Unintentional Insider Threat (UIT): Human Factors Risk...

Operational Risk Management (ORM) is a discipline that encompasses several facets of science and art. The human factors will continue to challenge the people who are tasked with mitigating risks in the face of a Republic with constitutional rights.  The United States is one of the many countries in the world, where employees of governments and private sector institutions, must comply with a myriad of laws pertaining to the privacy of the work force.

The behavioral aspect of humans operating day-to-day in the workplace, whether inside the R & D department at Google or the 7th Floor at DARPA have many of the same set of risks.  When you put an information storage and computing device in their hands, the likelihood of encountering a potential operational loss or failure increases dramatically.

For the past several years, there has been a significant amount of attention devoted to the topic of "Insider Threat."  In light of the Edward Snowden and "The Fifth Estate" events, many government and private sector organizations have been revisiting their employees security clearances and backgrounds.  A reaction-based effort that would not be out of the ordinary, for most organizations who are protecting national secrets or substantial intellectual property.

This however, is a small percentage of the overall risk that the organization is being exposed to every day, when that digitally enabled-human goes to work.  The reason is that the lense that is currently being focused on "Insider Threat," is looking for the next Edward Snowden.  This kind of insider will forever continue to amaze and surprise you, just like the people who may now be in legal proceedings, for collaborating with Bernie Madoff.  You see, not every human will show the behaviors, that all of a sudden look out of the ordinary.  The person stealing information or manipulating the books, will continue to operate within your organization without disclosure.

There is a foundational study completed by the CERT Insider Threat team at Carnegie Mellon University that highlights even a greater potential loss or failure.  "A significant proportion of computer and organizational security professionals believe insider threat is the greatest risk to their enterprise, and more than 40% report that their greatest security concern is employees accidentally jeopardizing security through data leaks or similar errors."

Unintentional Insider Threat Definition 

We recommend the following working definition of UIT:  An unintentional insider threat is: 

(1) a current or former employee, contractor, or business partner 

(2) who has or had authorized access to an organization’s network, system, or data and who, 

(3) through action or inaction without malicious intent, 

(4) causes harm or substantially increases the probability of future serious harm to the confidentiality, integrity, or availability of the organization’s information or information systems.  

       SEI  Insider Threat Team, CERT; Unintentional Insider Threats: A Foundational Study (CMU/SEI-2013-TN-022). Software Engineering Institute, Carnegie Mellon University, 2013.

Abstract

This report examines the problem of unintentional insider threat (UIT) by developing an operational definition of UIT, reviewing relevant research to gain a better understanding of its causes and contributing factors, providing examples of UIT cases and the frequencies of UIT occurrences across several categories, and presenting initial thinking on potential mitigation strategies and countermeasures. Because this research topic has largely been unrecognized, a major goal of this study is to inform government and industry stakeholders about the problem and its potential causes and to guide research and development (R&D) investments toward the highest priority R&D requirements for countering UIT.

Operational Risk Management is a 24 x 7 x 365 day process, that is focused on all humans operating in the ecosystem of the enterprise.  The Edward Snowden's are coming to work today along with their friend Bernie Madoff.  Hiding in plain sight.  Operational Risk Management professionals understand this and operate with the focus on the unintentional consequences of their behavior.

The enterprise that is solely focused on finding the one or two people in several decades of operations will overlook the dozens or hundreds who contribute to a loss of Intellectual Property or a breach. Believe us when we say that indeed the "Spy" and "Fraudster" will have a much harder time, operating each day in an organizational environment that is focused on the UIT.

Countering UIT, may seem like it is something that is already being accomplished, in the new hire orientation class or the remedial training that is mandated each year on information security for example.  Those who perceive it this way are again, only human.  The behaviors that we bring to work each day about how we treat and handle information, is not learned in a single session or a single annual workshop. Learning to behave consistently with sensitive or classified information on a daily basis, requires a discipline that few really understand right now.  This is especially true in the Defense and Intelligence Community supply chain.

Your goal is to get that UIT awareness inside every one of your employees, partners and suppliers.  To instill inside them the same diligence in their work processes to Deter, Detect, Defend and Document.  UIT is a major percentage of the answer to mitigating the risk of another Edward Snowden or Bernie Madoff incident in your organization.  More importantly, it is the answer to the other 98% of the losses you will incur this next calendar year.  Think about "Achieving a Defensible Standard of Care."

Trust Decisions: The Risk of a Digital Supply Chain...

