Pain or Joy: Change Management 101...

Habits are hard to change.  It takes discipline and continuous perseverance.

When was the last time you changed something that increased your revenue?  Your health.  Or your safety and security.

Change and managing change whether in the corporate ranks of your Fortune 500 Global Enterprise or back in your own personal life at home is a true challenge.

Before you even thought about what you needed to change in your business or your own life, you probably have encountered one of two experiences:

• Pain

• Joy

Which one of these two experiences have you recently encountered?

You see, our human behavior is quite predictable and it is usually one of these two motivators in life that will change your behavior.

Educating yourself and others you care about requires that you sometimes utilize one of these motivators in order to initiate new change.  Let’s begin with “Pain”.

These realities are exactly what the evil in our world today continues to prey on.  Those individuals who are unable or unwilling to change, and to manage change in their lives.

“It is really very simple. In the foreseeable future, we will not function as a global society without the Net and the immense digital resources and information assets of our society. The addiction is established—commerce, government, education, and our neighbors offer no option other than to require that we rely upon digital information in making decisions. But we will not function successfully if the war for control of those assets is lost. The battlefield, however, is the one on which trust is to be gained or lost—trust in the information we use, trust in the infrastructures that support us, and trust in the decisions we make in a digital world.”  Page 19 - Achieving Digital Trust | The New Rules For Business At The Speed Of Light  - Author Jeffrey Ritter

In your own digital life, these habits may be as simple as using the same password on multiple accounts that each of us rely on, each day or each week of our lives.  You know who you are.

As the continued use of “Ransomware” remains so pervasive across the globe and is utilized by so many criminal gangs and nation states, each one of us must consider our personal and business habits.

At home and at work.

It is now time to change.  It is time to change your digital habits so you may avoid the pain and continue to have even more joy in your life.

Take action.

Start a new habit now of changing the weak password on your bank accounts.  Make it 20 characters, and make it random.  Easily addressed when you "Use a Password Manager App".  Then set a reminder to change it on January 1, April 1, July 1, and October 1 of each year.

“Microsoft warns that ransomware threat actor Storm-0501 has recently switched tactics and now targets hybrid cloud environments, expanding its strategy to compromise all victim assets.

The threat actor first emerged in 2021 as a ransomware affiliate for the Sabbath ransomware operation. Later they started to deploy file-encrypting malware from Hive, BlackCat, LockBit, and Hunters International gangs. Recently, they have been observed to deploy the Embargo ransomware.

Storm-0501's recent attacks targeted hospitals, government, manufacturing, and transportation organizations, and law enforcement agencies in the United States.” —BleepingComputer

After you have successfully accomplished this simple task in your business and in your own personal life, remember:

The “Pain” of doing this simple “Change Management” step in your life, will help bring you continued “Joy” for so many years to come…:)

Godspeed!

Analytic Priorities: Crossing the Digital RubiCON...

The governance of information within the government enterprise or the private sector enterprise remains very much the same. Both are subjected to a myriad of laws to help protect the civil liberties and privacy of U.S. citizens. Yet the data leaks, breaches and lost laptops keep both private sector and government organizations scrambling to cover their mistakes and to keep their adversaries from getting the upper hand. Again, the governance of information is the core capability that must be addressed if we are to have effective homeland security intelligence sharing to defeat the threats to the homeland 100% of the time.

The stakeholders in the information sharing environments will say that they have all the laws they need to not only protect information and also to protect the privacy of and liberties of U.S. citizens. What they may not admit, is that they do not have the assets within the context of their own organizations to deter, detect, defend and document the threats related to too much information being shared or not enough. These assets are a combination of new technologies, new education and situational awareness training and the people to staff these respective duties within the enterprise architecture.

Operational Risk Management is a continuous process in the context of our rapidly expanding corporate environments. What is one example? People traveling to emerging markets to explore new business opportunities or new suppliers that will be connected by high speed Internet connections to the supply chain management system. These boundaries of managing operational risk, have not only expanded, they have become invisible.

Ru·bi·con

1. a river in N Italy flowing E into the Adriatic

—Idiom

2. Rubicon, to take a decisive, irrevocable step

This "Digital Rubicon" before us, to take on a more "Active Defense" in navigating the risk across international waters of e-commerce, privacy and legal jurisdictions will forever shape our future. The decisions made on what constitutes an adversarial attack in the cyber domain, will not be as easy as the dawn of the nuclear age. Policy makers today have to weave the potential implications into a sophisticated decision tree that crosses the complex areas of intelligence, diplomacy, defense, law, commerce, economics and technology.

The new digital "Rule Sets" are currently being defined by not only nation states but the "Non-State" actors who dominate a segment of the global digital domains. The same kinds of schemes, ploys, communication tactics and strategies are playing out online and what has worked in the physical world, may also work even better in the cyber-centric environment. Corporations are increasingly under estimating the magnitude of the risk or the speed that it is approaching their front or back door steps.

The private sector is under tremendous oversight by various regulators, government agencies and corporate risk management. Yet the "public-private" "tug-of-war" over information sharing, leaks to the public press and Wikileaks incidents has everyone on full alert. As the government has outsourced the jobs that will take too long to execute or that the private sector already is an expert, operational risks have begun to soar.

As the private sector tasks morph with the requirements of government you perpetuate the gap for effective risk mitigation and spectacular incidents of failure. Whether it is the failure of people, processes, systems or some other clandestine event doesn't matter. The public-private paradox will continue as long as the two seek some form of symbiosis. The symbiotic relationship between a government entity and a private sector supplier must be managed no differently than any other mission critical resource within an unpredictable environment.

Once an organization has determined the vital combination of assets it requires to operate on a daily basis, then it can begin it's quest for enabling enterprise resiliency. The problem is, most companies still do not understand these complex relationships within the matrix of their business and therefore remain vulnerable. The only path to gaining that resilient outcome, is to finally cross that "Digital Rubicon" and realize that you no longer can control it.

