Risk Appetite – managing feast and famine

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images-1I was able to attend the RANT forum a few nights ago, and watch an excellent presentation by Sarb Sembhi. However, and this is no insult to the speakers at the RANT forums (being one myself) the most valuable part of the evening is the socialising with colleagues and peers before and after.

I was talking to a couple of people who were recounting the challenges they face with their leadership regarding their risk management activities. I paraphrase greatly, but the gist of the issue was

Highlighting risks to them is all well and good, but then suddenly they tell us that another activity needs to be escalated up the risk matrix, or that there is a hot topic that they want pushed to the top of the risks list so it gets more attention. How are we supposed to manage a risk programme with any credibility when risks get artificially prioritised or de prioritised according to the mood of management?

We came to the conclusion that the risk appetite of the management team in question was a very flexible and fluid thing that changed quite frequently, and seemed entirely disconnected from the risk management activities being carried out.

This is a complex issue, and not one that can be solved in a single blog post, but there are a few guidelines and concepts that may be pertinent to heading off this kind of behaviour.

  1. Listen to them. On the whole an organisations management know what activities and changes will affect the business more than you. If they are highlighting something it is not to mess you around but because they are genuinely concerned about it. Look at your risk programme; does it squarely address the risks they are highlighting? Are they new risks, old risks, or poorly understood risks? Perhaps you have already found them and they need to be reviewed under the new light cast on it by management.
  2. Educate them. How much does your management team actually understand about the risk work you are doing? Do they really know what the scope of your remit is, how you go about finding risks, and more importantly how you measure them? ISO27005 is often described as an arbitary way of measuring risk, but it does a good job of explaining how you can approach and understand it. If you use that standard in your programme, make sure they understand how you measure them, and get their buy in to the approach. This way, when you disagree with their analysis of a “new” risk you can explain in agreed terms why.
  3. Use your governance structure. Your management team should only be looking at risks that are escalated to them, that is to say residual risks that are still considered as “high” (or whatever parlance you use). Every other risk below that should be managed and dealt with by the governance structure in place. Certain lower risks can be mitigated (managed, avoided or transferred) by people closer to that risk; a developer could change a portion of code, a project manager could remove or add contractors or a team member could go through more awareness training. Changing the course of a project or increasing the staffing costs by 50% is beyond their remit and they are therefore not able (or authorised) to treat them effectively; these risks get passed up your governance chain until they reach a point at which they can be dealt with. At the very top I would estimate they should be seeing no more than 0.1% of total risks escalated to them. Any more and it may be that the structure underneath is not doing their job.
  4. images-2Understand their appetite. One of the standard ISO 27005 risk acceptance approaches provides a matrices for what is acceptable and what isn’t. It is provided as an example only, and should not be used out of the box without considering the risk appetite of your organisation. If you are a risk averse organisation, the yellow and red band move down to the lower left, thereby meaning more “red” risks will need to be addressed. A risk taking organisation will move the green and yellow band up, thereby ensuring fewer “red” risks will need to be addressed. The risk profile of an organisation is something that is rarely understood by those that measure risk, and therein lies the problem. Only if the risk profile is drawn up, understood (including the approach to measure the risks in the first place) and signed off can risks be identified, “measured” and addressed in a way that meets the organisations business objectives.
  5. Accept that the appetite changes. if you review your risks annually (as a bare minimum) that is also a cue to review the risk appetite. If incidents throughout the year affect the business for the good or bad, that is a cue to review the risk appetite. If the organisation management suddenly think something is a big risk and needs to be addressed, that is a cue to review the risk appetite. And when I say review, I mean with the management, and not just in isolation.

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There… simple! Well, not at all when you face these challenges every day, but if you can start that dialogue with your management and start to understand the business as they understand it you will be a long way towards heading off the “the sky is falling, fix it now!” response to risks.

Use Your Nose and Gut to See The Real Picture

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avatars-000032667477-7n71zy-cropAfter the high energy of the conferences last week it was always going to be a challenge coming back to the humdrum of day to day work. Reviewing someone else’s audit findings was never going to be the quickest way to get those energy levels up!

This was compounded somewhat by what I found myself reading of course; this was a audit report on an environment that had a very limited scope, i.e. type of work being carried out, type of data being handled, type of resources required to complete the task. The auditors however were coming in from a very strictly controlled, somewhat binary view of the world. The upshot of this was that there were a lot of findings along the lines of:

  • Workstations have access to the internet.
  • Physically secured environment within the office (of the same company) required.
  • Firewall must separate development environment from the rest of the office.

On the face of it these findings are perfectly acceptable, but what they don’t do is take into account the bigger picture.

The group that was being audited did not have access to any sensitive information, PI or even intellectual property. They required access to the internet as they were a creative group that uses multiple types of resources from the web, and they were already on a secured VLAN.

Unfortunately they failed to understand what was in front of their faces throughout the entire audit and assessment process (in fact, they remind me of the type of auditor that Javvad recently showed us in his latest video)  They didn’t observe their surroundings fully, understand the working environment, nor comprehend the true purpose of the audit, namely to reduce risk not squash the life out of some very expensive resources and make it difficult to do their job.

