• Save
Measurement, Qualitative vs Quantitative Methods, and other Cool Stuff
Upcoming SlideShare
Loading in...5
×
 

Measurement, Qualitative vs Quantitative Methods, and other Cool Stuff

on

  • 1,570 views

Basic introduction into definitions of Risk, Measurement, Probability vs Possibility, Qualitative vs Quantitative Methods, and Monte Carlo simulation

Basic introduction into definitions of Risk, Measurement, Probability vs Possibility, Qualitative vs Quantitative Methods, and Monte Carlo simulation

Statistics

Views

Total Views
1,570
Views on SlideShare
1,568
Embed Views
2

Actions

Likes
3
Downloads
16
Comments
0

1 Embed 2

http://www.linkedin.com 2

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Measurement, Qualitative vs Quantitative Methods, and other Cool Stuff Measurement, Qualitative vs Quantitative Methods, and other Cool Stuff Presentation Transcript

  • Risk Centric Security, Inc. www.riskcentricsecurity.com Authorized reseller of ModelRisk from Vose SoftwareRisk Centric Security, Inc. Confidential and Proprietary . Risk Analysis for the 21st Century®Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Patrick Florer has worked in information technology for30 years. In addition, he worked a parallel track inmedical outcomes research, analysis, and the creation ofevidence-based guidelines for medical treatment. Hisroles have included IT operations, programming, andsystems analysis. From 1986 until now, he has worked asan independent consultant, helping customers withstrategic development, analytics, risk analysis, anddecision analysis. He is a cofounder of Risk CentricSecurity and currently serves as Chief Technology Officer. Risk Centric Security, Inc. Confidential and Proprietary . Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • This webinar is about language and ideas. No one owns the definitions of words, but it is often useful to: Understand what we mean when we use certain words and express certain ideas Understand what others mean when they do the sameRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • When speaking with our customers, we recognized: Information Security Professionals are comfortable speaking the technical language of firewalls, logs, threats, vulnerabilities, and exploits. Business managers are comfortable speaking the language of return on investment, discounted cash flows, and risk as financial impact. Mutual misunderstanding can occur, and it is often a source of frustration for everyone.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • By learning to speak about risk in business terms, Information Security Professionals can reach out and bridge the language gap. The technical details of sql injection attacks may be important to you, but your business counterparts may not understand, and they usually don’t care.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Instead of talking about threats, vulnerabilities, and controls, talk about risk in terms of financial impact. Tell the business people what a sql injection attack could cost. They will understand that! (They may not believe you, but they will understand what you are saying!)Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Risk – What it is and what it isn’t Risk and Opportunity Possibility vs. probability Measurement Variability and Uncertainty Precision vs. accuracy Qualitative vs. quantitative methods The “not enough data” syndrome Monte Carlo simulation Modeling expert opinion and the PERT distributionRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • From The American Heritage dictionary*: The possibility of suffering harm or loss; danger. A factor, thing, element, or course involving uncertain danger; a hazard. The danger or probability of loss to an insurer. The amount that an insurance company stands to lose. The variability of returns from an investment. The chance of nonpayment of a debt. *The American Heritage® Dictionary of the English Language, Fourth Edition. Copyright © 2006, 2000. Houghton Mifflin Company.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • From ISO 31000: 1.1 risk - effect of uncertainty on objectives NOTE 1 An effect is a deviation from the expected —positive and/or negative. NOTE 2 Objectives can have different aspects (such as financial, health and safety, and environmental goals) and can apply at different levels (such as strategic, organization-wide, project, product and process). NOTE 3 Risk is often characterized by reference to potential events (3.5.1.3) and consequences (3.6.1.3), or a combination of these. NOTE 4 Risk is often expressed in terms of a combination of the consequences of an event (including changes in circumstances) and the associated likelihood (3.6.1.1) of occurrence. NOTE 5 Uncertainty is the state, even partial, of deficiency of information related to, understanding or knowledge of, an event, its consequence, or likelihood Risk Centric Security, Inc. Confidential and Proprietary. Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • In the USA, NIST, Special Publication 800-30 describes risk in the following way: Risk is: “the net mission impact considering the probability that a particular threat-source will exercise (accidentally trigger or intentionally exploit) a particular information system vulnerability, and the resulting impact if this should occur.”Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • NIST (The National Institute of Standards and Technology), provides an additional definition of risk in Special Publication 800-39: Risk A measure of the extent to which an entity is threatened by a potential circumstance or event, and typically a function of: (i) the adverse impacts that would arise if the circumstance or event occurs; and (ii) the likelihood of occurrence. Information system-related security risks are those risks that arise from the loss of confidentiality, integrity, or availability of information or information systems and reflect the potential adverse impacts to organizational operations (including mission, functions, image, or reputation), organizational assets, individuals, other organizations, and the Nation. NIST, The National Institute of Standards and Technology, Special Publication 800-39, Appendix B, Page B-7.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • A probability that something will happen A probable impact if something does happenRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • The probability that something will happen to cause a negative impact in financial terms: For example, a 50% chance that it will cost 50 million dollars if our data are stolen. Another way to express this is to multiply the two numbers together and say that: Risk = 25 million dollars on an annualized basisRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Threats and exploits are not risks. Threat agents are not risks. Vulnerabilities are not risks. Ineffective controls are not risks. Each of these elements factors into understanding risk, but none of them constitute risk.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • For our discussion today, Risk will be used to indicate loss or harm. Opportunity can be viewed as the positive aspect of Risk. The techniques that apply to Risk analysis can also be applied to Opportunity analysis.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Let’s look at tossing a coin: What are the possibilities? What are the probabilities? Does knowing either help us predict what will happen when we toss the coin next time?Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • A possibility is something that is “capable of happening, existing, or being true without contradicting proven facts, laws, or circumstances known to be true. *” A probability is "the likelihood that a given event will occur.”* *All quotes from The American Heritage® Dictionary of the English Language, Fourth Edition. Copyright © 2006, 2000. Houghton Mifflin Company.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • In statistics, a probability is “a number expressing the likelihood that a specific event will occur, expressed as the ratio of the number of actual occurrences to the number of possible occurrences.“ Probability is calculated after tossing the coin many times. Probability is always a number between 0 and 1, sometimes expressed as: *All quotes from The American Heritage® Dictionary of the English Language, Fourth Edition. Copyright © 2006, 2000. Houghton Mifflin Company.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • How can we use this in information security risk analysis? The fact that something can happen (possibility) doesnt tell us how likely it is to happen (probability), or how much impact it might have if it does happen (probability). Estimating these values helps us prioritize our activities in a rational way.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • What is a measurement? An observation that “ascertains the dimensions, quantity, or capacity of” an object or process”* A set of observations that reduce uncertainty where the result is expressed as a quantity** *TheAmerican Heritage® Dictionary of the English Language, Fourth Edition. Copyright © 2006, 2000. Houghton Mifflin Company ** Hubbard, Douglas W., “How to Measure Anything 2nd Edition”, John Wiley & Sons, New Jersey, 2010, p. 23Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • What are the properties of a measurement? Validity – does the measurement actually do what you think it does? Reproducibility – when repeated, does the measurement give a consistent answer? Detail – does the measurement provide a useful level of detail?Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • What are some sources of error in measurement? Random error – a function of the instrument Bias – a function of the measurement takerRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Why do we make measurements? Measurements are a way to collect data. Making measurements should be about reducing uncertainty. A measurement only has to be good enough for the decision at hand. Sometimes, you cannot get the data you think you need, so you have to use a proxy.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Variability and uncertainty are not the same thing, and it can be useful to be aware of the difference. “Variability is the effect of chance and is a function of the system. It is not reproducible through either study or further measurement, but may be reduced by changing the physical system” * In order to reduce variability in a system, you have to change the system. *David Vose, Risk Analysis, A Quantitative Guide, 3rd edition, 2008, pp. 47-48Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • “Uncertainty is the assessor’s lack of knowledge (level of ignorance) about the parameters that characterize the physical system being modeled. It is sometimes reducible through further measurement or study, or by consulting more experts” Uncertainty is a normal characteristic of the assessor/measurer of an IT system. Lack of perfect certainty, and having to operate with less than perfect information is the norm here. In order to reduce uncertainty, you have to collect and analyze data. *David Vose, Risk Analysis, A Quantitative Guide, 3rd edition, 2008, pp. 47-48Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Using a coin for an example: Imagine that you don’t know anything about the possible outcomes - Variability: heads or tails is a random event. Uncertainty: what is the probability of heads or tails? After a few trials, we begin to get an idea. After many trials, we have a better idea.