, your applications and end-user identities. We refer to this expanding ecosystem as the “extended enterprise.” An extended enterprise is one for which, a business function is rarely, if ever, a self-contained workflow within the infrastructure boundaries of the company. We believe that the extended enterprise is such a major shift for CISOs and security professionals that we dedicated our upcoming Security Forum to it as well as a significant stream of research.

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IBM To Acquire Algorithmics... GRC And Financial Risk Management Get A Little Closer

Chris McClean

Today IBM announced plans to acquire the Fitch Group’s Algorithmics, a heavy-hitter in financial risk management software and services market, for $387 million.

 Here are my initial thoughts about today’s announcement:

  • IBM is making a (relatively safe) bet that operational and financial risk functions will continue to comes together. Regulatory pressures from Basel III, Dodd-Frank, and Solvency II, as well as the competitive realities of the global market, are pushing for banks and insurance companies to have more comprehensive oversight of exposure across all domains of risk. In fact, analytics should be a top priority of any compliance program. It will be some time before IBM (or any other vendor) can deliver a single platform to manage operational, credit, market, liquidity, etc. in one place; however, the addition of Algo’s subject matter expertise and even basic integration of data for a single source of reporting offers customers attractive benefits.
  • IBM still faces heavy competition in financial services for both operational risk with its OpenPages product and financial risk with its new Algo offerings... however. there are very few significant competitors that have strength in both. IBM’s announcement today was a strong move against these other few, most notably Oracle and SAS.
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Is CyberLiability Insurance Becoming A More Feasible Risk Management Strategy?

Andrew Rose

The cyberinsurance market today represents only a tiny segment of the overall insurance industry, and a recent Forrester paper on the topic identified that only a very small percentage of organizations that have purchased business insurance have also purchased cyberinsurance. Many insurance companies, however, are now estimating a period of significant growth in this area, and recent conversations suggest that more companies are either interested in this coverage or have recently purchased such policies.

I'm interested to know where your organization sits on this topic. If you have a minute, please respond to our short poll on the topic

You can find the poll in the right column of this page, below the “About the Analyst” or “About this Blog” section.

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7/22 UPDATE - An interesting story which seems to suggest that Sony may be trying to leverage cover from existing 'traditional' insurance policies to cover for recent cyber-losses, much to the annoyance of the insurer... http://www.theregister.co.uk/2011/07/22/sony_breach_insurance/

In the unlikely event that Sony do manage to get the insurer to pay, that would be an interesting development for the future of cyberliability insurance...

InfoSec In The Supply Chain

Andrew Rose

The importance of data security throughout the supply chain is something we have all considered, but Greg Schaffer, acting deputy undersecretary of the Homeland Security Department of the National Protection and Programs directorate at the Department of Homeland Security, recently acknowledged finding instances where vulnerabilities and backdoors have been deliberately placed into hardware and software. This is not a risk that hasn’t been previously pondered as, in 1995, we watched Sandra Bullock star in ‘The Net," and address this very issue. However the startling realism of Mr. Schaffer’s admission means that it can no longer be categorized as a "hollywood hacking" or a future risk.

The potential impact of such backdoors here is terrifying and it is easy to imagine crucial response systems being remotely disabled at critical points in the name of financial or political advantage.

If we are dedicated to the security of our data, we must consider how to transform our due diligence process for any new product or service. How much trust can we put in any technology solution where many of the components originate from lowest cost providers situated in territories recognized to have an interest in overseas corporate secrets? We stand a chance of finding a keylogger when it’s inserted as malware, but if it’s built into the chipset on your laptop, that’s an entirely different challenge… Do we, as a security community, react to this and change our behavior now? Or do we wait until the risk becomes more apparent and widely documented? Even then, how do we counter this threat without blowing our whole annual budget on penetration testing for every tiny component and sub-routine? Where is the pragmatic line here?

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RSA Breach: Two-Factor Authentication Is Not Dead But Is Morphing And Getting More Granular

Andras Cser

Many IT end-user companies deployed hard tokens at a time when intermediate-risk choices were thinner on the ground, and some of these companies would have benefited from a more granular approach anyway. In general, we are seeing companies moving towards risk-based authentication augmented by mobile soft tokens (sometimes called from a mobile application through an API). These software-only solutions are easier and cheaper to deploy, particularly if the target population is on smartphones, and a lot easier to patch in case of an attack. Interestingly, risk-based authentication is now asked about not only in the B2C context (which was a norm about a year ago), but also in the B2E context as well. Right now, end-user companies are thinking about:

  1. How they can ditch hardware tokens altogether; and
  2. How can they can move risk-based authentication, and increasingly authorization (fraud management), into the cloud.

