IT Risk Management

@ITCAMPRO #ITCAMP15Community Conference for IT Professionals
IT Risk Management
IT Solutions Specialist
CEH, Hyper-V MVP
tudy.tel
Tudor Damian

Many thanks to our sponsors & partners!
GOLD
SILVER
PARTNERS
PLATINUM

• IT risk overview
• COBIT & Risk IT framework
–Risk Governance
• Risk Appetite and Risk Tolerance
–Risk Evaluation
–Risk Response
• IT risk management as a continuous process
• Sources:
Agenda

IT RISK OVERVIEW
Business risk related to the use of IT
Image source: coolrisk.com / Artist: Michael Mittag

• We create information
• We use and store information
• We destroy information
• Technology creates opportunities
–Business, education, government, sales of real and
electronic goods, e-health, etc.
• IT plays an essential role in these activities
–Part of its duty is to protect these information assets
Information as a key resource

• Email passwords may be disclosed
• Facebook accounts may be used by someone else
• Credit card information may be disclosed
• Customer information may be stolen
• IT service delivery to customers may be poor
• IT systems may be obsolete
• IT projects may be late or fail
• IT systems do not provide any business benefit
• Risk of non-compliance with the regulator
• Own people may harm the systems
IT risk is business risk

• Opportunity and Risk - two sides of the same coin
–Those who manage risk, succeed
–Those who do not, fail
• Risk is inherent to every enterprise
• You don’t really have a choice: every decision taken,
every strategy chosen, carries a certain risk
Opportunity vs. Risk

• No organization is unaffected
• Businesses are disrupted
• Privacy is violated
• Organizations suffer direct financial loss
• Reputation is damaged
The impact of IT risk

High Risk
Low Cost
Low Risk
High Cost
Risk vs. Investment – an easy decision (?)

• 87% of small business and 93% of larger organizations
experienced a security breach in the last year alone
• 85% of breaches took weeks to discover
• 96% of breaches were not highly difficult
• 97% of breaches were avoidable through simple or
intermediate controls
• 57% of EU incidents were caused by administrative error,
missing hardware, exposed online, or stolen by insiders
Some statistics
Sources: Center for Media, Data and Society (CMDS) / Verizon / UK Government, Department for Business, Innovation and Skills (BIS)

Timeline of discovery for cyber attacks (2013)
Hours, 9%
Days, 8%
Weeks, 16%
Months, 62%
Years, 5%
Hours Days Weeks Months Years
Source: Verizon

Cyber crime attacks experienced by US companies (June 2014)
VIRUSES, WORMS, TROJANS
MALWARE
BOTNETS
WEB-BASED ATTACKS
MALICIOUS CODE
PHISHING AND SOCIAL ENGINEERING
MALICIOUS INSIDERS
STOLEN SERVICES
DENIAL OF SERVICE
100%
97%
76%
61%
46%
44%
41%
37%
34%
Sources: Ponemon Institute; Hewlett-Packard (HP Enterprise Security)

Some more statistics
Ponemon Institute 2011 Cost of Data Breach Study: United States
Verizon 2012 Data Breach Investigations Report
Reuters, http://reut.rs/zzrcec
Symantec Internal Threat Report 17
WIRED, http://www.wired.com/threatlevel/2012/05/flame/all/1
European Commission-Justice, Data Protection
Ponemon Institute Second Annual Benchmark Study on Patient
Privacy and Data Security
ISACA 2011 Top Business/Technology Issues Survey
Symantec 2012 SMB Disaster Preparedness Survey
Ponemon Institute True Cost of Compliance Report
Thomson Reuters State of Regulatory Reform 2012
eWeek, http://www.eweek.com/c/a/IT-Infrastructure/Unplanned-IT-
Downtime-
Can-Cost-5K-Per-Minute-Report-549007/
Sources:

Even more statistics
Ponemon Institute 2011 Cost of Data Breach Study: United States
Verizon 2012 Data Breach Investigations Report
Reuters, http://reut.rs/zzrcec
Symantec Internal Threat Report 17
WIRED, http://www.wired.com/threatlevel/2012/05/flame/all/1
European Commission-Justice, Data Protection
Ponemon Institute Second Annual Benchmark Study on Patient
Privacy and Data Security
ISACA 2011 Top Business/Technology Issues Survey
Symantec 2012 SMB Disaster Preparedness Survey
Ponemon Institute True Cost of Compliance Report
Thomson Reuters State of Regulatory Reform 2012
eWeek, http://www.eweek.com/c/a/IT-Infrastructure/Unplanned-IT-
Downtime-
Can-Cost-5K-Per-Minute-Report-549007/
Sources:

Statistics overload

How is IT Risk ideally handled?