The first step in any remediation program, is first to admit the problem and to accept the fact that it exists. Corporate enterprises and governments across the globe are coming to the realization that the only way forward is to cooperate, coordinate and contemplate a new level of trust.

operational risk

Insider Threat: Corporate Integrity Culture...

Does your organization have a culture of "Corporate Integrity?" One can only wonder how these findings have changed since these results.

The depth and breadth of Operational Risks were apparent over eight years ago in the 2011 CyberSecurity Watch Survey by CSO Magazine, USSS, CERT and Deloitte.

The most common insider e-crime at 63% is unauthorized access to / use of corporate information. Here are the others:

• 57% - Unintentional exposure of private or sensitive data
• 37% - Virus, worms or other malicious code
• 32% - Theft of intellectual property

When asked which electronic crimes were most costly or damaging the results were:

• 38% - Outsiders
• 33% - Insiders
• 29% - Unknown

Regarding the "Insiders" reasons were given for not referring for legal action, the one that stands out in our mind is this one. 40% could not identify the individual(s) responsible for committing the eCrime. And maybe even more astonishing is that 39% did not have enough information or a lack of evidence, to proceed with either civil or criminal litigation.

So what is really going on with these survey results presented so far? Even though the respondents say that 33% "Insiders", they have done little to collect enough evidence to identify who the responsible parties are to the incident. This may be for several reasons including the lack of internal expertise to preserve evidence and conduct timely investigations.

We have addressed the "Insiders" that make up one third of the digital incidents, yet what about the "Unknowns" who add an additional 29%. The combination of the two make up 62% of all the incidents in the study.

This is where Operational Risk professionals can have a significant impact within the enterprise.

The unauthorized access to information and use of that information is at the center of this issue. When an organization realizes that this "information" has impacted them, the funds have been stolen, the trades have been placed or the press has published a trade or national security secret.

Regardless of the high tech tools utilized or the systems and controls within the organization, there are always methods and processes that if properly implemented, will reduce the number of "Unknowns" and "Insider" threats.

In your particular case, it just may come down to developing more effective situational awareness with your employees.

Suppose you create a mandatory program for all employees that is focused on corporate integrity and each year the CEO kicks off the first session with their own attendance and their own direct reports, including the Board of Directors.

Next, all senior staff attend the program and posted on the corporate Intranet are webcast shows with several 5 minute clips of parts of the one day session.

Finally, the roll out for the remainder of the employees is tied to the annual 360 degree review, that each manager does with their subordinates in the company.

Employees must understand the ethical behavior expected of them. New employee orientation should detail the organization's mission, values and code of conduct, types of fraud, compliance, their responsibility to report violations of ethical behavior and impropriety, and details of the hotline or other ways to report incidents and other integrity concerns.

Periodic training throughout an employee's career reinforces awareness and the cost of internal incidents.

If your organization does not currently have a program as we have described earlier, then maybe it's time to start one.

If you already have one in place, how effective is it in detecting the "Insider Threat" and the spectrum of Operational Risks within your organization...

4th Generation Warfare: Insider Risk...

Flashback to 2010.  Over 8 years ago, this author discussed the situational awareness and the implications of the "Stuxnet" malware that was being investigated by international authorities. In January 2011, the New York Times published a more detailed set of facts and a hypothesis that the sophisticated "worm code" was tested in Israel:

William J. Broad, John Markoff and David E. Sanger.

The Dimona complex in the Negev desert is famous as the heavily guarded heart of Israel’s never-acknowledged nuclear arms program, where neat rows of factories make atomic fuel for the arsenal.

Over the past two years, according to intelligence and military experts familiar with its operations, Dimona has taken on a new, equally secret role — as a critical testing ground in a joint American and Israeli effort to undermine Iran’s efforts to make a bomb of its own.

Behind Dimona’s barbed wire, the experts say, Israel has spun nuclear centrifuges virtually identical to Iran’s at Natanz, where Iranian scientists are struggling to enrich uranium. They say Dimona tested the effectiveness of the Stuxnet computer worm, a destructive program that appears to have wiped out roughly a fifth of Iran’s nuclear centrifuges and helped delay, though not destroy, Tehran’s ability to make its first nuclear arms.

4th Generation Warfare (4GW) and the implications for global critical infrastructure organizations is obvious. The Operational Risks associated with targeted infiltration of systems that control machines, manufacturing processes and software that manages transportation, has now changed the baseline for where to begin mitigating this asymmetric threat.

Executives then and to this day, realize the continuous requirement for improved focus on the "Insider Threat" to their systems operations. Why?

This particular worm was initially delivered by a USB Thumb Drive according to various reports. This means that someone would have to have been inside the facility targeted for the attack, to actually introduce the malware to the actual system controller. A person within the perimeter of the organization with this single device, could set the chain reaction in motion.

Whether you are a major manufacturer or an electric utility doesn't matter. The person you trust to access systems inside the organization, is the basis for mitigating this type of attack. Most important is the scrutiny associated with the extended supply chain of semi-trusted contractors or others known to the organization. 

All of the back ground checks and other methods for determining someone's character will not be the major deterrent to a worm introduced internally to an Intranet, with the use of a USB thumb drive.

So what is the answer to address this threat?

A TSA-style check, scan and pat down at the entrance to every commercial enterprise that has computers inside with open USB ports? This is very unlikely in the near term for most facilities.

What about disablement of the technology itself, that turns off the ports themselves on each system inside the organization perimeter? This solution is more likely to deter many opportunities for this type of USB style attack to occur, yet still doesn't remove all of the risks against another possible vector to the network through a CD drive as an example.

Regardless of the method or the controls you employ to mitigate this risk, it will not eliminate the entire threat from your organization. Even the use of a "Digital Sandbox", Endpoint security measures or other methods to disable ports on systems will entirely lock down your organization.

There is only the ability to create a more resilient and durable environment to survive a significant business disruption. The mind set shift to durability and the latency to recover, now becomes the new strategy for these kinds of risks.

Using a strategy for "Business Resilience" is one that requires significant resources, a Global Security Operations Center (GSOC) and a committed management team. The ability to survive is the first part of the process and how soon you return to full operational capability is the metric. How long does it take to bounce back to normal from a major crisis, in your organization?