Are you a business that is operating internationally?  What components of Operational Risk Management (ORM) currently intersect with your international business operations?  The safety and security of your employees who travel into countries with unstable political elements are no doubt of immediate concern.  There may even be a heightened sensitivity with whom your international business executives are meeting with and the tremendous U.S. rule-base associated with OFAC, as one example.

Fortune 500 organizations are all too familiar with these concerns, as major players in international business. The Chief Security Officers (CSO) and other key executives charged with the safety, security and integrity of employees, are focused on those who are traveling and meeting across the globe.  This is considered ORM 101.  This facet of ORM is quite mature and familiar to the Board of Directors who are charged with the Enterprise Risk Management (ERM) of the company.

What is growing more pervasive and continues to plague organizations doing business internationally is the risk of a Digital Supply Chain.  Trusted information and the confidentiality, integrity and assurance of data.  The "Genie" is out of the bottle and even the most mature and risk adverse global organizations, are continuously barraged by sudden incidents that interface with privacy and security of information.

Here is a recent example:

After a public comment period, the Federal Trade Commission has approved final orders that settle charges against 14 companies for falsely claiming to participate in the international privacy framework known as the U.S.-EU Safe Harbor. Three of the companies were also charged with similar violations related to the U.S.-Swiss Safe Harbor.
The FTC previously announced the settlements in January, February and May of 2014 with the following companies: 

• American Apparel
• Apperian, Inc.
• Atlanta Falcons Football Club, LLC
• Baker Tilly Virchow Krause, LLP
• BitTorrent, Inc.
• Charles River Laboratories International, Inc.
• DataMotion, Inc.
• DDC Laboratories, Inc.
• Fantage, Inc.
• Level 3 Communications, LLC
• PDB Sports, Ltd., d/b/a Denver Broncos Football Club
• Reynolds Consumer Products Inc.
• Receivable Management Services Corporation
• Tennessee Football, Inc

Under the settlements, the companies are prohibited from misrepresenting the extent to which they participate in any privacy or data security program sponsored by the government or any other self-regulatory or standard-setting organization.
Consumers who want to know whether a U.S. company is a participant in the U.S-EU or U.S.-Swiss Safe Harbor program may visit http://export.gov/safeharbor to see if the company holds a current self-certification.

Under the settlements, the companies are prohibited from misrepresenting the extent to which they participate in any privacy or data security program sponsored by the government or any other self-regulatory or standard-setting organization.

So what is the real underlying issue here?  It is about "Trust Decisions".

These organizations were representing themselves as compliant with a U.S.-EU framework designed and established to protect their constituents, under the jurisdiction of the Federal Trade Commission (FTC).  The decisions to trust these organizations by an individual or business, regarding the perception that they are in compliance with a framework for privacy and security, is what is true.

How often have you ever made a "Trust Decision," based upon your knowledge that a business is displaying an official seal, mark or a sign that your information is safe and secure?  There are dozens of high profile companies operating across the globe that are in the business of selling "Trust".  Symantec, TRUSTe and GeoTrust to name a few.  The reason that a business buys one of these trusted seals or marks is because it wants to increase it's perception of trust, to the consumer or business that it is engaged with to transact business.

The business wants to display that they are compliant with the particular laws or rules associated with their industry or country.  It wants to create a sense of business assurance or peace of mind for the buyer of their products or services.  When you use one of these seals to assist in making an affirmative "Trust Decision" based upon the display of one of these badges, marks, signs or even special symbols or colors; the consumer still assumes risk of the unknown risks.  So what?

So how many consumers on a daily basis do you think visit this web site to get their free annual credit report? Green Padlock https://www.annualcreditreport.com/index.action

This is the official web site advocated by the U.S. Federal Trade Commission (FTC) for consumers to get a free annual credit report in compliance with Fair Credit Reporting Act (FCRA).  When you visit this site, you see that the URL displays a green padlock and the https: designating that the site is using secure protocols to transmit your Personal Identifiable Information (PII).  Or is it?

When you test the Annual Credit Report web site with a SSL security test service, run online by Qualys SSL Labs, https://www.ssllabs.com/ssltest/ this is their rating, on the security of Annual Credit Report.com as of 6/28/14.

Overall Rating

F

0

20

40

60

80

100

Certificate

100

Protocol Support

0

Key Exchange

80

Cipher Strength

90

Documentation: SSL/TLS Deployment Best Practices, SSL Server Rating Guide, and OpenSSL Cookbook.

