Real vs. Regulatory Risk

Posted by Venkat Rajaji on Thu, Apr 28, 2016

Risk is a word you hear every day and it has become common place across the security industry. What is risk? What does it really mean? And why is it so important? Most importantly, how should we think about the impact of these risks and how we mitigate it?


Riisk is composed of: Impact x Likelihood. 

Impact- The damage caused by the risk, criticality of the assets, the actual data in the systems, the liability associated with an audit finding

Likelihood - The probability that an event will occur. When we think about likelihood we think about usage patterns, access levels for individuals and accounts,and exposure or vulnerability of such systems.

 

Within the context of Information Security there are two types of risk that companies face, real risk and regulatory risk.

 

Regulatory risk is associated with not being complaint with any number iStock_000026774677_Large_1.jpgof regulations. The penalty for this might be financial penalties, incarceration or a drop in stock prices if said issues are "material" enough to require reporting. For example, compliance within the healthcare industry with data privacy and HIPAA, companies within the Financial Services industry and SOX compliance, or retail organizations or anyone else accepting credit cards who must adhere to PCI compliance. What regulatory risk calls for is the implementation of a governance process for which to ensure compliance.

 

When you think about real risk, you're thinking about things like customer and consumer data, credit card information, employee data, SSNs, and access to processes like the recent Iranian nuclear processing  centrifuges that were hacked into and then stopped and started over and over until they blew up.  Here, governance process is not enough. This is now about protection and the impact is far greater than just a fine. Reputational damage, brand image, liability, and other major financial damages will impact the company.

 

Compliance regulations have helped and have forced companies to put in place governance processes to mitigate some risk. However, this drive for compliance has led to a lot of rubber stamping. Reason being, there is too much data and we don't know what is important and what is just another request. So the compliance checks themselves often don't do enough to protect the companies or their customers.

 

cyber-311111.jpgWe need the ability to really understand risk within the constricts of impact and likelihood. In order to satisfy both regulatory needs and to mitigate against real risk we need solutions that provide context for these risks. Context might be things like access levels, known vulnerabilities to systems, criticality of business systems and the data stored in those systems. This helps us better understand our enterprise risk.  Done correctly, this automation and intelligence also dramatically improves understanding of how you are actually doing and how that is changing over time (read actually managing this stuff), efficiency (read cost savings) and efficacy (real and regulatory risk reduction).

 

To manage both real and regulatory risk, you need to deter bad touches (inappropriate access) to information and processes. Since motivated bad guys have proven that they still might find creative ways in, you need to detect when that happens, and ebook_Assessing_the_Risk.pngonce you do that, you better figure out how to remediate the issues really quickly. The Courion suite of solutions are designed to solve exactly this problem across both the physical (vulnerability management) and logical (access management) worlds.

 

Looking for more information on how to mitigate both real and regulatory risk? Download Assessing the Risk of Identity and Access to learn how to identify and remediate both your real and regulatory risk. 

Topics: risk management, security risk, cyber risk, risk