RSA Conference: CSO Insomnia Over Insider Risk...

Next week in the U.S. there will be thousands of risk management and security professionals invading the RSA Conference in San Francisco. The myriad of topics, education and case studies are worth examining to see what is on the mind of these thought leaders and practitioners who are also designated speakers. You can even look to the popular press to see what the vibe is on what this years biggest worries will be:

1. Mobile Devices
2. Advanced Persistent Threat
3. Big Data Privacy
4. Hacktavists

However, if you spend some time to drill down on each of these topic areas and really look at the actual presentations of the presenters, some are based upon real cases and research and others are not. The one presentation that caught our eye and continues to be what some savvy CSOs would say keeps them sleeping with one eye open each night, is their insomnia over the "Insider Threat." That person or organized group of unidentified subjects that are there to recruit vulnerable people into initiating or perpetuating crimes against the organization.

Dawn Cappelli runs the Insider Threat Center at the Software Engineering Institute and highlights these areas of concern from their research and analysis of real cases:

The CERT Top 10 List for Winning the Battle Against Insider Threats

Dawn M. Cappelli Director, CERT Insider Threat Center CERT Program, Software Engineering Institute Carnegie Mellon University

• 10. Learn from past incidents
• 9. Focus on protecting the crown jewels
• 8. Use your current technologies differently
• 7. Mitigate threats from trusted business partners
• 6. Recognize concerning behaviors as a potential indicator
• 5. Educate employees regarding potential recruitment
• 4. Pay close attention at resignation / termination!
• 3. Address employee privacy issues with General Counsel
• 2. Work together across the organization
• 1. Create an insider threat program NOW!

Number Three on the list is certainly on the top third and for good reason. Employees and the policy decisions on what data is owned by the company and owned by the employee is of grave concern these days in the United States. Now after so many years it looks as if this issue is going to get more heated and see the light of day from a congressional point of view. Yet the CSO must feel that the ability for the safeguards necessary to keep the organization safe and secure are not in place yet. Catherine Dunn of ALMs Corporate Counsel sheds more light on this:

According to a new White House report on consumer data privacy protection, trust is worth a lot of money to U.S. businesses—users have to know their data will be protected if the economic engine of digital innovation is to keep roaring. Ergo, the U.S. needs a privacy framework that’s “flexible” enough to accommodate industry innovation, and comprehensive enough that consumers will feel safe—and keep clicking.

But trust between consumers and companies in the U.S. is only part of the equation. There’s another important element, too: how compatible U.S. safeguards are with those of the rest of the world, and particularly Europe. This new proposal arrives a month ahead of a conference on data protection between E.U. and U.S. officials in Washington, D.C., leading to questions about whether Europe and the U.S. are any closer to getting on the same page when it comes to data privacy.

The answer not only depends on who you ask, but also what section of the White House’s report you’re looking at. The white paper lists seven principles and stresses that these principles should form the basis of voluntary codes of conduct adopted by industry. Once adopted, the Federal Trade Commission would have the power to enforce compliance to those codes. The paper also includes a call for Congress to pass legislation based on these principles, and devotes a section to “international interoperability”—which considers how data can be sent across international borders without violating laws on either side of the transaction.

This is where we need to make sure we understand the difference between what privacy issues have to do with a company employee and the privacy associated with just a U.S. consumer, who is not an employee but perhaps a member, client or customer of the organization.

If we go back to the big worries at RSA and combine this with the employees who are operating at the "Speed of Business" in your enterprise, you begin to see the difference. Actually, if you think about it some more, every employee of the organization has a duty to care for the information inside the organization, in order to better protect the assets of the enterprise but simultaneously the assets of the consumer.

The consumer assets are their "Personal Identifiable Information" (PII) and this represents in many cases what the organized criminals are after in the first place. This is where the outside recruitment threat starts to have its nexus. However, even the highly trained and state sponsored agents who are inside the enterprise to steal corporate or national security secrets are far and few these days. That may be surprising to some, but if you look at how the exfiltration of data is taking place it's almost all automated. No human intervention is required.