They did everything by the book.

There is always a time and a place for a slightly more maverick approach in my opinion. There are times when as an auditor you need to go with what your nose tells you is bad, or your gut tells you isn’t right. No kind of by-the-book approach will let this happen. Let’s elaborate on these two approaches a little more:

Using your nose

This is quite literally “smelling” out the findings. Just because a document has been presented and all seems in order, or just because an activity is shown to be in normal use doesn’t always mean everything is in order. I have spent many enjoyable hours discussing with colleagues the tricks and traps that people use to fool auditors and assessors (some of the simpler ones are in Javvad’s video!). I even heard one where freshly printed documents were deliberately given coffee stains to give the impression that they had been around for some time, or people being sent home for the day when the auditor was around. Smelling this out requires a slightly cynical nature and a “poacher-turned-gamekeeper” approach. You might see a name occur too often, or the same approval date on documents that were obviously written at different times and approved by different approvers, but they are all indicators that something may be amiss.

Using your gut

A “gut feeling” is a very difficult thing to define, and to be honest not always as reliable. i often think it is because you have observed something subconsciously that make it a gut feeling. Using your nose is based upon an observable phenomenon whereas using your gut is not. They can be very good indicators that something is not quite right and deserve to be investigated further; the real skill however is knowing when to stop. Burning up half of your audit time because of a gut feeling is unprofessional, a waste of time and is doing both you and the auditees a huge disservice. However it can pay off huge dividends when you get it right in what is uncovered.

I want to caveat the above however; I don’t want to come across as though auditing is some kind of cat and mouse arms race (or any other kind of mixed metaphor). Any good audit or assessment is always going to be open, collaborative and educational and this needs to be the goal from the outset. However, many auditees are placed under huge pressure to pass an audit and sometimes will feel a high risk, deceptive, strategy is the only way to retain their jobs. I myself was once told in no uncertain terms “do whatever it takes to pass the audit” (and of course did).

What I really want to see in the industry is a move away from the checkbox and clipboard approach to auditing and assessing as the natural conclusion of that is a deeply unpleasant homogenisation of controls and environments that stifles creativity, and ultimately reduces the ability of a business to deliver to its clients and to its shareholders.

Getting Your Hands Dirty

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dirty-handsIn my last post I referred to ensuring that your risk management programme is producing the quality of output to ensure the business information it feeds into is of the highest quality; maintaining the integrity of your programme.

If there is one thing that can be done to improve the integrity of your risk assessments it is simply to get your hands dirty during them. I have had a number of conversations with people who have been on the receiving end of an assessment where the assessor simply sits at the table and asks for evidence in the form of documentation, verbal responses or even just PowerPoint presentations to confirm the effectiveness of the information security programme in question. Personally I have sat in a conference room for one or two days at a time and only left the room for a short thirty minute ‘walkabout’. Quite how the assessor felt they were getting a representative view of what we were doing was beyond me.

There are a number of problems with this hands off approach:

The ability of those being assessed to ‘play’ the assessor increases with their reluctance to physically move around the organisation. Pre-prepared evidences (the so called “audit box” as was once described to me) can be made available, the organisations SME’s can be wheeled in to ensure the right things are said at the right time and the people who never seem able to say the right thing at the right time (and every organisation has them!) can be told to work in a different building that day.

Secondly, unless the assessor is actually looking at the evidence first hand, even down to rifling through the physical pieces of paper or reviewing server logs, there is absolutely no way any kind of discrepancy will ever be found. Of course this is a sampling exercise, and of course there is no way every single piece of evidence, paper or electronic can be reviewed, but some kind of benefit can be gleaned from going though them. Quite apart form anything else it gives the clear impression that “no stone is unturned” during the assessment process. I have come up with a surprising number of findings from simply taking a few minutes to look through large piles of paper records.

Finally, and perhaps slightly more esoterically, the action of a walkabout can give a very good “feel” for a place. If the presence of the auditor brings hurried and furtive glances everywhere they go, it may give the indication of nervousness or unwillingness regarding the assessment (or of course just a healthy distrust of strangers). If there are rows of empty desks that are obviously normally in use but seem to be vacated for the day this may give the indication that special plans have been laid on for the assessment (or that the sales team are in a meeting). This last point is not so clear cut as the other two, and should only be used as an indicator of what is already coming out of your assessment, but it is a useful one nonetheless.

I have a colleague who every time he enters a “serious” meeting, he undoes his cufflinks and rolls up his cuffs a couple of times; this is his way of mentally preparing for the challenge ahead by literally rolling up his sleeves. When it comes to risk assessments that is exactly what you need to do, and then prepare yourself to get your hands dirty.

Risks, Risks Go Away, Come Back Another Day

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rain34Risk Management can be a tricky business, and this is coming from a fairly straightforward perspective with a simple view of risk management (which means even I can understand it!). To the lay person the purpose of risk management is to find the risks and then remove the risks to the organisation, otherwise why bother?