The ability to manage emerging risks, anticipate the interactions between different types of risk, and bounce back from disruption or crisis, will be a competitive differentiator for companies and countries alike in the 21st century.

Homeland security is often seen as a protective, even defensive, posture. But Maginot lines are inherently flawed. Fences and firewalls can always be breached. Rather, the national focus should be on risk management and resilience, not security and protection.

Resilience—the capability to anticipate risk, limit impact and bounce back rapidly—is the ultimate objective of both economic security and corporate competitiveness...

Predictive Profiling: The Human Firewall...

In Harrison Ford's 2006 movie Firewall the viewer is entertained with a combination of a Seattle bank heist, kidnapping and good old fashioned Hollywood chase and fight scenes. There is even a degree of deception and conspiracy mixed in, to spice up the story line. The plot is full of social engineering lessons, that even those with little knowledge of high technology can learn a thing or two.

While the actual high technology bank heist turns out to be nothing more than a simple stealing of account numbers and a transfer of $10,000 from 10,000 high net worth customers, the movie title is a ploy. In only one short sequence is there any focus on the fact that the bank is being attacked on a daily basis from other locations on the other side of the globe.

Those attackers using new and increasingly sophisticated strategies, are consistently giving financial institutions new challenges to secure their real assets; binary code.

In early 2005, a criminal gang with advanced hacking skills had tried to steal GBP 220 million (USD 421 million) from the London offices of the Japanese banking group Sumitomo and transfer the funds to 10 bank accounts around the world. Intelligence on the attempted theft via key logging software installed on banks' computers has been circulating in security circles since late last year after warnings were issued to financial institutions by the police to be on the alert for criminals using Trojan Horse technology that can record every key stroke made on a computer.

In this case and even in the movie, the "Insider" is a 99.9% chance. A person has been bribed, threatened or spoofed in order for the actual fraud or heist to occur. The people who work inside the institution are far more likely to be the real source of your crime, rather than the skilled hacker using key logging software. More and more the real way to mitigate these potential risks is through behavior profiles and analysis.

The human element, which relates to awareness, can't be ignored any longer. And this can only be changed through education, training, and testing of employees. An organization that procures technology worth millions, is naive if you don't invest in educating your employees to make the investment worthwhile.

Sometimes the human element stands alone. Awareness, detection and determination of threat, deployment, taking action and alertness are key ingredient for security.

Predictive Profiling comes into play as organizations recognize that detecting threats starts long before the firewall is compromised, falsified accounts established and bribes taken.

The Israeli Airline El Al has known for a long time the power of the "Human Factor" as a force in security. An empowered, trained and aware group of people, will contribute to the layered framework as a force multiplier that is unequaled, by any other technology investment.

Firewall The Movie, was a wake-up call for those institutions who still have not given their employees more of the skills and tools, for detecting human threats long before any real losses occur.

National Security: Cyber Infrastructure Risk...

Is your organization a threat to National Security? That depends on whether you own, install, and maintain Critical Infrastructure. When you hear that term, "Critical Infrastructure" what comes instantly to mind? A bridge, a road or some other shovel ready project?

Yes, the hard leap for many to get their head around is that your cell phone, TV and Internet connection are vital "Critical Infrastructure" and if you are a Verizon, AT&T, Sprint or large cable company in the United States; National Security is a top of mind issue.

Is it possible that our country is at risk because of the same "Risk Management" paradigm that has plagued the Financial Services industry? A lack of resources and focus to deter, detect, defend and document risks to our critical infrastructure, could turn into a systemic and interdependent threat to our national security.

How can you make the case for a 2008 era economic meltdown in the financial services sector, to be similar to the potential failure of the Communications, Information Technology, Water or Energy sector?

It's easy. Look at human behavior and to the motivators of greed, selfishness and just plain blindness to a "risk bubble" just waiting to burst. Who will be the next Bear Stearns, in the Communications Sector?

The truth is, that some Fortune 500 companies marketing departments, may have a larger budget than the information systems, internal audit department and the security department combined. When the nuts and bolts, concrete and plumbing associated with electronic commerce, banking, and just plain mobile communications come to a slow crawl or halt in it's tracks, the government will have to do the same thing all over again.

Bail out or restore the industry and the companies, who are the lifeblood of our Critical Infrastructure.

Our National Security is at stake and the owners and operators are still waiting for the right incentives to invest in robust maintenance and security programs, instead of just more marketing. After all, market share is what shareholders ask about, along with how many new subscribers you won or lost last quarter.

How often do we hear the question at the shareholders meeting, that asks about the amount of downtime, failed systems or customers without service, as a result of a "Glitch" or fried circuit board?

So how does the electronic critical infrastructure really impact National Security?  The Department of Homeland Security (DHS) has the lead.  The mission is to lead the national effort to secure Critical Infrastructure from all hazards by managing risk and enhancing resilience through collaboration with the critical infrastructure community.

"The Office of Infrastructure Protection (IP) leads and coordinates national programs and policies on critical infrastructure security and resilience and has established strong partnerships across government and the private sector. The office conducts and facilitates vulnerability and consequence assessments to help critical infrastructure owners and operators and State, local, tribal, and territorial partners understand and address risks to critical infrastructure. IP provides information on emerging threats and hazards so that appropriate actions can be taken. The office also offers tools and training to partners to help them manage the risks to their assets, systems, and networks."

A culture of risk management is slowly moving it's way into the Board Room conversations and the CEO may be on notice, if the "Tone at the Top" is not focused on Enterprise Business Resilience. However, that "Tone at the Top" needs to go beyond the shareholder value conversation, to the National Security topic.

One only has to look further in a few places on the "Net," to better understand what the offensive cyberwarfare conversation is all about, as the Advanced Persistent Threat (APT) has evolved in the past few years.

Once you understand that many cyber incidents with our U.S. Critical Infrastructure are just a test, then you will realize that U.S. shovel ready projects need a new public service announcement (PSA), with a shock value of texting while driving.