COBIT® AND RISK IT FRAMEWORKS
www.isaca.org/cobit

• Better accountability and responsibility (ownership)
– You get out of the blame game
• Better management
• Better benefits from IT investments
• Better compliance
• Better monitoring
• Easily compare yourself with others
• Everybody’s doing it anyway
– ITIL, ISO 27001/2, COSO ERM, PRINCE2, PMBOK, Six Sigma, TOGAF, etc.
Why use best practices / frameworks?

IT risk in the enterprise risk hierarchy

Overview – COBIT®, Risk IT and Val IT

• A comprehensive IT governance and management framework
• Addresses every aspect of IT
• Ensures clear ownership and responsibilities
• A common language for all
• Improves IT efficiency and effectiveness
• Better management of IT investments
• Ensures compliance
• A complementary copy is available:
– www.isaca.org/cobit
COBIT®

•Manage 3rd-party Services
•Ensure Continuous Service
•Ensure Systems Security
•Manage Incidents
•Manage Data & Operations
•Monitor and Evaluate IT
Performance
•Monitor and Evaluate
Internal Control
•Ensure Compliance
•Provide IT Governance
•Acquire & Maintain
Application Software
•Acquire and Maintain
Technology Infrastructure
•Manage Changes
• Strategic IT Plan
• Manage IT Investment
• Manage IT Human
Resources
• Manage IT Risks
• Manage Projects
PLAN &
ORGANIZE
ACQUIRE &
IMPLEMENT
DELIVERY &
SUPPORT
MONITOR&
EVALUATE
COBIT® coverage

• Framework for effective management of IT risk
• Complements COBIT®
– COBIT® provides a set of controls to mitigate IT risk
– Risk IT provides a framework for enterprises to identify, govern and manage IT risk
• Enterprises who have adopted COBIT® can use Risk IT to enhance risk
management
• Integrates the management of IT risk into the overall enterprise risk
management (ERM) of the organization
• Helps management make well-informed decisions about the extent of the
risk, the risk appetite and the risk tolerance of the enterprise
• Helps management understand how to respond to risk
• Available for ISACA members:
– http://isaca.org/RiskIT
Risk IT

• Always connects to business objectives
• Aligns the management of IT-related business risk with
overall enterprise risk management (ERM) - if applicable
• Balances the costs and benefits of managing IT risk
• Promotes fair and open communication of IT risk
• Establishes the right tone from the top while defining and
enforcing personal accountability for operating within
acceptable and well-defined tolerance levels
• Is a continuous process and part of daily activities
Risk IT principles

• To prioritize and manage IT risk, management needs a
clear understanding of the IT function and IT risk
– Key stakeholders often do not have a full understanding
• IT risk is not just a technical issue
– IT experts help to understand and manage aspects of IT risk
– Business management is still the most important stakeholder
• Business managers determine what IT needs to do to
support their business
– They set the targets for IT
– They are accountable for managing the associated risks
Managing and understanding IT risk

1. Define a risk universe and scoping risk management
2. Risk appetite and risk tolerance
3. Risk awareness, communication and reporting: includes key risk
indicators, risk profiles, risk aggregation and risk culture
4. Express and describe risk: guidance on business context,
frequency, impact, COBIT business goals, risk maps, risk registers
5. Risk scenarios: includes capability risk factors and environmental
risk factors
6. Risk response and prioritization
7. A risk analysis workflow: “swim lane” flow chart, including role
context
8. IT risk mitigation using COBIT and Val IT
Risk IT process model