This server supports SSL 2, which is obsolete and insecure. Grade set to F.

Experimental: This server is vulnerable to the OpenSSL CCS vulnerability (CVE-2014-0224), but probably not exploitable.

The server supports only older protocols, but not the current best TLS 1.2. Grade capped to B.

The server does not support Forward Secrecy with the reference browsers.  MORE INFO »

This server is not vulnerable to the Heartbleed attack.

Q: What information do I need to provide to get my free report? 

A: You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide credit reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

On a daily basis, humans are subjected to signs, marks, badges and other indicators that help them make more informed affirmative "Trust Decisions".  Whether it is the "Green Light" at the local intersection or the "Green Padlock" on the web site where we are being asked to give up our Personal Identifiable Information (PII).  The regulatory and private entities that are tasked to ensure that the signs, marks, badges and even colors are in compliance, must also look to their own level of trust of their Digital Supply Chain.

This is just one glaring example of why "Trust Decisions" are so vital to online global e-commerce.  It is also a wake-up call for any organization that is advocating trust by using a digital third party that the consumer relies on every day.  However, the FTC and other government agencies rely on private sector companies to assist them in outsourced services such as hosting Annual Credit Report. com.  The site is hosted by:

IP Location

- Massachusetts - Cambridge - Akamai Technologies Inc.

How confident are you, that your organizations digital supply chain is ensuring safe and secure "Trust Decisions" for your customers?

Algo Bots: The Risk of Human Error...

What "Trust Decisions" did you make this past week?  How fast did you make them?  The ability to manage an entire portfolio of operational risks in a daily routine is daunting.  How do you prioritize? What Operational Risk Management (ORM) process will you engage in, with so many uncertain outcomes?  Why will you sit up in bed at 3AM, to read the latest alert on your smartphone?

In October of 2012, this ORM blog discussed the topic of "Algo Bots" and "Dark Pools".  Machine language talking to other machines, to make optical network speed decisions and more precise, "Trust Decisions."  What is the risk of a low probability and high consequence incident when humans are taken out of the equation?  Dave Michaels of Bloomberg explains the current focus:

Mary Jo White’s blueprint for imposing tighter controls on high-frequency traders and some of the murky venues they inhabit stops short of a crackdown. 

The U.S. Securities & Exchange Commission’s plan, unveiled by White in a speech this week, advanced some new ideas while borrowing heavily from existing proposals and measures that already have support on Wall Street. While stock exchanges, rapid-fire traders and private trading venues known as dark pools all would come under new scrutiny, White didn’t embrace the kind of tighter restraints that have been enacted in countries such as Australia and Canada. 

White isn’t acting in a vacuum. She is responding to political pressures raised by an investigation by the New York attorney general into whether speed traders prey on slower-moving investors as well as a book by Michael Lewis, “Flash Boys,” that condemned the role of exchanges and brokers in enabling unfairness. She announced the initiatives even as she said U.S. markets aren’t rigged and serve the goals of retail and institutional investors.

As an Operational Risk Management (ORM) professional, you have to stay on the edge.  You must imagine the future and dive into the current R&D of innovation.  Being a futurist is staying on the bleeding edge of technology and this is just one facet of the risk mosaic.  The other and more human factor oriented component are the TTP's.  Tactics, Techniques and Procedures (TTP) are what you need your own "Opposition Research" team to be studying.  This is your opportunity to gather the intelligence on your competition and simultaneously look at your own vulnerabilities.  Sam Mamudi and Keri Geiger explain:

The U.S. Securities and Exchange Commission cited Wedbush Securities Inc. and Liquidnet Holdings Inc. for violations of stock market rules, taking tangible steps a day after Chairman Mary Jo White outlined her plan to improve Wall Street trading. 

Wedbush, which the SEC said is among the five biggest Nasdaq Stock Market traders, failed to vet clients who broke the law as they placed billions of dollars of transactions in the stock market, the regulator said. Two current and former Wedbush executives, Jeffrey Bell and Christina Fillhart, were also targeted in the complaint. 

Liquidnet, one of the biggest independent dark pool operators, agreed to pay a $2 million fine for not living up to client secrecy standards on its private trading platform.

