Chapter 7Risk Management: Identifying and Assessing RiskChapter OverviewChapter ObjectivesSet-up NotesLecture Notes and Teaching Tips with Quick QuizzesQuick QuizQuick QuizQuick QuizQuick QuizKey TermsPrinciples of Information Security 1-1Chapter 7Risk Management: Identifying and Assessing RiskChapter OverviewChapter 7 defines risk management and its role in the organization and allows the reader to begin using risk management techniques to identify and prioritize risk factors for information assets. The risk management model presented here allows the assessment of risk based on the likelihood of adverse events and the effects on information assets when events occur. The chapter concludes with a brief discussion on how to document the results of risk identification.Chapter ObjectivesWhen you complete this chapter, you will be able to:- Define risk management and its role in the organization- Begin using risk management techniques to identify and prioritize risk factors for information assets- Assess risk based on the likelihood of adverse events and the effects on information assets when events occur- Begin to document the results of risk identificationSet-up NotesThis chapter could be completed in a single class session, if there is sufficient time to cover the material. Unless the students have not had the opportunity to read the material in advance (in some settings, the textbooks are not made available until the first class meeting), it may be prudent to have a general discussion of the topic, with detailed lecture to follow at the next class meeting. The subject matter can be covered in 1.25 to 2.5 hours.Principles of Information Security 1-2Lecture Notes and Teaching Tips with Quick QuizzesIntroductionInformation security departments are created primarily to manage IT risk. Managing risk is one of the key responsibilities of every manager within the organization.In any well-developed risk management program, two formal processes are at work: - risk identification and assessment - risk controlRisk Management “If you know the enemy and know yourself, you need not fear the result of a hundred battles.“If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. “If you know neither the enemy nor yourself, you will succumb in every battle.” Sun TzuKnowing OurselvesThis means identifying, examining and understanding the information and how it is processed, stored, and transmitted. Armed with this knowledge, they can then initiate an in-depth risk management program.Risk management is a process, which means the safeguards and controls that are devised and implemented are not install-and-forget devices. Knowing the EnemyThis means identifying, examining, and understanding the threats facing the organization’s information assets. Managers must be prepared to fully identify those threats that pose risks to the organization and the security of its information assets. Risk management is the process of assessing the risks to an organization’s information and determining how those risks can be controlled or mitigated.Accountability for Risk ManagementAll communities of interest must work together to:- Evaluating the risk controls- Determining which control options are cost-effective - Acquiring or installing the appropriate controls- Overseeing processes to ensure that the controls remain effective - Identifying risks, which includes:- Inventory information assets - Classifying/organizing assets - Assigning information asset value- Identifying threats to the cataloged assetsPrinciples of Information Security 1-3- Pinpointing vulnerable assets by tying specific threats to specific assets- Assessing risks, which includes:- Determining likelihood of attacks on vulnerable systems by specific threats - Assessing relative risk facing information assets, so risk management and control activities can prioritize- Calculating the risks to which assets are exposed in their current setting - Reviewing controls for identified vulnerabilities and says to control the risks that the assets face- Documenting the findings of risk identification and assessmentSummarizing the findings, which involves stating the conclusions of the analysis stage of risk assessment in preparation for moving into the stage of controlling risk by exploring methods to mitigate riskQuick Quiz1. What are the two formal processes within a risk management program? ANSWER: Risk identification and assessment and risk control.2. What is risk management? ANSWER: Risk management is a process, which means the safeguards and controls that are devised and implemented are not install-and-forget devices.Principles of Information Security 1-4Risk IdentificationRisk identification begins with the process of self-examination. At this stage, managers identify the organization’s information assets, classify them into useful groups, and prioritize them by their overall importance. Creating an Inventory of Information AssetsThe risk identification process begins with the identification of information assets, including people, procedures, data and information, software, hardware, and networking elements. This step should be done without pre-judging the value of each asset; values will be assigned later in the process.Principles of Information Security 1-5Identifying Hardware, Software, and Network AssetsWhether automated or manual, the inventory process requires a certain amount of planning. Most importantly, you must determine which attributes of each of these information assets should be tracked. That determination will depend on the needs of the organization and its risk management efforts, as well as the preferences and needs of the information security and information technology communities. When deciding which attributes to track for each information asset, consider the following list of potential attributes:- Name- IP address- MAC address- Asset type- Serial number- Manufacturer name- Manufacturer’s model or part number- Software version, update revision, or FCO number- Physical location- Logical location- Controlling entityIdentifying People, Procedures, and Data Assets Responsibility for identifying, describing, and evaluating these information assets should be assigned to managers who possess the necessary knowledge, experience, and judgment. As these assets are identified, they should be recorded via a reliable data-handling process like the one used for hardware and software. -