• Risk IT Framework
– A set of governance practices for risk management
– An end-to-end process framework for successful IT risk management
– A generic list of common, potentially adverse, IT-related risk scenarios
– Tools and techniques to understand concrete risks to business operations
• Risk IT Practitioner Guide
– Support document for the Risk IT framework
– Provides examples of possible techniques to address IT-related risk issues
– Building scenarios, based on a set of generic IT risk scenarios
– Building risk maps, techniques to describe scenario impact and frequency
– Building impact criteria with business relevance
– Defining KRIs (Key Risk Indicators)
Risk IT publications

Risk management frameworks and standards compared

Key activities / Roles
Board
CEO
CRO
CIO
CFO
EnterpriseRisk
Committee
Business
Management
BusinessProcess
Owner
RiskControl
Functions
HR
Complianceand
Audit
Define IT risk analysis scope I R C I C A R C C
Estimate IT risk I R C C I A/R R R C
Identify risk response options C C C R A R R I
Perform a peer review of IT analysis A/R I I I
Perform enterprise IT risk assessment I A R R C I R C R C C
Propose IT risk tolerance thresholds I I C R C I A C C C
Approve IT risk tolerance A C C C C R C C C C C
Assign IT risk policy C A R R R C R R R R C
Promote IT risk-aware culture A R R R R R R R R R R
Encourage effective communication of IT risk R R R R R R A R R R R
RACI charts – IT risk example
A RACI chart identifies who is Responsible, Accountable, Consulted and/or Informed

RISK GOVERNANCE

• Risk Governance
– Establish and Maintain a Common Risk View
– Integrate with Enterprise Risk Management (ERM)
– Make Risk-aware Business Decisions
• Risk Evaluation
– Collect Data
– Analyze Risk
– Maintain Risk Profile
• Risk Response
– Articulate Risk
– Manage Risk
– React to Events
Risk governance, evaluation and response

IT Risk Management Responsibilities and Accountability

RISK APPETITE AND RISK TOLERANCE

• Risk Appetite: the amount of risk an entity is prepared to
accept when trying to achieve its objectives
– Defining factors:
• The enterprise’s objective capacity to absorb loss (e.g., financial loss,
reputation damage)
• The (management) culture or predisposition towards risk taking -
cautious or aggressive (i.e. what is the amount of loss the enterprise
wants to accept to pursue a return?)
• Risk Tolerance: the tolerable deviation from the level set by
the risk appetite and business objectives
– e.g., standards require projects to be completed within estimated
budgets and time, but overruns of 10 percent of budget or 20
percent of time are tolerated
Risk Appetite and Risk Tolerance

Risk map

Sample risk scenarios and risk appetite

Elements of risk culture

RISK EVALUATION

Expressing IT risk in business terms

IT scenario development

IT risk scenario components

RISK RESPONSE

• Identify Key Risk Indicators based on:
– Impact
– Effort to implement, measure and report
– Reliability
– Sensitivity
• Decide on best response to risk
– Avoidance
– Reduction/Mitigation
– Sharing/Transfer
– Acceptance
Risk response overview

IT RISK AS A CONTINUOUS PROCESS

Risk IT maturity model

Business
Goals
IT Goals
Process
Goals
Activity
Goal
Defining goals and metrics - example
Maintain
reputation
IT can resist to
an attack
Reduce
unauthorized
access
Understand
vulnerabilities
and threats
Number of incidents with
public embarrassment
Number of incidents with
business impact
Number of incidents caused
by unauthorized access
Frequency of review

SUMMARY

• Use best practices (such as COBIT®) to minimize IT Risks
• Start with basic processes
• Form a high level IT Strategy Committee
• Formulate and implement IT Strategic Plan and IT policies
• Allocate resources (budget, people, infrastructure)
• Assign roles and responsibilities, authority and
accountability (using RACI chart)
• Make IT a regular item on the board agenda
• Regularly assess, review and monitor IT Risks
Summary

Q & A

Thank you!
IT Solutions Specialist
CEH, Hyper-V MVP
tudy.tel
Tudor Damian

IT Risk Management

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