Risk Management

What is risk management? Why is identification of risks, by listing assets and their vulnerabilities, so important to the risk management process? Risk management is the process of identifying risk, as represented by vulnerabilities, to an organization’s information assets and infrastructure, and taking steps to reduce this risk to an acceptable level. Each of the three elements in the C. I. A. triangle, introduced in Chapter 1, is an essential part of every IT organization’s ability to sustain long-term competitiveness.

When an organization depends on IT-based systems to remain viable, information security and the discipline of risk management must become an integral part of the economic basis for making business decisions. These decisions are based on trade-offs between the costs of applying information systems controls and the benefits realized from the operation of secured, available systems. 2. According to Sun Tzu, what two key understandings must you achieve to be successful? Know Yourself and Know the Enemy.

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Who is responsible for risk management in an organization? Which community of interest usually takes the lead in information security risk management? The resources used when undertaking information asset risk management is usually provided by all three communities: Information Security, Information Technology and General Management. 4. In risk management strategies, why must periodic review be a part of the process? Periodic reviews must be a part of the risk management strategies because threats are constantly changing for a company.

Also once any specific vulnerability is completely managed by an existing control it no longer needs to be considered for additional controls. 5. Why do networking components need more examination from an information security perspective than from a systems development perspective? Networking components need more examination from an information security perspective than from a systems development perspective because networking subsystems are often the focal point of attacks against the system. 6.

What value does an automated asset inventory system have for the risk identification process? An automated asset inventory system would be valuable to the risk identification process because all hardware components are already identified – models, make and locations – thus management can review for the most critical items and assess the values. 7. What information attributes is often of great value for networking equipment when DHCP is not used? IP Address 8. Which is more important to the systems components classification scheme, that the list be comprehensive or mutually exclusive?

It is more important that the list be comprehensive than mutually exclusive. It would be far better to have a component assessed in an incorrect category rather than to have it go completely unrecognized during a risk assessment. 9. What’s the difference between an asset’s ability to generate revenue and its ability to generate profit? The main difference between a revenue-generating asset and a profit-generating asset is that the revenue-generating asset produces a cash flow that is linked directly to the asset. If the asset were sold, the cash flow would stop.

With a profit-generating asset, the linkage is not so direct. The asset does not produce cash directly, but influences consumer and competitor behavior with the intention of producing more revenues. 10. What are vulnerabilities and how do you identify them? A vulnerability is a weak spot in your network that might be exploited by a security threat. Risks are the potential consequences and impacts of unaddressed vulnerabilities. Vulnerability assessment tools or scanners are used to identify vulnerabilities within the network.

The vulnerabilities identified by most of these tools extend beyond software defects (which are fixed by patching) to include other easily exploitable vulnerabilities, such as unsecured accounts, misconfigurations and even back doors. There are several types of assessment tools available. Although these tools have general similarities, they can vary in the methods and processes they employ to identify vulnerabilities. As a best practice, you shouldn’t rely on a single assessment tool but should use different tools to gain a broader perspective of their exposure to vulnerabilities.

Open-source or shareware assessment tools are available online and can be used to supplement commercial scanners 11. What is competitive disadvantage? Why has it emerged as a factor? Competitive disadvantage is the state of falling behind the competition. It has emerged as a factor because business which do not stay on the cutting edge of IT can quickly fall behind the competition, given the current fast pace of technological advances. 12. What are the strategies from controlling risk as described in this chapter?

The four risk control strategies are avoidance, transference, mitigation and acceptance. 13. Describe the “defend” strategy. List and describe the three common methods. The strategy of avoidance involves applying controls that eliminate or reduce the remaining uncontrolled risks. Application of policy, Training and education, and Applying technology 14. Describe the “transfer” strategy. Describe how outsourcing can be used for this purpose. The strategy of transference involves shifting risks to other areas or outside entities.

Outsourcing can be used for risk transference by outsourcing security-sensitive areas which are not central to the organization’s purpose and letting the outsourcing firm accept the risk. ($$$). 15. Describe the “mitigate” strategy. What three planning approaches are discussed in the text as opportunities to mitigate risk? The strategy of mitigation involves reducing the impact should an attacker successfully exploit the vulnerability. Incident response plan (IRP), Disaster recovery plan (DRP), Business continuity plan (BCP) ?. 16.

How is an incident response plan different from a disaster recovery plan? Incident response plan (IRP) focuses on immediate response to an incident. Disaster recovery plan (DRP) focuses on restoring operations at the primary site after disasters occur. 17. What is risk appetite? Explain why risk appetite varies from organization to organization? 18. What is a Cost Benefit Analysis? Cost–benefit analysis (CBA), sometimes called benefit–cost analysis (BCA), is a systematic process for calculating and comparing benefits and costs of a project, decision or government policy.

What is the definition of single loss expectancy? What is annual loss expectancy? Single Loss Expectancy (SLE) is the amount of loss expected for any single successful threat attack on any given asset. This is a monetary value that describes how much the incident will cost in terms of lost asset value. Annual Loss Expectancy (ALE) estimates the annual loss resulting from an incident. 20. What is residual risk? Residual risk: risk that has not been completely removed, shifted, or planned for. Exercise:

If an organization has three information assets to evaluate for risk management as shown in the accompanying data, which vulnerability should be evaluated for additional controls first? Which one should be evaluated last? An evaluation of the provided asset vulnerabilities results in: Asset A: This is a switch that has two vulnerabilities. The first involves a hardware failure likelihood of 0. 2 and the second involves a buffer attack likelihood of 0. 1. The switch has an impact rating of 90. Assumptions made on this asset have a 75% certainty.

Asset B: This is a web server that deals with e-commerce transactions. It has one vulnerability with a likelihood of 0. 1. However it has an impact rating of 100. Assumptions made on this asset have an 80% certainty. Asset C: This is a control console with no password protection with a likelihood of attack of 0. 1. It has no controls and an impact rating of 5. Assumptions made on this asset have a 90% certainty. ANSWER: Even though the switch has the highest risk I would evaluate the web server for additional controls first.

The company Web site is hosted by this server and performs valuable e-commerce transactions which can be compromised if the Server is not protected. If an attack on this Server occurs much of the company’s private data could be compromised which could harm the organization in many ways. Protecting the server could also keep the organization safe from other threats and attacks. I would evaluate the control console that monitors operations in the server room last because the likelihood of misuse is low and it has the lowest impact value and poses the least amount of risk to the organization.

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