The risk of a specific kind of behavior on the road or the critical infrastructure complacency within the corporate enterprise, can have the same results. We have already nationalized the likes of AIG, Freddie Mac and Fannie Mae after the last financial crisis.

Perhaps it time to do the same for Amazon, Verizon, AT&T, Sprint and others, who are vital assets in our National Security and have them report directly to the Pentagon...think about it.

Unthinkable: Adapting in New World Disorder...

Will 2018 bring more data breaches, lost laptops and insider threats than 2017?  This is why CSO's, CPO's and corporate General Counsels have their teams working overtime.

When the enemy is increasing their attacks, utilizing new strategies and leveraging the existing base of compromised organizational intellectual and data assets, the future horizon becomes ever more clear. 

The statistics don't lie.  1579 documented Data Breaches occurred in 2017. Up 44.7% according to reports by the Identity Theft Resource Center (ITRC) compared to the previous year.  It is the new normal.

The Insider Threat Program (InTP) however, remains a key focus for Operational Risk Management (ORM) professionals because human behaviors are exaggerated during periods of stress, fear and uncertainty. This means that people who may have never considered doing something to jeopardize their reputations, may now be up against a wall.

When there is no obvious exit and no way out, people will do extraordinary things to get ahead, beat the odds and hedge their own risk portfolio of life.

In Joshua Cooper Ramo's book "The Age of the Unthinkable", "Why the New World Disorder Constantly Surprises Us and What We Can Do About It" the author discusses the concept of Deep Security. His analogy of how to think about "Deep Security" is the biological immune system:

"A reactive instinct for identifying dangers, adapting to deal with them, and then moving to control and contain the risk they present."

The key word in Ramo's writing is "Adapt".  Being Adaptive.  However, prior to this there are two other very vital words that we feel are even more imperative. Instinct. Identifying. In other words, Proactive Intuition.

Ask any savvy investigator on how she solved the case and you may hear just that, "I had a hunch."

Talk with a Chief Privacy Officer in any Global 500 company.  You might get them to admit they have a sense that their organization will be the target of an "Insider data breach" incident in the coming year or two.

Do you remember signing off on reading and your acceptance of the employee handbook?  When did your organization last make changes to the Corporate Employee policies?  We would start with the updates to the following sections:

• MEDIA CONTACT
• SOCIAL MEDIA POLICY
• REMOTE ACCESS POLICY
• E-MAIL, VOICE MAIL AND COMPUTER NETWORK SYSTEM PRIVACY
• (YOUR ORGANIZATION) RIGHT TO ACCESS INFORMATION
• SYSTEMS USE RESTRICTED TO COMPANY BUSINESS
• FORBIDDEN CONTENT
• PASSWORD SECURITY AND INTEGRITY
• INTERNET ACCEPTABLE USE POLICY
• POLICY ON USE OF SOFTWARE
• COMPANY PROPERTY
• PROTECTION OF TRADE SECRETS/NON-DISCLOSURE OF COMPANY INFORMATION 

Due to the increasing complexity of IT systems, cloud computing, data networks and the hundreds or thousands of laptops and mobile devices circling the globe with company executives and employees is enough to predict that a major breach will occur.

Being adaptive and having proactive intuition in the modern enterprise does not come natural. You have to work at it and it requires a substantial investment in time and resources to make it work effectively.  Proactive Intuition.

Once you realize that all of the controls, technology and physical security are not going to keep you out of harms way, you are well on your way to reaching the clairvoyance of "The Age of the Unthinkable."

Higher Purpose: A Mission of Trust...

As you walk into that next meeting with another co-worker or even a colleague for a coffee catch-up, pause and reflect.  Think about how you could (1) make this encounter not only productive and (2) simultaneously enhance the relationship of trust.

All too often we are focused on getting something of value from the meeting.  We are blinded by the purpose of the meeting or have preconceived ideas on how the time together will be of value, or a waste of time.  Now think differently.

A true professional in any business, unit, agency or organization is there to "Build Trust".  The day-to-day or hour-to-hour interactions you have with others is vital.  A true professional in any domain, industry or vocation, can aspire to a higher purpose than the normal roles of a stated job description.

One thing is certain when it comes to meeting with other people and the value or outcomes obtained, trust is a major factor in the future outcomes of the relationship.  Have you ever wondered why certain people you meet, take so long to trust you?  How are you going to accomplish your intended purpose working with this superior or subordinate if they don't trust you?  What about that new client or business partner?

At the most fundamental level, the trust gurus and authors have been writing about a spectrum of trust for eons:

Zero Trust >>>>>Trust Exists >>>>>Implicit Trust

From ground zero of your first encounters with another person, your goal is to move towards a point on the spectrum where "Trust Exists".  Then your goal is to keep moving to the right and towards a place of "Implicit Trust".  This is when you don't even think about it anymore.  How many people do you know where this is the case, even within your own family?

So what?

As an Operational Risk professional, velocity is everything.  Yet you already know that uncontrolled velocity alone can be fatal.  The risk factors associated with business, government or the manufacturing process of a highly engineered electronic component are always present.  Always changing.  Creating new obstacles or new harm.  In our current state, 24x7x365 pervasively connected society, the trust factors are even more important and vital to moving towards "Implicit Trust".

Here are a few examples in the news this past year, where Operational Risk Management (ORM) was a factor:

Samsung Galaxy Note 7

On 2 September 2016, Samsung suspended sales of the Galaxy Note 7 and announced an informal recall, after it was found that a manufacturing defect in the phones' batteries had caused some of them to generate excessive heat, resulting in fires and explosions. A formal U.S. recall was announced on 15 September 2016.

Yahoo

When Yahoo said on Thursday that data from at least 500 million user accounts had been hacked, it wasn't just admitting to a huge failing in data security -- it was admitting to the biggest hack the world has ever seen.

Until Thursday, the previous largest known hack was the 2008 breach that hit almost 360 million MySpace accounts, according to a ranking by the "Have I been pwned" website. Like the Yahoo breach, the hack was only publicly disclosed this year after data was offered on a hacker forum.