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Precision is “the ability of a measurement to be consistently reproduced.” Accuracy is “the ability of a measurement to match the actual value of the quantity being measured.”*All quotes from The American Heritage® Dictionary of the English Language, Fourth Edition. Copyright © 2006, 2000. Houghton Mifflin Company. Risk Centric Security, Inc. Confidential and Proprietary. Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Precision: a machine can produce the same part to within 1/1000th mm all day long. This is no guarantee that the part is the correct length, however. Accuracy: a machine can produce the same part to within +/- 2/1000th mm of the correct length. Although some parts are a bit shorter and some are a bit longer, every part is within spec.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Precision: 100.001, or 10.233% Accuracy: 100 or 10%, or 10.2%Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Prefer Accuracy to Precision. Precise Accuracy? – it would be nice!Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Qualitative methods: Categorical: green/yellow/red; male/female Nominal: male = 1/female = 2 Ordinal: rank ordering – first/second/third; 0 – 5 Interval: intervals are equal, but no zero point – temperature in Faherenheit Quantitative methods: real numbers (cardinal numbers, ratio scale). Most of the time, quantitative methods are easier.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Benefits of qualitative methods? They are useful in certain scenarios, and can be quick and good enough. Good for quick ordering/prioritization of options Be careful with aggregation – if done incorrectly, an erroneous picture will be presentedRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Benefits of Qualitative Methods From ISO 17999Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Problems with qualitative methods? No ability to compare between different qualitative scales Variability between assessors Inconsistency of a single assessor Arithmetic and statistical operations not possible Problems near the boundaries of categories Loss of informationRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • No ability to compare between different qualitative scales Red – Yellow – Green don’t mean the same thing in my method as they do in your method. 0 – 5 on my scale doesn’t mean the same thing as 0 – 5 on your scale.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Variability between assessors Faced with the same set of facts, different assessors apply a scale differently. Two QSA’s apply the PCI standards differently. Two risk analysts classify risks differently – one says low, one say mediumRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Inconsistency of a single assessor Given the same set of facts, an assessor might make different assessments when the only difference is the passage of time.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Difficulty with arithmetic and statistical operations From ISO 17999Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Difficulty with arithmetic and statistical operations From ISO 17999Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Difficulty with arithmetic and statistical operations From ISO 17999Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Difficulty with arithmetic and statistical operations Imagine if money worked this way: The value of a dollar would be relative to the purchase price of an item. The value of a dollar might vary from store to store.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Problems with aggregation and estimates near the boundaries of categories Assume that: Low = < 1M Medium = 1M – 5M High = >5MRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • And assume that the following risks have been identified and put into categories: $100K, 500K, 800K: all in Low category $1M, 3M, 3M, 4M: all in Medium categoryRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • What happens when you aggregate based upon qualitative scales? What is the real difference between a very “high Low” and a very “low Medium”? How can we justify and defend category boundaries that are essentially arbitrary?Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Loss of information Most of the time, we get a number in mind. Then, we assign it to a category. Why not just keep the number? Or better yet, create a distribution around a range of estimates to better express our beliefs and confidence?Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Benefits of quantitative methods? The numbers mean what they are (cardinality). Arithmetic and statistical methods are possible. Problems with quantitative methods? Data are required. Estimates are estimates – the future hasn’t happened yet. Formal training in calibration techniques is very helpful.