So what?  The Rise of the Machine Traders:

In the beginning was Josh Levine, an idealistic programming genius who dreamed of wresting control of the market from the big exchanges that, again and again, gave the giant institutions an advantage over the little guy. Levine created a computerized trading hub named Island where small traders swapped stocks, and over time his invention morphed into a global electronic stock market that sent trillions in capital through a vast jungle of fiber-optic cables. 

By then, the market that Levine had sought to fix had turned upside down, birthing secretive exchanges called dark pools and a new species of trading machines that could think, and that seemed, ominously, to be slipping the control of their human masters. Dark Pools is the fascinating story of how global markets have been hijacked by trading robots--many so self-directed that humans can't predict what they'll do next.

So how do you mitigate the potential risk of a rogue algorithm? Some have devised a mechanism called a circuit-breaker. In other words, an alarm that something is not normal. Let's slow down until we can understand what is going on here. What are some other ways that we could potentially address the threat or the vulnerability? Was the "Flash Crash" a weak signal of a pending melt down of the complete system?

Or is this just the next natural phase of the future growth curve.  Who will you put your faith in for your next "Trust Decisions"...

Information Leaks: Risk Of The Data Supply Chain...

There is a well known threat that has been talked about with the Board of Directors behind closed doors for years. This threat is not new to most Operational Risk Management (ORM) professionals and yet executive management is still in denial that it could happen to us. Have you or someone in your C-Suite ever awakened one morning and wondered how the companies new plans for a merger are now in the published press? What about that new research and development breakthrough that ends up with another company with a similar process being patented a week or a month ahead of you?

What is the threat? Call it competitive intelligence, economic espionage, press leaks, loose lips or advanced persistent threat (APT), it does not really matter. The threat remains from all those people, rivals, industry peers, countries, states, allies and enemies that are working 24 x 7 x 365 to copy your valuable information and use it for their own advantage. What advantage depends on who obtains the valuable information and how they will eventually use it or sell it.

What is even more fascinating to most subject matter experts, is the amount of information that is still created and allowed to be compromised in some way that is false, fake and designed to confuse the adversary. So what is it, that much of executive management still does not understand about all of this? 

The "source" of the vulnerability that is leaking or allowing the secret or confidential information to be compromised. They still to this day are naive to the potential source. This source is not even inside their own company or organization in many cases. It is within the organizations data supply chain somewhere, but where is it exactly?

The answer is only possible to narrow down, if you absolutely know where your data and secret or confidential information is collected, transported and stored, in the hands of trusted third parties, outside the four walls of your business. That is the remedial first step. Creating a definitive map of who has custody of your data through some kind of third party agreement. The agreement could be with any number of key business partners in your data supply chain:

• Banker
• Venture Capitalist
• Accountant
• Attorney
• Insurer
• Internet Service Provider
• Utility
• Data Telecom Provider
• Wireless Telecom Provider
• Payments Processor
• Document Custodian or Shredder

This short list is a good place to begin your quest for better understanding where the source of your information leak may be. Now think about this list and ask yourself who might have the most robust set of staff, resources and technology savvy people to keep your data safe. Regardless of the service level agreements or engagement letters in place, who is the most vulnerable on this list?

Even more important may be the question of which one of your data supply chain business partners, has the least amount of resources, people and state-of-the-art detection systems for the APT, Zeus, and other mechanisms that are exfiltrating your data to another country. When was the last time you asked any of your business partners to walk you into their IT department for a look around with your CIO or CTO?

Believe us when we say that if you get that "Deer in the Headlights" look on your business partners face, you are in trouble. You can bet that the attackers are not attacking you, as much as they are attacking your data supply chain. If you say in public or on your public filings that you have your primary outside counsel firm as "Red, White and Blue," you can be assured that your adversaries will take notice.

You see, just because your organization has spent millions or billions on new data centers with the most sophisticated technologies available to counter your cyber adversaries, how can you be sure that your business data supply chain has done the same? There is only one way to do that and it is in person and on site. You may consider this level of due diligence before handing over your business for the merger and acquisition project or the development of a vital new component for your new patented product. A model "Request for Information" (RFI) on the business partners controls and capabilities for securing your sensitive, confidential and secret information shall be a first step requirement.

The second step shall be to get an inventory of what systems your data supply chain partner has in place to mitigate the risk of a data breach. At the top of that list, should be the management system that governs all the other hardware and software systems. So even if your business partner says they are using RSA NetWitness on their corporate networks and Fixmo MRM for their mobile devices, that is not going to be enough.