National Healthcare Fraud

Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced today an unprecedented nationwide sweep led by the Medicare Fraud Strike Force in 36 federal districts, resulting in criminal and civil charges against 301 individuals, including 61 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $900 million in false billings.

National Security Agency

A federal contractor suspected in the leak of powerful National Security Agency hacking tools has been arrested and charged with stealing classified information from the U.S. government, according to court records and U.S. officials familiar with the case.

In each one of these few example cases, relationships between people started with a meeting encounter.  Over time, the product, service or personal relationship outcomes involved a failure of people, processes, systems or external events.  The core components of Operational Risk Management (ORM).

Raising the level of trust across personal, business or government encounters is only possible, with effective "TrustDecisions".  The Decisions to Trust another person, product or service have several elements.  These are vital for the mission to grow towards "Implicit Trust" and simultaneously with the safety and security necessary to reduce the risk of failure.

The Mission

The mission as a co-founder of a new startup or the CEO of a Global 500 is to ensure the survival of the organization. We all know the failure rate for new companies. Just ask Dun & Bradstreet for the statistics or even your local Venture Capitalist who is celebrating failures these days. So beyond just the survival of the organization, is the imperative to establish a cultural and operating environment where people feel encouraged, creative and unencumbered to fulfill their job requirements and goals.

The Take Away

Operational Risks are inherent in any new or established business endeavor. The earlier the Operational Risk Management (ORM) design begins in the trusted relationship evolution, the more resilient you will ultimately become. The framework of the system-of-systems, the look and feel of the cultural environment and the end state visions are all at stake. Take the time and include the expertise to work on the "TrustDecisions" foundation of your enterprise.

Ensure the survivability of the new products or service solutions, that are so valuable to our economy and our nation.  Embrace Operational Risk Management early in your relationships and allow it's presence while it preserves all that you have worked for and dreamed of...

Utility of Attack: Target Selection and Execution...

The threat spectrum for Operational Risk Management (ORM) professionals is wide and they are constantly evaluating opportunities to learn.  Recent data breaches, terrorist attacks and the strategies utilized by adversaries online and on the ground, has surfaced another key lesson learned:

u·til·i·ty n. (pl. -ties) 1 the state of being useful, profitable, or beneficial (in game theory or economics) a measure of that which is sought to be maximized in any situation involving a choice.  The New Oxford American Dictionary

Here are two data breach examples:

1. On May 30, 2016, Omni Hotels discovered they were the victim of malware attacks on their network affecting specific point of sale systems on-site at some Omni properties. The malware was designed to collect certain payment card information, including cardholder name, credit/debit card number, security code and expiration date. They have no indication that reservation or Select Guest membership systems were affected.  50,000 records are impacted.
    
2. Prior to May 2016, identity thieves stole tax and salary data from big-three credit bureau Equifax Inc., according to a letter that grocery giant Kroger sent to all current and some former employees. The nation’s largest grocery chain by revenue appears to be one of several Equifax customers that were similarly victimized this year. Atlanta-based Equifax’s W-2 Express site makes electronic W-2 forms accessible for download for many companies, including Kroger — which employs more than 431,000 people.  According to a letter Kroger sent to employees dated May 5 2016, thieves were able to access W-2 data merely by entering at Equifax’s portal the employee’s default PIN code, which was nothing more than the last four digits of the employee’s Social Security number and their four-digit birth year.

Here are two terrorist attack examples:

In two major domestic terrorism events in the United States this past year, "Utility" was a major factor and should not be discounted, in analyzing motivations and "modus operandi" of homegrown violent extremists.  In San Bernardino, CA the adversaries were planning a major attack and had already stockpiled explosives and ammunition.  In Dallas (Mesquite), TX the adversary was planning a major attack and had already stockpiled a cache of explosives as well.

In both of these cases, the adversaries had accumulated and trained to use explosives in an attack.  Then they came upon a choice.  A utility.

1. In San Bernardino, an incident with government co-workers motivated the employee attacker to deviate from the intended plans and to capitalize on the "Utility" of a workplace holiday gathering at the county facilities.
2. In Dallas, a peaceful protest march that would attract a significant government presence of police officers, motivated the attacker to deviate from future plans and to capitalize on the "Utility" of a public gathering.

Dr. Erroll Southers is correct:

While the impetus for attack is rooted in beliefs, a terrorist’s selection of how and where to attack is based on a consideration of utility. This is the estimate of an attack’s consequences with respect to the intended target’s value as a domestic or international interest and the political impact the attack will have on the intended audience. Utility is a primary consideration for extremists during preparation for an attack, weighing desired results against the investment in activities to plan, rehearse and execute an operation. Always mindful of the aftermath, utility weighs heavily in the decision-making process of target selection, possible attack paths, methodologies and execution.  Southers, Erroll (2014-09-25). Homegrown Violent Extremism (pp. 9-10).

In both cases, the adversaries accelerated their plans.  They abandoned their use of explosives and a future planned event, to act on their emotions and motivations of the moment.  Domestic Terrorism in the United States will continue at a rapid pace without a more serious focus, on Homegrown Violent Extremism.

Whether it be online with the trust of your data systems or offline with the safety and security of your citizens, employees and facilities, beware of the changing opportunities for your adversaries, to launch their attack...

Utility, leveraged by your adversaries, is a consideration that must be continuously evaluated and analyzed in your particular threat environment. 

4GW: Strategic Risk Vs. Tactical Insurgencies...

Fourth Generation Warfare (4GW) is upon us in the E-Ring, The West Wing and the PGP Keyring. Information Assets and the knowledge that is the key to wealth is not a physical debate any longer. Thomas X. Hammes articulates this in his book, The Sling and The Stone:

Fourth-generation warfare (4GW) uses all available networks -- political, economic, social, and military -- to convince the enemy's political decision makers that their strategic goals are either unachievable or too costly for the perceived benefit. It is an evolved form of insurgency. Still rooted in the fundamental precept that superior political will, when properly employed, can defeat greater economic and military power, 4GW makes use of society's networks to carry on its fight. Unlike previous generations of warfare, it does not attempt to win by defeating the enemy's military forces. Instead, via the networks, it directly attacks the minds of enemy decision makers to destroy the enemy's political will. Fourth-generation wars are lengthy -- measured in decades rather than months or years.