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • They say: there isn’t enough “good” data, so you are just processing “garbage in and garbage out.” The reason we need data is to reduce uncertainty in decision-making. The decision we need to make will define the data we need – some decisions require very little data, others require quite a bit.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • A sample can be smaller than you think. Parametric vs. non-parametric methods Contact us for more information on these topics.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • We often hear that the data are poor – What does this mean? Data are just data – some data may be more interesting than other data – it depends on what you are doing.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Dan Geer et al.: The Index of Cybersecurity (http://www.cybersecurityindex.org/) Prediction Market Project The Beewise Project (http://beewise.org/markets/metricon.ctrl)Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Please refer to the slides at the end of this presentation.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Monte Carlo simulation is a game changer for information security risk analysis. Less sophisticated methods use single-point estimates or even simple ranges of estimates: 35%, or from 20% - 51% Monte Carlo methods sample thousands or tens of thousands of values, and provide a much clearer picture of the possible outcomes.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Minimum: What is the least or lowest (best or worst) numerical estimate that you believe to be reasonable? This will be the smallest number you come up with. Most Likely: What is the most likely or most probable numerical estimate in your opinion? This number must fall between the minimum and maximum. It may equal either the minimum or the maximum, but should not equal bothRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Maximum: What is the greatest or highest (best or worst) numerical estimate that you believe to be reasonable? Note that “best” or “worst” case estimates could be either minimum or maximum values, depending upon the scenario. In a risk / loss exposure scenario, lower is better, so the minimum represents the lowest loss, or best outcome. The maximum represents the highest loss, or worst outcome. In a sales or opportunity scenario, it’s the reverse: lower is not better, so the minimum represents the worst case. Higher is better, so the maximum represents the best case.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Confidence: On a scale that includes “Very Low”, “Low”, “Average”, “High”, and “Very High”, how confident are you in the accuracy of your estimates? This parameter controls the sampling around the most likely value, and thereby also controls the height of the histogram or slope of the cumulative plot. For most analyses, using “Average” for the confidence parameter works well. In this instance, “Average” really means having no strong feeling about the matter – being evenly divided between under-confidence and over- confidence.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Percentile TablesRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Percentile Tables 1% of values are <= 10,044 and 99% are > 10,044 10% of values are <= 11,120 and 90% are > 11,120 20% of values are <= 11,658 and 80% are > 11,658 50% of values are <= 13,025 and 50% are > 13,025 The 50th percentile has another name - it’s called the Median. The Median is the mid-point in a list of values - half of the values in the list are less and half are greater than the Median.Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Histogram Risk Centric Security, Inc. Confidential and Proprietary. Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Cumulative Plot Risk Centric Security, Inc. Confidential and Proprietary. Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Thank you ! Risk Analysis for the 21st Century ® Patrick Florer CTO and Co-founder Risk Centric Security, Inc patrick@riskcentricsecurity.com 214.828.1172 Authorized reseller of ModelRisk from Vose SoftwareRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Open Security Foundation: datalossdb and osvdb http://www.opensecurityfoundation.org/ Computer Security Institute (CSI): http://gocsi.com/ Office of Inadequate Security: http://www.databreaches.net/ Identity Theft Resource Center: http://www.idtheftcenter.org/ ISACA: www.isaca.org ISSA: www.issa.orgRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Mitre Corporation: www.mitre.org OWASP: http://owasp.com/index.php/Main_Page Privacy Rights Clearing House: http://www.privacyrights.org/ SANS: www.sans.org The Ponemon Institute: www.ponemon.orgRisk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Conference procedings: Black Hat, RSA, Source Conferences, BSides Internet tools: Search engines: Google, Bing, Yahoo, Ask.com Trend Analyzers: Google trends: http://www.google.com/trends Twitter Trends: www.trendistic.com Amazon: http://www.metricjunkie.com/Risk Centric Security, Inc. Confidential and Proprietary.Copyright © 2011 Risk Centric Security, Inc . All rights reserved.
  • Securitymetrics.org – mailing list Society of Information Risk Analysts (SIRA)Books: How to Measure Anything – Hubbard The Failure of Risk Management – Hubbard Risk Analysis: A Quantitative Guide – Vose Clinical Epidemiology and Biostatistics - Kramer Risk Centric Security, Inc. Confidential and Proprietary. Copyright © 2011 Risk Centric Security, Inc . All rights reserved.