01 March 2014

RSA Conference 2014: The Aftermath and the Consequences...

The 2014 RSA Conference USA is complete and yet what have we learned?  Operational Risk Management (ORM) is still top of mind from the "Board Room" to the back office.  The mitigation strategies are permeating the 3rd Party supply chain, as management realizes that operational risks really do exist with partners and suppliers.  By now the RSA attendees are reviewing their notes, connecting with people on LinkedIn and sorting the stack of business cards on their desk.  Now what.
  • Have some of the largest retailers been the victims of massive data breach hacks?  Yes.  Have those attendees of the RSA Conference who downloaded the mobile app been exposed to a potential data leak of their information.  Yes.
  • Meanwhile, Operational Risks exist far beyond Moscone and San Francisco.  Have financial institutions been fined by government regulators over alleged violations of the sale of mortgage securities, that lead to the 2008 financial crash?  Yes.  
  • Have the age old competitive intelligence tactics evolved into full blown "Industrial Espionage" funded and supported by nation states?  Yes.
  • Has the polar vortex created a vast economic risk for millions of businesses due to adverse weather? Yes.
And the Operational Risks to your organization will continue, that is for certain.  How after a week of RSA can you return to your enterprise and know where to begin?  What to change.  What new initiative to begin.  What new vulnerability to remediate.  Don't worry, the list will not be getting any shorter.  The priorities however may be changing.

So maybe it is time for a new "Consequence Assessment."  Here are the key variables for the rows of your matrix:
  1. Loss of life:  Likely fatality count.
  2. Economic damage:  Estimated costs of the attack or hazard.
  3. Psychological impact:  Considerations of change in population behavior toward social functions.
Now, the consequence levels become your columns of the matrix:
  • 0 - None or Negligible
  • 1 - Minor
  • 2 - Moderate
  • 3 - Significant
  • 4 - Catastrophic or Severe
In order to make the consequence assessment relevant and applicable to your business size, industry sector and geographic location, you now need to define each of the cells of the matrix.  So as an example, if we go to the matrix cell of Economic Damage / Moderate (2), what is your definition?  In the range of $1 billion to $10 billion.

If you are JPMorgan Chase then this may be the case for a consequence of legal liabilities, due to adverse litigation by the U.S. government in the Madoff case:
JPMorgan Chase has been fined more than $2 billion for violations of the Bank Secrecy Act tied to failure to report suspicious activity related to Bernie Madoff's decades-long, multi-billion dollar Ponzi scheme. Madoff was sentenced in 2009 to 150 years in prison for his deception. 
The fines against Chase were the result of three settlements. A settlement with the U.S. Attorney's Office for the Southern District of New York included a $1.7 billion penalty; a separate settlement with the Office of the Comptroller of the Currency included a $350 million penalty. Additionally, the Treasury Department's Financial Crimes Enforcement Network fined Chase $461 million for BSA-related violations. But FinCEN determined that its fine was satisfied by Chase's payment to the U.S. Attorney of New York.
If you are a mid-level business enterprise in the software industry that develops an "App" for consumers to file their income taxes online, then the metrics will be different for a moderate consequence of "Economic Damage." Your matrix will be entirely different and fine tuned to what is relevant in your industry sector.

The Loss of Life category will be an interesting exercise.  None or Negligible will be zero fatalities. Yet how do you define the difference between minor (1) and moderate (2).

The Psychological Impact category will span:

0 - None or Negligible = No major change in population behavior; no effects on social functioning
4 - Catastrophic or Severe = Loss of belief in government and institutions; widespread disregard for official instructions; widespread looting and civil unrest

Once you have designed your particular matrix for your size and type of business, the real work begins. You must now begin developing the "Use Cases."  What are the scenarios that you will apply to the exercise that will take place next with the effected stakeholders?

In a generic fashion, you will design specific and customized scenarios that address the major business revenue components of your particular enterprise.  You are imagining an attack or hazard outcome, that impacts that component of your business.  Such as these typical cases:
  • Earthquake destroys data centers
  • Tsunami overcomes nuclear reactors
  • Data hack exposes millions of customers PII
  • Infectious disease outbreak across work force
  • Government prosecutes for violations of regulatory laws
  • Employee sues company for management harassment
  • New Customer Order Management system launch encounters substantial bugs/failures
After you have cleaned off your desk from a week away at RSA, the work really begins.  Start your new "Consequence Assessment" soon.  Gather senior executives for an off-site for two days to review the new scenarios you have designed.  Get their independent feedback and perception of the variables of your matrix.  Ask your Board of Directors for the resources and budgets to address the outcomes and insights from the exercise.
“ Man must be arched and buttressed from within, else the temple will crumble to dust. ”
— Marcus Aurelius Antoninius

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