The Mission
The global business landscape has known for all to long the power of marketing. Knowledge is not a fixed asset in a fixed physical location. Intellectual property, patent applications and new formulas can be reduced to zeros and ones and sent to anyone in the world almost instantaneously. Encrypted data flows through the veins of the Internet and has changed the playing field for governments and for your organization.

While nations states and growing adversaries wage their respective political and economic battles, the private sector and the Fortune 500 are in another and parallel conflict to keep their Intellectual Property and Information-Based Assets safe and secure from a growing threat spectrum.

Modern digital insurgents and other 4GW opponents are part of a virtual network that has no specific location found in longitude latitude or geocode. The money center bank or transnational pharmaceutical company is all to familiar with the hijacking of trade secrets or personal identities, held for ransom or sold to the highest bidder.

The Take Away
Yet this is not about technology and it is even more apparent that it is not about the Internet. It is about how people are able to operate in a wide variety of countries, cultures and operating environments. These human networks are the most powerful forces to governments and to marketers.

Whether it's a brand being endorsed by a superstar rocker like Paul McCartney or a book being recommended by Oprah Winfrey this 4GW strategy is exactly what this sharing of human knowledge and intelligence is all about. And let's not forget the power of Aljazeera and The New York Times.

The risk of operating your enterprise across the planet requires a "4GW" mentality and toolkit to help ensure your success. What is your organization doing to retool and retrofit your work force to compete on an operational level with more educated people and superior human capital?

CAG 20: Red Team Exercises...

The Consensus Audit Guidelines (CAG) have been public for years and the 20 controls are vital to our enterprise business resilience. One stands out however that is not automated and requires a specific advance Operational Risk Management (ORM) strategy. CAG: Critical Control 20: Red Team Exercises:

Attackers penetrate networks and systems through social engineering and by exploiting vulnerable software and hardware. Once they get access, they burrow deep and expand the number of systems over which they have control. Most organizations do not exercise their defenses so they are uncertain about its capabilities and unprepared for identifying and responding to attack. 

This control goes beyond traditional penetration testing, which typically has the goal of identifying vulnerabilities and showing their business risks. Red Team Exercises are exercise in the traditional sense of military exercises where the three goals are improved readiness of the organization, better training for defensive practitioners, as well as inspection of current performance levels. Independent red teams can provide valuable objectivity regarding both the existence of vulnerabilities and the efficacy of defenses and mitigating controls already in place and even those planned for future implementation.

We would like to emphasize the importance of this strategy execution beyond the IT and Information Systems within the organization. In any significant business disruption or "incident", whether it be the breach and theft of a database full of "Personal Identity Information" (PII) or the breach of a rear window of a corporate executives residence to initiate a kidnapping plot; the goal remains the same:

"Attackers use tools to exploit a vulnerability; to create an action on a target, that produces an unauthorized result to obtain their objective."

Think about it for a minute. Whether it be the online digital world or the offline physical environment your organization is operating in today; someone is probing and testing your vulnerabilities. The only possible way for you to discover them before your adversary is to continuously attack your own business and it's assets. And possibly most importantly, it must be done on a clandestine basis:

clandestine from L. clandestinus "secret, hidden," from clam "secretly," from base of celare "to hide"

What value can be gained from exercises or testing that is conducted with advance warning to your staff or team? Very little. To execute the "Red Cell" approach to effectively improve and to increase the resilience of your organization, the strategy execution must remain secret. Yes of course there will be people placed throughout the organization, in key areas that know that the exercise or attack on the organization is a planned exercise. However, it is only for the safety and liability purposes, along with the potential injection of simulations that increase the effectiveness of the vulnerability testing.

The CAG has 20 controls that are focused on Cyber Defense and many of these will require manual intervention, planning and effective oversight. Automated tools can only go so far, to address the real goal of understanding human behavior during and after a "Real Incident" actually unfolds. In the context of using a Red Team exercise, you must include the use of Gavin De Becker's "Elements of Prediction" with your employees and stakeholders:

1. Measurability - How measurable is the outcome you seek to predict?
2. Vantage - Is the person making the prediction in a position to observe the pre-incident indicators and context?
3. Imminence - Are you predicting an outcome that might occur soon, as opposed to some remote time in the future?
4. Context - Is the context of the situation clear to the person making the prediction?
5. Pre-Incident Indicators - Are there detectable pre-incident indicators that will reliably occur before the outcome being predicted?
6. Experience - Does the person making the prediction have experience with the specific topic involved?
7. Comparable Events - Can you study or consider outcomes that are comparable- though not necessarily identical- to the one being predicted?
8. Objectivity - Is the person making the prediction objective enough to believe that either outcome is possible?
9. Investment - To what degree is the person making the prediction invested in the outcome?
10. Replicability - Is it practical to test the exact issue being predicted by trying it first elsewhere?
11. Knowledge - Does the person making the prediction have accurate knowledge about the topic?

This is how and where you extend your physical controls to the actual people, who will make the difference before and during a critical incident in your enterprise.  Revisit the Consensus Audit Guidelines (CAG) for your enterprise.  It just might help you find that one place where the continuity of the business is at risk after a significant disruption or the one threat that still is hiding in the shadows.

Blackhat: Corporate Counterintelligence Capability...

If you are an Operational Risk Management (ORM) professional you should invest time to see the latest movie on Information Security this weekend.  Michael Mann's latest production is entitled "Blackhat" and it has a few lessons learned including several stark reminders of the current state of industrial asymmetric warfare.

While you may laugh at some of the scenes, there are some effective learning points along the way.  Even better, consider inviting one of your corporate executives to the movie with you.  They could walk away with a better understanding of the active cybercrime and cyberterrorism syndicates that have global operations.

The motivations for these continuous cyber attacks in most cases can be described in one word, "Greed".  The human factors associated with greed continue to become more exemplified in the digital Internet of Things (IoT) domain year-to-year.  So what does Wired Magazine and Cade Metz have to say about this latest hacker movie?