If that is the case, then what is Dawn Cappelli and the Insider Threat Team at CERT so concerned about from their research insights:

Criminal enterprises mask their fraud by involving multiple insiders who often work in different areas of the organization and who know how to bypass critical processes and remain undetected. In several cases, management is involved in the fraud. Those insiders affiliated with organized crime are either selling information to these groups for further exploitation or are directly employed by them. Ties to organized crime appear in only 24 cases in the CERT insider threat database and are characterized by multiple insiders and/or outsiders committing long-term fraud.

All of the insiders involved with organized crime attacked the organization for financial gain. The insiders usually were employed in lower level positions in the organization, were motivated by financial gain, and were recruited by outsiders to commit their crimes. The average damages in these cases exceed $3M, with some cases resulting in $50M in losses.

Now you know why your CSO is headed to the RSA Conference this week and why they are sleeping with one eye open these days.

operational risk

PPD-8: Resilience of the Whole Community...

Business Resilience in 2012 will continue to be a factor of the private sectors ability to withstand the Operational Risks that it encounters. The strategy for business assurance will be cognizant of the environments developed for preparedness and sustainability set forth by local and federal governments.

This bottom up approach to achieving a "Whole Community" resilience depends upon the cooperation, coordination and communication at the citizen, city and county level. In the United States, Presidential Preparedness Directive 8 (PPD-8) has been put forth as the future baseline for both private and public entities to adopt and implement going forward:

National Preparedness is aimed at strengthening the security and resilience of the Nation by preparing for the full range of 21st century risks that threaten national security, including weapons of mass destruction, cyber attacks, terrorism, pandemics, transnational threats and catastrophic natural disasters.

The National Preparedness System Description is the second deliverable required under Presidential Policy Directive (PPD) 8: National Preparedness. The National Preparedness System Description concisely describes current efforts and how we will build on those efforts, many of which are established in the Post-Katrina Emergency Management Reform Act and other statutes, to build, sustain and deliver the core capabilities needed to achieve the National Preparedness Goal.

Specifically, it identifies six components to improve national preparedness for a wide range of threats and hazards, such as acts of terrorism, cyber attacks, pandemics and catastrophic natural disasters. The system description explains how as a nation we will build on current efforts, many of which are already established in the law and have been in use for many years. These six components include:

• Identifying and assessing risks;
• Estimating capability requirements;
• Building or sustaining capabilities;
• Developing and implementing plans to deliver those capabilities;
• Validating and monitoring progress made towards achieving the National Preparedness Goal; and
• Reviewing and updating efforts to promote continuous improvement.

The six components can be internalized for the citizen, community and private sector to encompass into their own respective operational risk management strategy. The mechanisms for elevating situational awareness have improved dramatically over the years since 9/11. Citizens have prepared their own personal 72 hour kits, business organizations have created awareness programs for their members to heighten planning activities and local city and counties have trained thousands of volunteers for the Community Emergency Response Team (CERT).

This continues to get us so close to the goal and yet so far from really understanding the reality of where we are weak and where the single points of failure still remain. Think about it. How often has your household, community or business actually tested and exercised your ability to withstand a 72 hour crisis? The odds are you haven't and therefore all your planning and preparedness will never know where to improve and what resource investment is required to achieve greater degrees of safety, security and overall resilience.

Ten years after the 9/11 attacks, are our first responders prepared? A new report conducted by Capella University seeks to answer this question.

"To assess our preparedness for another disaster, Capella University partnered with leading national public service and public safety organizations, including the U.S. Council of the International Association of Emergency Managers, the American Public Health Association, the American Society for Public Administration, the Comprehensive Emergency Management Research Foundation, and the FBI National Academy Associates to conduct a nationwide survey of more than 1,000 public service and public safety professionals. We wanted to hear directly from those who would be on the front lines of the next crisis."