The Power Of Data Analysis - "Spamalytics"

Edward Ferrara

Some of you may have seen the article in the New York Times by John Markoff (endnote1) announcing a paper to be presented at last week’s IEEE conference. This paper is an update to research conducted by a team at the International Computer Science Institute in Berkeley, California. The institute is associated with the University of California, San Diego and the University of California, Berkeley. A paper published by the team in 2008 Spamalytics: An Empirical Analysis of Spam Marketing Conversion outlines interesting research in the area the research team has coined as “spamalytics.”

The paper describes a methodology to understand the architecture of a spam campaign and how a spam message converts into a financial transaction. The team looks at the “conversion rate” or the probability an unsolicited email will create a sale. The team uses a parasitic infiltration of an existing botnet infrastructure to analyze two spam campaigns: one designed to propagate a malware Trojan, the other marketing online pharmaceuticals. The team looked at nearly a half billion spam emails to identify:

  • the number of spam emails successfully delivered
  • the number of spam emails successfully delivered through popular anti-spam filters
  • the number of spam emails that elicit user visits to the advertised sites
  • the number of “sales” and “infections” produced
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More On Metrics...

Edward Ferrara

At Forrester, we place a great deal of emphasis on relevance and what it means when researching a topic.  For the busy executive, it's sometimes difficult to wade through deep lists of operational security metrics and really understand how relevant the information is to the mission of the business.  Further to the problem is the need to understand what your metrics say about the security posture of your organization and the health of the business overall.

The draft title of the report I'm currently working on is Information Security Metrics – Present Information That Actually Matters To The Business. In the paper, I plan to focus on the key factors that make security metrics relevant.  The idea here is that if people start checking their BlackBerrys and iPhones while you're presenting your report, it's probably time for some new metrics.

Success is the ability to educate positively the C-Level suite in your organization and demonstrate the value you and your information security program provide.  

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Information Security Metrics & The Balanced Scorecard

Edward Ferrara

I just finished a final draft of a presentation on information security executive reporting that I and some colleagues will present at the upcoming Forrester IT Forum in Las Vegas.  For those of you who want more information on the Forum please see Forrester's IT Forum 2011 in Las Vegas. In this presentation Alissa Dill, Chris McClean and I will present an approach for using the Balanced Scorecard to present security metrics for senior level audiences. For those of you who are not familiar to the Balanced Scorecard, it was originated by Robert Kaplan currently of the Harvard Business School and David Norton as a performance measurement framework that added non-financial performance measures to traditional financial metrics to give managers and executives a 'balanced' view of organizational performance[1].  This tool can be used to:

  • Align business activities to the vision and strategy of the organization
  • Improve internal and external communications
  • Monitor organization performance against strategic goals
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Your Vertical Is . . .

John Kindervag

Companies often demand to know what their peers in a particular vertical market are doing within the realm of information security before making new decisions. “We’re in retail” or “healthcare” or “financial services” they will say, “and we want to do what everyone else in our industry is doing.” Why? The TCP/IP revolution has changed everything, including how vertical markets should be viewed. In the old analog world, you could define yourself by your product or service, but no longer. Today it doesn’t matter if your company sells plastic flowers or insurance — what defines you is your data and how you handle it.

When advising Forrester clients on InfoSec, the first question I ask is, “what compliance mandates are you under?” Like it or not, compliance determines how data is handled and that defines your vertical in our data-driven society. For example, I often say that, “PCI is the world’s largest vertical market.” It is a single global standard that affects more companies than not. You may think you are a hotel and your vertical is hospitality, but if you handle credit cards your real vertical — from a data perspective — is PCI.

Data defines markets. Look at your data, your transactions, and your process, and map them to your compliance initiatives. That will determine your digital — not analog — vertical. Using this measure, you can determine your security baseline and compare yourself to companies who must handle data in the same manner as you to help guide your security decisions.

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