For Parisa Tabriz, who sits at the center of the info-sec universe as the head of Google’s Chrome security team, it’s a Hollywood moment that rings remarkably true. “It’s not flashy, but it’s something that real criminals have tried—and highlights the fundamental security problems with foreign USB devices.” 

Tabriz will also tell you that such accuracy—not to mention the subtlety of the scene with the coffee-stained papers—is unusual for a movie set in the world of information security. And she’s hardly alone in thinking so. Last week, Tabriz helped arrange an early screening of Blackhat in San Francisco for 200-odd security specialists from Google, Facebook, Apple, Tesla, Twitter, Square, Cisco, and other parts of Silicon Valley’s close-knit security community, and their response to the film was shockingly, well, positive. 

Judging from the screening Q&A—and the pointed ways this audience reacted during the screening—you could certainly argue Blackhat is the best hacking movie ever made.

Hollywood, California is getting closer to understanding how to reach a broad audience who are interested in the commercial cyber thriller.  The cyber themed movies have been around for years including "Sneakers" with Robert Redford in 1992.  So what has changed, after all of these attempts to help illustrate the spectrum of Operational Risks impacting the corporate enterprise?  Sabotage on critical infrastructure is ever more present.  So what has remained the same?

Still to this day there remains a tremendous amount of complacency on the risk of "Insider Threat." To illustrate this further; what are some of the common factors in all espionage incidents in the U.S. since 1950?

• More than 1/3 of those who committed espionage had no security clearance. 
• Twice as many “insiders” volunteered as were recruited. 
• 1/3 of those who committed espionage were naturalized U.S. citizens. 
• Most recent spies acted alone. 
• Nearly 85% passed information before being caught. 
• Out of the 11 most recent cases, 90% used computers while conducting espionage and 2/3 used the Internet to initiate malicious contact.

What can a corporation do in an environment of competing resources for talent, new tools and an increasing focus on consumer privacy?  Having an effective counterintelligence program within your organization is paramount to preserving your intellectual property and the integrity of the U.S. industrial supply chain.  So where should you start?

Begin your organizations awareness building with a robust program on cyber security:

Welcome to the InfraGard Awareness Security Awareness Course - We all have a role to play in protecting ourselves and the nation from the impact of cybercrime and identity theft, and that role can begin in the workplace. 

The better you are at protecting your own workplace from cybercrime and identity theft, the fewer opportunities criminals, petty thieves, and even terrorists will have to exploit security vulnerabilities for their own purposes.

1. "What technologies do you want to protect from your competitors (e.g., R&D, supply chain, pricing and customer service information, contracts, production and maintenance records, etc.)  Do you believe you are adequately protecting them?  Can you rank these items by level of importance?  
2. What information or technology (including expertise in manufacturing, production, or operations) are foreign competitors lacking that keeps them from being competitive?  Identify the various applications (both military and commercial) of your product or service.
3. Do you have a reporting program in place to track how and where your critical/emerging technologies are being targeted by domestic and foreign adversaries?  If so, what trends have you seen?"

• Source:  FBI SPIN:  15-001

The genesis of any mature insider threat program beings with the strategic development of a robust counterintelligence capability within your Operational Risk Management (ORM) framework.  The future of your organization and the safety and economic security of the entire nation is at stake.

OPS Risk: Best of 2013 and 2014 Forecasts...

This Operational Risk Management (ORM) blog has been posting since September 2003.  Over a decade later, the 1000+ pages of content on the discipline and profession of Operational Risk Management provides continuous learning and significant new insights.

Here are a few of our most visited "Operational Risk" blog posts of 2013:

• Walking the Talk: Asymmetric Lessons Learned...
• Social Media Risk: Situational Awareness on Wall Street to Main Street...
• Business Resilience: Supply Chain Risk to National Security...
• Cyber Risk: Human Factors vs. Automation...
• Unintentional Insider Threat (UIT): Human Factors Risk...
• Legal Risk: Forensic Analysis of Supply Chain...

As we approach the end of 2013 and embark on our journey into 2014 in the United States, there are many reflections and new aspirations on our mind.  When we look back over the past 12 months, we see old Operational Risk vectors pioneered in the days prior to the Internet, now making their way online.  Why?  It is far easier and more efficient to rob banks, extort people, defraud consumers and conduct psychological warfare, over a global network of interconnected digital devices.

2014 will continue to accelerate the needs and requirements for more robust Operational Risk Management strategies and increased adaptive tactics to neutralize a rapidly evolving set of new adversaries.  This however, may be one of the most compelling challenges for OPS Risk professionals across the globe:

Correcting the record on the NSA review

By Michael Morell, Published: December 27 

Michael Morell is the former acting director and deputy director of the Central Intelligence Agency and a member of President Obama’s Review Group on Intelligence and Communications Technologies. 

One of the dangers of a 304 -page report on a complex subject is that everyone gets to choose what he or she thinks is the bottom line. Many of those commenting on the report and recommendations of the recently completed Presidential Review Group on Intelligence and Communications Technologies must have read a different report than the one I helped write. 

As one of the five members of the panel, let me try to clear up some of the confusion and misperceptions. One such misperception is the extent of the changes called for in the report. Commentators have used the word “sweeping” to characterize the recommendations, arguing that they would“roll back” the capabilities of the intelligence community.  This is incorrect.

The reason that the ambiguity on the "Security vs. Privacy" debate will challenge the OPS Risk professionals, is obvious.  Uncertainty and indecision, increases vulnerability.  As a policy maker, U.S. military officer, consumer or a corporate CxO, the same applies.

2014 will require augmented abilities to adapt and to increase our adaptive speed.  What is your latency to change, from the time your adversary measures your behavior after a test of your controls or defenses?  In these continuously asymmetric ecosystems operating on a global basis, the response time window has narrowed to minutes or even seconds.  Not hours or days:

Target: Deceive first, answer questions later

Issuing deceptive statements is no way to win back customers' trust. That's a lesson for anyone who might find itself in Target's position someday. 