The overarching "Management System" is not about technology. It is not about your favorite eDiscovery or computer forensics guru. It is about the way your business partner trains and educates it's people. It is about how those people use relevant business controls to secure your secrets, confidential data and records. Look at their behavior around this topic of "Achieving A Defensible Standard of Care" and you will soon discover whether you have found the most ideal banker, accountant or attorney to entrust to your digital supply chain.

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

The 2014 RSA Conference USA is complete and yet what have we learned?  Operational Risk Management (ORM) is still top of mind from the "Board Room" to the back office.  The mitigation strategies are permeating the 3rd Party supply chain, as management realizes that operational risks really do exist with partners and suppliers.  By now the RSA attendees are reviewing their notes, connecting with people on LinkedIn and sorting the stack of business cards on their desk.  Now what.

• Have some of the largest retailers been the victims of massive data breach hacks?  Yes.  Have those attendees of the RSA Conference who downloaded the mobile app been exposed to a potential data leak of their information.  Yes.
• Meanwhile, Operational Risks exist far beyond Moscone and San Francisco.  Have financial institutions been fined by government regulators over alleged violations of the sale of mortgage securities, that lead to the 2008 financial crash?  Yes.  
• Have the age old competitive intelligence tactics evolved into full blown "Industrial Espionage" funded and supported by nation states?  Yes.
• Has the polar vortex created a vast economic risk for millions of businesses due to adverse weather? Yes.

And the Operational Risks to your organization will continue, that is for certain.  How after a week of RSA can you return to your enterprise and know where to begin?  What to change.  What new initiative to begin.  What new vulnerability to remediate.  Don't worry, the list will not be getting any shorter.  The priorities however may be changing.

So maybe it is time for a new "Consequence Assessment."  Here are the key variables for the rows of your matrix:

1. Loss of life:  Likely fatality count.
2. Economic damage:  Estimated costs of the attack or hazard.
3. Psychological impact:  Considerations of change in population behavior toward social functions.

Now, the consequence levels become your columns of the matrix:

• 0 - None or Negligible
• 1 - Minor
• 2 - Moderate
• 3 - Significant
• 4 - Catastrophic or Severe

In order to make the consequence assessment relevant and applicable to your business size, industry sector and geographic location, you now need to define each of the cells of the matrix.  So as an example, if we go to the matrix cell of Economic Damage / Moderate (2), what is your definition?  In the range of $1 billion to $10 billion.

If you are JPMorgan Chase then this may be the case for a consequence of legal liabilities, due to adverse litigation by the U.S. government in the Madoff case:

JPMorgan Chase has been fined more than $2 billion for violations of the Bank Secrecy Act tied to failure to report suspicious activity related to Bernie Madoff's decades-long, multi-billion dollar Ponzi scheme. Madoff was sentenced in 2009 to 150 years in prison for his deception. 

The fines against Chase were the result of three settlements. A settlement with the U.S. Attorney's Office for the Southern District of New York included a $1.7 billion penalty; a separate settlement with the Office of the Comptroller of the Currency included a $350 million penalty. Additionally, the Treasury Department's Financial Crimes Enforcement Network fined Chase $461 million for BSA-related violations. But FinCEN determined that its fine was satisfied by Chase's payment to the U.S. Attorney of New York.

If you are a mid-level business enterprise in the software industry that develops an "App" for consumers to file their income taxes online, then the metrics will be different for a moderate consequence of "Economic Damage." Your matrix will be entirely different and fine tuned to what is relevant in your industry sector.

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

The Psychological Impact category will span:

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

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

In a generic fashion, you will design specific and customized scenarios that address the major business revenue components of your particular enterprise.  You are imagining an attack or hazard outcome, that impacts that component of your business.  Such as these typical cases:

• Earthquake destroys data centers
• Tsunami overcomes nuclear reactors
• Data hack exposes millions of customers PII
• Infectious disease outbreak across work force
• Government prosecutes for violations of regulatory laws
• Employee sues company for management harassment
• New Customer Order Management system launch encounters substantial bugs/failures

After you have cleaned off your desk from a week away at RSA, the work really begins.  Start your new "Consequence Assessment" soon.  Gather senior executives for an off-site for two days to review the new scenarios you have designed.  Get their independent feedback and perception of the variables of your matrix.  Ask your Board of Directors for the resources and budgets to address the outcomes and insights from the exercise.

“ Man must be arched and buttressed from within, else the temple will crumble to dust. ”
— Marcus Aurelius Antoninius

Black Swan: Strategy Execution for the "Outlier"...