Key findings include:

• 71% believe the United States is better prepared for a terrorist attack today than we were in the days before September 11, 2001.
• 67% think the federal government and our leaders in Washington, DC, are not giving this issue enough attention.
• 66% say their governor and state government leaders are not giving this issue enough attention.
• 69% are worried that the United States will experience another major terrorist attack.

Regardless of the outcomes of this study, each community, state and region will be at a different degree of readiness. Your job, should you choose to accept it, is to figure out where your community is today and how to get to the next level:

1. No Awareness
2. Denial / Resistance
3. Vague Awareness
4. Preplanning
5. Preparation
6. Initiation
7. Stabilization
8. Confirmation / Expansion
9. High Level of Community Ownership

Do you think that Houston is more prepared than Denver? Why or why not. Do you think Los Angeles is more prepared than Las Vegas? The degree to which an area has an ongoing perceived threat and vulnerability will in most cases dictate where they are on the 1-9 scale above.

Ultimately, the United States National Preparedness System’s ability to succeed, is based upon ensuring the whole community has the opportunity to contribute to its implementation to achieve the goal of a secure and resilient Nation. How often is the private sector the catalyst or the citizens community asking government to participate in their exercise, as opposed to the other way around?

operational risk

OPS Risk 2011: A Year of Living Dangerously...

2011 has been a year of living dangerously. Operational Risks have plagued governments, private sector companies and the citizens of local communities across the globe. The continuous threats from people, processes, systems and external events will become substantially more asymmetric in 2012 and volatility will become the new normal.

As professionals plan and budget for the next annual cycle there will be tremendous debate on where to invest in new mitigation and remediation strategies. The economics of austerity programs will now become another threat to consider as infrastructures continue to decay. People are leveraging the power of mobile devices to perpetuate their situational awareness and to wage "Information Warfare" on the brand equity of Fortune 500 companies. Verizon has followed the foot steps of Bank of America. Ylan Mui and the Washington Post explain:

Verizon backed away on Friday from plans to charge customers a $2 fee to pay their bills online or over the phone after receiving thousands of complaints, the latest victory in a wave of consumer activism that has roiled some of the nation’s largest companies.

The announcement came a day after the fee was made public. Consumer advocacy groups derided the charge as “pay-to-pay.” The fee also caught the eye of Verizon’s regulator, the Federal Communications Commission, which had said it would look into the issue. But it was individual consumers — amped up after battles this year with corporate giants such as Bank of America and Target — that the company said tipped the scale.

Corporate brand managers and CEO's have little tolerance to an erosion in brand equity. This is counter to the politicians who are continuously operating at an approval rating hovering at 50%. How different the behavior remains in the public vs. private sector. Look for this to change in 2012 as an election year takes hold in the United States.

The systemic impacts from failed banking institutions and nation states will not be under estimated any longer. Will the rise of democratic states in the Middle East increase the risk to your organization? Think about the new risks that are yet to be discovered as a result of the death of Usama bin Laden. al-Qa'ida's so called new American recruits suggests a pattern to be debated and includes:

• Omar Hammami
• Daniel Boyd
• Carlos Bledsoe
• David Headley
• Michael Finton
• Hosam Smadi
• Betim Kaziu
• Terek Mehanna
• Jaime Paulin-Ramirez

Today's radicalization process is domestic to the U.S. and can take only months. It is decentralized and is taking place on the Internet, not in churches, synagogues, mosques or other locations of religious worship. The face of terrorism has morphed to people born in the USA, educated here and who have never left the homeland. They are invisible.