Evan Schuman December 28, 2013 (Computerworld)

For Target to get beyond its data breach disaster, it needs to regain the trust of its shoppers. Mystifyingly, it has opted to issue statements that are, at best, misleading. Some tiptoe beyond misleading, since the chain had to know they were untrue when it issued them. 

The latest example came Friday, when Target confirmed that encrypted PIN data was stolen. Then came the whopper: "The most important thing for our guests to know is that their debit card accounts have not been compromised due to the encrypted PIN numbers being taken." 

Of course those debit card accounts have been compromised. Webster's dictionary defines compromise as exposing something "to risk or danger." When personal identification numbers that give full access to someone's bank account are in the hands of experienced and sophisticated cyberthieves, I think it's safe to say that those bank accounts are indeed exposed to risk or danger. How could anyone argue otherwise?

2014 Operational Risk Management (ORM) will include "lessons learned" from the advice given to and within companies, such as Target Corporation.  Corporate counsel in collaboration with external private sector Incident Response companies including government agencies, will debate the disclosures, the sources and methods, as well as the timing of public relations press releases.

2014 will embark with the political narratives that are necessary to gain psychological advantage over the masses. Business media interests will begin managing the risks associated with any negative outcomes of their favored Pawns, Bishops and Knights.  Protecting the King or even the Queen for the first time, is the name of the game.  Political chess has an impact on governance, regulatory and compliance environment for business.

In 2014 horizontal thinking will "Break out" to bridge the gaps between public and private strategies. Managing catastrophic risks to vital critical infrastructure requires private sector willingness with public sector cooperation.  Big picture problem-solving and addressing global issues, requires more focus on the World Economic Forum  Global Risks Report agenda:

• Testing Economic and Environmental Resilience

• Digital Wildfires in a Hyperconnected World

• The Dangers of Hubris on Human Health

In an interdependent, fast-moving world, organizations are increasingly confronted by risks that are complex in nature and global in consequence. Such risks can be difficult to anticipate and respond to, even for the most seasoned business leaders.

Finally, 2014 will provide new opportunity and a positive outlook not seen since 2007.  The global investors are still bullish on the possibilities for long-term growth.  The religious wars will continue to spark new regional conflicts, yet the super powers will continue to find common ground.  Resilience to systemic failures will define what countries emerge, as the next tier of global influence.

At the end of the day, we are all the same.  Love for our family and the constant anxiety of providing a safe, secure and nourishing environment for them to live out their days.  As we close our eyes each night to try to sleep, we plan our next day on managing the "Operational Risks" in our path ahead.

operational risk

Insider Threat: Corporate Integrity Culture...

In August 2011, this Operational Risk Management (ORM) blog posted the following.  In light of the increasing impact of "Insider Incidents" in 2013, this is worth revisiting:

Does your organization have a culture of "Corporate Integrity?" The depth and breadth of Operational Risks are apparent in the 2011 CyberSecurity Watch Survey by CSO Magazine, USSS, CERT and Deloitte.

46% of the respondents said damage caused by "Insider Attacks" is more damaging than "Outsider Attacks". The most common insider e-crime at 63% is unauthorized access to / use of corporate information. Here are the others:

• 57% - Unintentional exposure of private or sensitive data
• 37% - Virus, worms or other malicious code
• 32% - Theft of intellectual property

When asked which electronic crimes were most costly or damaging the results were:

• 38% - Outsiders
• 33% - Insiders
• 29% - Unknown

Regarding the "Insiders," the reasons that were given for not referring for legal action, the one that stands out in our mind is this one:

40% could not identify the individual(s) responsible for committing the eCrime.  And maybe even more astonishing is that 39% did not have enough information or a lack of evidence to proceed with either civil or criminal litigation.

So what is really going on with the facts presented so far? Even though the respondents say that "Insiders" are the most damaging, they have done little to collect enough evidence to identify who the responsible parties are to the incident. This may be for several reasons including the lack of internal expertise to preserve evidence and conduct timely investigations.

We have addressed the "Insiders" that make up one third of the digital incidents but what about the "Unknowns," who add an additional 29%. The combination of the two make up 62% of all the incidents in the study. This is where Operational Risk professionals can have a significant impact within the enterprise.

The unauthorized access to information and use of that information is at the center of this issue. When an organization realizes that this "information" has impacted them, the funds have been stolen, the trades have been placed or the press has published a trade or national security secret. To narrow this down further, you might say the Fraudsters and the WikiLeakers are bringing the institution into a torrential storm of criminal activities.

Regardless of the high tech tools utilized or the systems and controls within the organization there are always methods and processes that if properly implemented, will reduce the number of "Unknowns" and "Insiders."

 

In your particular case, it just may come down to developing more effective situational awareness with your employees. This particular educational and awareness building process may indeed also uncover the individuals within your company, who may be already down a path of fraud, embezzlement, insider trading or corporate espionage.

Suppose you create a mandatory program for all employees that is focused on corporate integrity and each year the CEO kicks off the first session with their own attendance and their own direct reports, including the Board of Directors.

 

No one that we know of can explain the basis for this process better than Martin T. Biegelman:

"Obviously, a poor working environment provides a motive and rationalization to commit fraud. Here's a quick health check: does management appear not to care about their employees? Does it have unreasonable expectations or financial targets? Is the organization autocratic or participative? Is there a lack of training or promotion opportunities? Does management say one thing but do another? Are senior executives treated differently than rank and file employees when it comes to discipline?" 

Employees must understand the ethical behavior expected of them. New employee orientation should detail the organization's mission, values and code of conduct, types of fraud, compliance, their responsibility to report violations of ethical behavior and impropriety, and details of the hotline or other ways to report fraud and other integrity concerns. Periodic training throughout an employee's career reinforces fraud awareness and the cost of fraud to an entity."

So what?  

 

If your organization does not currently have a program as we have described earlier, then maybe it's time to start one. If you already have one in place, how effective is it in detecting the "Insider Threat" and the spectrum of Operational Risks within your organization?

operational risk