The Black Swan is a surprise event and the idea that a catastrophe can strike without warning. What does your organization plan for? The low consequence high frequency incident or the high consequence low frequency incident? The ratio can tell you what your "Resilience" factor is to Operational Risk loss events. Key Performance Indicators (KPI's) can give you some forward looking view into the risk portfolio yet what about the resilience to the Black Swan?

A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives.

Why do we not acknowledge the phenomenon of black swans until after they occur? Part of the answer, according to Taleb, is that humans are hardwired to learn specifics when they should be focused on generalities. We concentrate on things we already know and time and time again fail to take into consideration what we don’t know. We are, therefore, unable to truly estimate opportunities, too vulnerable to the impulse to simplify, narrate, and categorize, and not open enough to rewarding those who can imagine the “impossible.”

Your organization is no doubt spending time on the Operational Risk Management (ORM) events that consistently are in the high frequency "In Your Face" category. In a highly regulated industry sector such as finance, health care or energy the oversight mechanisms require a continuous analysis of risk based upon the criticality of these sectors to the overall resilience of the economy. Yet it is the "Outlier" incident that comes at the most unexpected time that is the real threat and the incident catalyst, that could be your "Black Swan". You never know when it is going to be coming, so you must plan, prepare and imagine that someday it will happen.

Enabling Global Operational Risk Management (ORM) requires thinking beyond models and outside the box analysis of the "Resilience Factor," should an outlier impact the organization, the state or the country. The resources, personnel and systems focused on these areas of risk are small today. But not for long. Just ask those people who had been working 24/7 since the "Fukushima" or "Lehman Brothers" crisis. Or more importantly, the plaintiff lawyers preparing their briefs for the inevitable aftermath of litigation over, who knew what, when.

One prediction into the future could be that litigation will follow all "Black Swan" incidents. If you are in a highly vulnerable industry sector because it's part of the critical infrastructure of the global grid, then you already know you are in the middle of the target zone. What is amazing to many in the after-action reporting is how much we continue to under estimate the magnitude of a lack of planning and resources devoted to these low frequency high consequence events.  Enter Target Corporation:

Is Target to Blame for Its Data Breach? Let the Lawsuits Begin 

By Joshua Brustein December 26, 2013 

The lawsuits started almost immediately after Target’s (TGT) admission that hackers had stolen information related to the credit-card accounts of 40 million shoppers. At least 11 customers are now pursuing class-action suits against the retailer, claiming it was negligent in protecting their data. 

Losing control of sensitive customer data is a fact of life for American companies. They’re collecting more of it, and they are often outgunned by hackers, who are highly motivated to get at it. It’s not even clear how much legal responsibility they have to protect it. “There is limited judicial guidance on what constitutes negligence in the cybersecurity area,” says Craig Newman, a partner at Richard Kibbe & Orbe who follows legal issues related to security.

Unauthorized Access: Civil CFAA Legal Risk Strategy...

A tutorial on the definition of a "loss event" is appropriate for those who seek greater understanding of "Operational Risk Management" (ORM).   Specifically when it comes to the civil litigation strategy utilizing the "Computer Fraud and Abuse Act" (CFAA) 18 U.S.C. 1030.

What is a loss?  Easy:  Loss = cost.  "Any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment and restoring the data, program, system or information to its condition prior to the offense and any revenue lost, cost incurred or other consequential damages incurred because of interruption of service."

So the remedies available are economic damages, loss damage and injunctive relief.  Not exemplary damages or attorneys fees.  Don't let that last one scare you from using CFAA, as an effective deterrent in your arsenal as a General Counsel.  The basic threshold is that the victim incurred a loss during any one year period, of at least $5,000.00.

For the focus of this blog post, we will talk about "Insiders" who exceed authorized access, that is access in a way not entitled.  Typically employees or others in the business supply chain, who may have the use of a password or key to gain access to information only known or available by another employee, such as a supervisor or system administrator.

It is imperative here to state the importance of finding an attorney that truly understands this law, from a civil, not a criminal perspective.  The complaint must provide factual content that the Plaintiff has suffered the type of damage to "data, a program, a system or information."  Think more about business interruption and the expenses related to investigation, remediation and integrity of operations.  An employee who leaves the company and has e-mailed proprietary information of clients or proposals to their personal account, is not what we are talking about here.