The number of supply-chain disruptions that have occurred over the course of 2011 is undetermined due to the sensitivity of the information and the implications to a business market share or stock price. Suffice it to say that the multi-headed hydra unleashed from the Macondo Gulf Oil Disaster is still being calculated even as new criminal charges are being considered by the Justice Department. Consider the possibility of some of the insurance industries scariest risks from Willis:

In the energy industry, the unthinkable has perhaps already happened: the $40 billion in losses associated with the Macondo well that blew out last year were utterly unprecedented. Most of that risk was uninsured, so the energy market got off relatively lightly in this case. But as the drive to drill wells similar to Macondo continues, the nightmare scenario for the energy market is the “perfect storm” of another blowout of a similar nature combined with a Gulf of Mexico windstorm on the scale of a Katrina, Rita or Ike. That would almost certainly lead to underwriting losses that would be sufficient to prompt a potential capacity crisis.

The point is that the attacks will continue and the defenses will never be high enough or wide enough to protect your assets from loss and harm. Then if this is the case, what have you planned for 2012 that will encompass the business resiliency doctrine? Who is your Chief Continuity Officer and how will they be investing in your continuous survival next year?

Operational Risks in 2012 will trend higher for organizations because there are decision makers who will continue to ignore the factors of resiliency. The mind set associated with resiliency takes the point of view that you will be attacked by cyber marauders, that your supply chain will suffer a catastrophe of epic proportions from a natural phenomenon, that you will suffer the consequences of a significant employee-based litigation. And the list goes on...

Which risk is scariest for your business?

• Terrorism (14%)
• Environmental Unknowns (8%)
• Death of Innovation (8%)
• Data Breach (8%)
• Supply Chain Disruption (8%)
• Not Understanding Risk (8%)
• Italian Default (7%)
• Chinese Pandemic (5%)
• Exploding Health Care Costs (5%)
• Macondo Mach II (5%)
• Mass Real Estate Disruption (5%)
• Systemic Risk (3%)
• Coal-tastrophe (3%)
• New Frontiers in Renewables (2%)
• D&O Insolvency (2%)
• Middle East Oil Prices (2%)
• Blackout Britain (2%)
• Aerospace Fuel Prices (2%)
• Credit Price Hikes (0%)
• Solvency II (0%)
• Obstetrics (3%)

Finally, we want to thank you for raising this blog to the #2 link on Google when searching for Operational Risk and Operational Risk Management. We agree that Wikipedia should remain #1. In 2012, look for more topics and expanded investigative reporting. And one of these days, perhaps it will be time to create the best of our over 1,000+ posts to create an e-book for your Kindle.

operational risk

Integrity & Ethics: Whistleblower Risk...

Operational Risk Management in your organization may be in need of a more robust awareness campaign.  Malfeasance and ethical wrongdoing is continuously perpetuated in the workplace when those who are victims or witnesses refuse to speak up. Many fear the retaliation by supervisors or other co-workers. This study emphasizes the issue at hand:

Labaton Sucharow LLP yesterday announced the results of its nationwide Ethics & Action Survey. Conducted by ORC International between November 17-20, the survey questioned 1,000 Americans on their knowledge of wrongdoing in the workplace and willingness to come forward and report it. With significant financial rewards and strengthened anti-retaliation and anonymity protections offered under Dodd-Frank, an overwhelming 78% of respondents indicated they would report wrongdoing in the workplace if it could be done anonymously, without retaliation and result in a monetary award. In fact, more than one-third (34%) of respondents knew about wrongdoing in the workplace. However, 68% were unaware that the Securities and Exchange Commission (SEC) has a new Whistleblower Program designed to protect and reward individuals who report violations of the federal securities laws.

This kind of Operational Risk doesn't have to involve insider trading or the SEC to be an issue.  Do you have a controlling boss or a bully in the organization who uses their position of power to get what they want at any cost or to force you to look the other direction?  What kind of facts point to their behaviors and the actions by others that contribute to a caustic and toxic work place setting or to further perpetuate the situation?  Whether it is your Fortune 500 public company or your tiny 501(c)3 non-profit does not matter.  When over one-third of the respondents of the ORC Ethics and Action Survey knowingly ignore or are afraid to report incidents of wrongdoing or ethics violations the culture is broken and in need of repair.  The people who have the fiduciary duty to see that this kind of behavior is deterred also have the responsibility to provide the tools and the mechanism for those being victimized and those who are observing the malfeasance to anonymously defend themselves.