The clue of course is in the word management. Many information security professionals already know that you can do one of four things to your risks, once identified:

  1. Mitigate (aka Manage), that is implement a control or carry out at activity that reduces the risk.
  2. Avoid, or basically just stop doing the thing that is causing the risk.
  3. Transfer, or just give the risk to someone else, like an insurer or a third party vendor.
  4. Accept, or just face facts that this risk is the price you pay for doing business in this area.

So let’s assume you have completed your risk assessment and applied at least one of these actions to each risk, does this mean you are done? Does this mean you have successfully removed all of your risks from your organisation? Unfortunately, not by a long chalk.

Risks are always going to be present in your organisation; there are the ones you know about albeit reduced, the ones you think are too small to worry about, and finally the risks you have no idea about.

With the risks you know about even though you have reduced them, even though they may have gone from scoring an 8 to a 4 (in ISO 27005 parlance) they still exist! They can still happen, and worse still, the day after you have measured it, your assumptions are technically out of date. And just to really make your day, they may have even evolved and become unrecognisable and therefore invalid in your risk register.

The smaller risks you deem to be at an acceptable level will also suffer in the same way. Again, in ISO 27005 parlance the likelihood of something happening may change dramatically, or perhaps the ease of exploitation. Even worse, the asset value that you are measuring your risks against may have changed which will have a number of far reaching impacts to your risk register. To that I mean that a project that was once of little importance to the organisation, or even a physical asset, may suddenly take on a more important role and therefore greater ‘asset’ level.  All of this is going to have an impact on your risks and how they impact  your organisation.

Finally, the risks you weren’t even aware of. To be honest, and by their very nature, there is not a lot you can do about these except consider the following advice which applies to all risks;

You should be clear on one thing, namely that risk management is not a one time activity. All of the text books and standards will say that your risk register needs to be reviewed every year or after every major change. Whilst I don’t disagree with this per se (and in fact a minimum of a yearly formal review is an absolute necessity), I think in reality this needs to be much more frequent. Really, reviewing your risks needs to be an organic part of your day to a greater or lesser degree, and dependent upon the type of environment you operate in.

This does not necessarily mean you need to pore over your risk registers every day, but rather make a concerted and formal effort to be aware of the changing ‘threat landscape’; you can do this through popular news sites (e.g. BBC, CNN etc), specialist news sites (e.g. SANS, Sophos Naked security etc), blogs of people you know and trust, and of course Twitter for instance. There are likley to be many examples, but each one of these sources is going to give you a constant stream of information that needs to be processed and reviewed in some away against your risk register. You may only make minor changes every month or so, or you may find more frequent changes dependent upon your environment, but either way you will be ensuring that the your risk environment is fresh and up to date.

Now that your risk register is up to date and managed well you can be assured that the information you have is accurate, timely and subsequently meaningful. What you do with that information however is even more important, and something that will be looked at in a later post. As always, your comments and questions are welcome.

(Artwork by Peter Spier from his book, RAIN.)

Wash Out Your Ears – The importance of listening during risk assessments

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listening-ears1I can’t tell you the number of times I have sat on the other side of the table during a risk assessment or audit and not only been talked at by the auditor but also not even listened to. Unless what I or my colleagues are saying are a part of the accepted script the auditor expects to hear it can often fall on deaf ears.

It doesn’t matter if what I am saying is germane to the topic in hand, explains in more technical detail, or even if it addresses a number of questions old or yet unasked, the auditor blindly continues, or even just appears to switch off. How can this lead to a successful audit or assessment? To some, an audit or assessment is a sequence of activities to be completed in a set order and a set pace, and that will never result in quality findings. Approaching an audit or risk assessment from a less mechanical perspective will often derive results in unexpected ways.

Simply listening will give you at least two things:

  1. More information. It may not always be immediately relevant, but at some point in the day it will help you form a larger and more complete picture.
  2. Unprepared auditees will sometimes talk themselves into trouble! Nerves can make people do very silly things, and letting people engage their mouths before their brains can lead to some startling insights.

When you combine the above points you can often find what I call the “over specific response” occurring. What this means is that people will also sometimes be very specific in their responses, for instance when asked if a particular procedure has been tested, the response “Yes, this procedure has been tested” gives rise to so many other questions such as “when, where, and by whom?”, and yet at a casual listening it is a very positive response. Listening to the exact response and unpicking the precise verbiage is vital.

Additionally, there is one other aspect of listening that should be observed; that is, carrying on listening even when the other person has stopped talking. Just as nature abhors a vacuum, human beings as social animals abhor a silence. Staying silent for longer than is comfortable (at least to them) very often produces more talking and more information than they originally intended. When I first presented this thought just over a year ago in a risk forum a member of the Metropolitan Police in the audience later asked me if I had ever had interrogation training, as this was exactly one of the approaches they used! I would certainly never suggest that an audit or assessment is an interrogation, but there is very much an art to getting the maximum amount of information out of someone trying to give you the absolute minimum.

One rule of thumb to take away in this instance is a quote I first read in The Leaders Workbook by Kai Roer (@kairoer):

Try to keep in mind that you have twice as many ears as you have mouth, implying you should spend more time listening than talking.

That’s a pretty good ratio for any risk assessment or audit I think.