What about the employee who decides to damage or destroy organizational records or of their primary area of responsibility, (database of client contacts, meeting notes, reports and proposals) or even those of the entire company.

The term “damage” means any impairment to the integrity or availability of data, a program, a system, or information and the term “loss” means any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service.  Here is just one example:

Tech Systems, Inc. v. Pyles, 2013 WL 4033650 (ED VA Aug. 6, 2013) (4th Cir)
After being terminated, former employee forwarded company emails and deleted company emails from mobile device before returning it to employer because they contained incriminating evidence. Court granted spoliation finding and jury returned verdict for violating Computer Fraud and Abuse Act, among other claims.

This is just a single case of how a single disgruntled employee, decided to proactively get revenge with a former employer, Tech Systems, Inc. of Alexandria, VA, a U.S. defense contractor.  Why organizations do not utilize the tools such as CFAA to find civil remedy, on a more regular basis is the question at hand.

CFAA is designed to be legally effective on a broad scale and for good reason.  It does however, require that someone uses it with the right intent and legal purpose.  We predict that more civil cases will be filed, as General Counsels and attorneys better understand how to effectively utilize it, in combination with other laws associated with Intellectual Property Theft.  As judges and more cases are tried, the momentum will pick up.  So what?

Booz Allen Hamilton v. Snowden.  Not yet?  Just a Violation of a "Code of Ethics" and fired?  Not likely.

The revelation that Snowden got access to some of the material he leaked by using colleagues' passwords surfaced as the U.S. Senate Intelligence Committee approved a bill intended in part to tighten security over U.S. intelligence data. 

One provision of the bill would earmark a classified sum of money - estimated as less than $100 million - to help fund efforts by intelligence agencies to install new software designed to spot and track attempts to access or download secret materials without proper authorization. 

The bill also requires that the Director of National Intelligence set up a system requiring intelligence contractors to quickly report to spy agencies on incidents in which data networks have been penetrated by unauthorized persons.

 United States of America v. Edward J. Snowden.  Filed under seal June 14th, 2013. Offenses include 18 U.S.C. 641, Theft of Government Property.  18 U.S.C. 793(d), Unauthorized Communication of National Defense Information.  18 U.S.C. 7989a)(3), Willful Communication of Classified Communications Intelligence to an Unauthorized Person.

Civil CFAA Legal Risk Strategy can be utilized in many cases where the magnitude of the loss and the economic exposure to a U.S. government contractor, is not on the radar of the U.S. Attorney.  Keep it in mind...

eDiscovery Risk: The Marketing of Privacy...

Operational Risk Management (ORM) professionals from London to Paris, Berlin to Brasilia and Silicon Valley to Washington, DC are quietly smiling these days.  It is ironic, that now privacy is the new vogue marketing strategy.  After so many years of trying to explain to executives the risks that exist around confidentiality, integrity and assurance of data--now a rogue U.S. citizen charged with espionage, finally has convinced some senior business executives of the value of marketing increased privacy of their technology products and services.  Chris Strohm explains:

While Google, Yahoo, Microsoft and Facebook Inc. provide data to the government under court orders, they are trying to prevent the NSA from gaining unauthorized access to information flowing between computer servers by using encryption. That scrambles data using a mathematical formula that can be decoded only with a special digital key. 

The NSA has tapped fiber-optic cables abroad to siphon data from Google and Yahoo, circumvented or cracked encryption, and covertly introduced weaknesses and back doors into coding, according to reports in the Washington Post, the New York Times and the U.K.’s Guardian newspaper based on Snowden documents. He is now in Russia under temporary asylum.

Mitigating the risks of being hacked by a group of criminals stealing personal identifiable information from consumers on a transnational basis has not motivated these same executives to move towards investing in more effective data and information assurance strategies.  Yet now that the adversary has been described by the mainstream media as the U.S. Government, industry executives have started to listen.  Go figure...

What are the industry executives motivation for now improving the confidentiality, integrity and assurance of customers information?  Improved market share and presence.  The payback will be rapid and those organizations that have been in denial that customers expect and demand more systems and tools to protect their information, are now doing an about face.

As we quickly approach Cyber Monday and the commerce of the Internet is at a peak of annual transaction volume, some servers will be talking to each other on encrypted networks for the first time. All seamless to the end user and consumer, yet not to the adversary.  So who really is the adversary these days; the criminal organizations or the U.S. Government?  The strategists mitigating risks at commercial private organizations unfortunately in many cases, see both in the same category.  This is a real mistake and one that should be evaluated, discussed and agreed upon.