So what should you do as an Operational Risk professional to make sure this doesn't happen to the people in your respective organization?  Here is a good start:

Many corporations have internal compliance programs for corporate misconduct. These programs are, in theory, designed to provide an audience for workers who want to report unethical or illegal corporate conduct. Whether to utilize internal compliance reporting procedures is not an easy question to answer. As a general proposition, some believe that where the wrongdoing is pervasive—as in the case of securities fraud—an internal compliance program will not provide an adequate means of redress. Some believe that where the issue involves massive overbilling to the Government, or an allegation that a corporation is receiving significant dollars in unlawful revenue through fraudulent conduct, the internal compliance system will not work.

It's imperative that you also become aware of and communicate to employees and volunteers what their rights are outside the formal processes that are in place within the organization. Sometimes the nature of the ethics violations will not easily fall into the category for the internal compliance department.

So even "A Decade After the Fall of Enron" the laws and the rules provide us with a false sense of security from the corporate and workplace malfeasance that so many U.S. citizens are being subjected to on a daily basis.  And based upon the current-state-of-play around the beltway in Washington, DC you can expect that the coordination and cooperation is increasing by the minute.

The increased collaboration among the alphabet soup of enforcement and regulatory agencies is also due to a collateral effect of the current financial crisis: declining agency budgets. In the current downward budget cycle, agencies are working in concert more than ever before. This trend is exacerbated by a change in the mission of the FBI in the post-Sept. 11, 2001, world, shifting resources to counterterrorism and creating a need for other agencies to play an increased role. The overarching lesson from this increased collaboration is clear: Gone are the days that inside or in-house counsel can assume that the state or federal agency with whom they are dealing is acting alone; it is increasingly likely there are additional state or federal agencies involved, resulting in overlapping criminal, civil or regulatory exposure.

If you are charged with the position of the Senior Operational Risk professional in your organization, this topic of wrongdoing in the workplace can not be overlooked any longer.  It is not too late to create a "Defensible Standard of Care" and to turn the word "Integrity" into a cultural pursuit for all to aspire to, before it is too late.

operational risk

Intelligence Analysis: Robust and Resilient...

Operational Risks are on the rise for Top Secret America. Now that the "Super Committee" has thrown in the towel, there are several companies beginning to ask what it will mean in the next few years. Intelligence Analysis has been a tremendous windfall for large and small businesses especially in the National Capital Region of the United States.

The analysis of information, from open sources (e.g., information that appears in the news media or on the Internet) to the most sensitive information collected or gleaned from human and technical sources. Since 9/11, there has been an explosion of the amount of information obtained via technical means, particularly imagery and communications intercepts, necessitating new analytic methods of sorting and exploiting incoming information, as well as data mining to discover patterns of information and intelligence contained within huge quantities of data. Document exploitation (DOCEX) and forensic methods are also growing areas of intelligence analysis for captured materials and site exploitation.

39 government organizations and 358 companies are at the nexus of "Intelligence Analysis" according to the work by Dana Priest and William Arkin of the Washington Post. The next 24 months will tell us how this vital discipline begins to morph from agency to agency and company to company based upon who is deemed most essential and what information is most highly valued.

40 large companies, 57 medium companies and 261 small companies, comprise the majority of the firms who are the supply chain to many of the core intelligence apparatus of the U.S. Government. When these supply chains are impacted by the quantity and potential quality of intel, the opportunity for operational risks will increase. If you can imagine a pipeline of information coming from the street and keyboard level, all the way up to the Presidential Daily Brief (PDB) 365 days a year, this is what is at stake.

So what could you expect to happen in the next few years when it comes to the "Intelligence Analysis" pipeline and the rate and quality of information that is flowing to provide "Decision Advantage"? It's going to increase and for good reason. The traditional nation states and the threat of an attack from conventional means is diminishing. The new threats are morphing into the new normal. The asymmetric methods of warfare in the digital domain:

Congress will pay the FBI an additional $18.6 million to better investigate computer hacking cases, following a federal study that found a third of bureau agents probing breaches significant to national security lacked the necessary networking and counterintelligence skills.

A spending package passed Nov. 17 to fund many federal agencies through September 2012 includes President Obama's full request for $166.5 million to tackle computer crimes, an 11.2 percent increase over last year's appropriations. The bureau must use the money to hire an additional 42 computer security professionals, including 14 special agents, according to a report accompanying the legislation.

The new funds will also assist in the continuous analysis of information, to ascertain the origin and the legitimacy of attacks agains U.S. Critical Infrastructure, the next frontier for insider threats and cyber terrorists:

An ongoing investigation into the possible hack of a U.S. water plant should trigger a methodical analysis of the security of the nation's industrial systems to avoid jumping to the wrong conclusions, former federal cybersecurity officials say.

The Homeland Security Department's cyber response team and the FBI are gathering facts about a report of a water pump failure in Springfield, Ill., according to DHS officials. Their actions follow a state fusion center alert, first reported by noted security specialist Joe Weiss and later publicized by media outlets, that apparently suggests intruders may have lingered in the system for weeks. Some security experts familiar with the report are attributing the malfunction to a targeted attack originating from a Russian network access point, or IP address. If the report bears truth, then this incident represents the first known intentional intrusion into a U.S. industrial control system.

But some experts caution that many organizations don't have the computer forensics expertise to pinpoint the cause of suspicious network events, let alone the identities of perpetrators.

Intelligence Analysis is alive and well and the education and quality of the analysis will not be disrupted regardless of what law makers may fail to do behind closed doors. Operational Risk Management in the 358 companies is on high alert, yet diligently working to ensure the supply chain is robust and resilient for a long time to come.

operational risk

Arab Spring: Information Operations Risk Management...

The Operational Risks associated with doing business on an international scale is nothing new. Global companies have for years been subjected to laws in the U.S. that are highly scrutinized by the Treasury Department. The Office of Foreign Asset Control (OFAC) is one such office. Companies in several key industry sectors including financial services have been obligated to know who they doing business with KYC (Know Your Customer) programs. This complies with the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) laws. The Commerce Department has the U.S. Bureau of Industry and Security.

As compliance in any business is one of those areas that in many cases may seem burdensome, it is only one aspect of a total risk management strategy in the enterprise. One industry group that may have underestimated the magnitude of compliance and an effective export control operation is the high technology sector. During the next decade as emerging markets are building new communications infrastructure, this will be even more important; perhaps not for the reasons one would normally think about.

Information Operations (IO) are alive and well within the ranks of official and clandestine forces around the world. Why is John Q. Public surprised to hear this news? The political aspirations of new and rising factions within nation states have found the tools of the Internet and "Social Media" to instigate and to perpetuate non-kinetic components of asymmetric warfare. Now, technology companies in the United States must be ever more so cognizant of the risk implications associated with this social, political and military nexus. Here is more from the WSJ:

By JENNIFER VALENTINO-DEVRIES, PAUL SONNE and NOUR MALAS

A U.S. company that makes Internet-blocking gear acknowledges that Syria has been using at least 13 of its devices to censor Web activity there—an admission that comes as the Syrian government cracks down on its citizens and silences their online activities. Blue Coat Systems Inc. of Sunnyvale, Calif., says it shipped the Internet "filtering" devices to Dubai late last year, believing they were destined for a department of the Iraqi government. However, the devices—which can block websites or record when people visit them—made their way to Syria, a country subject to strict U.S. trade embargoes.

Discussions on the intersection of "The Arab Spring" and "Social Media" has been going on now for well over 9 months in the published press. One can only imagine that Google, Facebook and Twitter management have behind closed doors, been entertaining conversations from a myriad of .ORG and .GOV entities on this very subject. This week, the dialogue has taken on a more serious tone with comments from U.S. Secretary of State Clinton regarding Iran in the Washington Post:

By Thomas Erdbrink, Published: October 29

TEHRAN — An Iranian police unit that was formed this year to counter alleged Internet crimes is playing a key role in an escalating online conflict between the United States and the Islamic Republic. The “cyber police” force is part of a broad and largely successful government effort to block foreign Web sites and social networks deemed a threat to national security. Iranian officials say they must control which sites Iranians are able to visit, to prevent spying and protect the public from “immoral” material. The United States, they charge, is waging a “soft war” against Iran by reaching out to Iranians online and inciting them to overthrow their leaders. Secretary of State Hillary Rodham Clinton on Wednesday played into such accusations, saying U.S. officials had asked Twitter, the social networking site, to postpone online maintenance in 2009 so that it would be available for Iranian anti-government protesters organizing demonstrations against President Mahmoud Ahmadinejad’s disputed election victory. Iran’s state radio responded Thursday, citing Clinton’s comments as proof that Washington is using U.S. Internet companies to influence events inside Iran. Tensions between the two countries are high following allegations that an Iranian American citizen had plotted to assassinate the Saudi ambassador to Washington at the behest of the Quds Force, an elite branch of Iran’s Revolutionary Guard Corps. Iran has denied the accusations, but the United States has called for tougher sanctions against Tehran.

Again, where have John and Jane Q. Public been for the past few years? This is not new news to those who have been watching the growth of mobile communications and the explosion of the "Internet of Things." The utilization of wireless mobile communications and its intersection with social media apps in civilian environments is here to stay. How these consumer based applications have been now leveraged for situational awareness and information operations is exploding across the emerging nations, where the Internet is now gaining even more ubiquitous use.

What this means for risk managers in the C-Suites of major technology companies is a heightened sensitivity and awareness to the ways your tools and capabilities could be utilized in the hands of the wrong end user. No different than the unleashing of certain tools like Metasploit, to help understand vulnerabilities within the confines of the corporate enterprise. These same tools could be utilized by nefarious cyber terrorists to quickly exploit the weakness in our own U.S. government and corporate network systems.

Like many inventions by mankind, they can be used for good and simultaneously for evil in the hands of the wrong person. Risk Management in the high technology sector will be just as much of an imperative as the manufacturing and shipment of products from Barrett or the manufacturers of detcord. The "Export Control" compliance mechanism is here to stay and companies who operate in the new age of emerging social media via mobile technologies, will need more effective OFAC internal controls.

Operational Risks exist within the business processes that you use with your sales and business development organization. When was the last time you had a compliance-based OFAC discussion within the ranks of the sales force at your new emerging technology company? Are you fully funded by the VCs and ready to sell your new encrypted social media app for Android to the world? We need to make sure that part of the roll out strategy, encompasses the right conversations with the correct government departments to determine the right process and the online tools available to better understand where and who you can sell your products to outside the U.S..

The past Arab Spring and the next organized movement utilizing social media and mobile internet technologies that include encrypted messaging, GPS and live video will be more closely scrutinized by internal compliance officers and the regulatory watchdogs domestically and abroad. Yet the most effective management tools going forward, may lie in the same ones used by your Mother and Father growing up. The ethical and the moral arguments in many cases can have a dramatic impact on people at an early stage in their lives. Perhaps it is still not too late to reinforce and to emphasize the fact that our cyber environments, are nothing more than the mirror image of the physical world we already know. Good and bad.

The future of risk management online and the effective compliance with legal sanctions may well begin with a heart-to-heart conversation at your next company sales meeting.

operational risk