You see, U.S. based companies must have an effective symbiosis with it's legal system and rule of law. What does that mean?  Operational Risk encompasses the risks to the institution from a legal perspective.  That means that the process of processing, storing, archiving and retrieving information is subject to the laws of electronic discovery and forensic evidence.  It means that as an organization, having an effective way to encrypt information to stay ahead of the criminal organizations simultaneously requires that your organization is also adaptive to current legal statutes.  Tomorrow, you may need to identify, decrypt and produce evidence to the U.S. Government or as a result of another legal order.

As organization executives embark on the "new new" trend of marketing privacy to their customers, they should also be working along side the legal staff.  The risk management and information technology professionals should be briefing both corporate executives on the implications of being responsive to their consumers and non-responsive to plaintiff lawyers, or the U.S. Attorney or State Attorney General:

Fearful of adverse consequences if they inadvertently discard electronic documents that are deemed to be relevant in litigation, some of the biggest companies in the U.S. are simply saving all documents, including email sent via employees' electronic devices. 

A minority of federal courts say companies can be sanctioned even if they discard documents without intending to. All allow sanctions, which can mean the loss of a big case, when documents are intentionally destroyed. So companies including Exxon Mobil Corp. and Microsoft Corp. are asking the federal Judicial Conference to recommend a new rule that would provide uniform standards for document retention and allow sanctions only when documents are destroyed willfully or in bad faith, reports the Wall Street Journal(sub. req.).

So this is where the marketeers and the legal staff need to get their heads together.  The privacy vs. government legal requests space is still not widely understood inside corporations let alone the average John Q. Citizen, who has never even heard of eDiscovery:

Microsoft General Counsel Brad Smith said yesterday that there are "significant inaccuracies" in last week's news reports. He added in a blog post, referring to Outlook.com: "When we are legally obligated to comply with demands, we pull the specified content from our servers where it sits in an unencrypted state, and then we provide it to the government agency."

HSI Governance: Equilibrium of Privacy and Security...

When people are faced with increasing Operational Risk uncertainty in their organization, our inherent DNA makes us gravitate towards avoiding new risk at all costs. What any new bold policy shift requires to succeed for the masses is to face risk squarely in the eye and to manage it effectively. This is exactly how many private sector intelligence organizations have evolved and continue to thrive in a vast universe of "Open Source" and Electronically Stored Information (ESI).

The U.S. government "Homeland Security Intelligence" (HSI) enterprise has the same opportunity to embrace risk and simultaneously manage it more efficiently and effectively. Over the course of the past decade the U.S. Patriot Act has several controversial provisions that have been implemented, tested and refined. Several of these include Sec. 203(b) and (d) that allow information from criminal probes to be shared with intelligence agencies and other parts of the U.S. government. Another is Sec. 206 that allows one wiretap authorization to cover multiple devices, eliminating the need for separate court authorizations for a suspect's cell phone, PC and Blackberry, for example. The civil liberties debate on Sec. 215 known as the "libraries provision" allows access to records such as what books were checked out at the library or purchased from a bookstore, as long as the records are sought "in connection with" a terror investigation.

The governance of information by the private sector may have either accelerated or detained HSI enterprises in terrorism investigations. One example are the policies private sector Internet Service Providers utilize for records management and "Electronically Stored Information" (ESI) readiness. Electronic discovery amendments to the Federal Rules of Civil Procedure (FRCP) have created the requirement for private sector companies to be more prudent in "Achieving a Defensible Standard of Care."

The risk associated with non-compliance of the Federal Rules of Civil Procedure (FRCP) is a major facet of Operational Risk Management. The fusion of the Corporate Governance Strategy Execution comes together with a dedicated internal "Task Force" inside the enterprise. Comprised of the General Counsel, CIO, CISO and VP of Human Resources, this team provides the mechanism for effective policy implementation and operations accountability. The mission is to carry out the fiduciary duty to create a culture of legal compliance within the organization.

The evidence obtained for Homeland Security Intelligence (HSI) investigations may only be as accessible and obtainable as the effectiveness of a private sector companies ESI policies. How often do they purge their e-mail from databases? How much data storage does the enterprise allow for each person's mailbox? Are there people circumventing the information governance policies in the private or public workplace in order to get their daily business accomplished?

The collection of information for HSI has a parallel path with the collection of evidence and it must be done according to the civil liberties and privacy laws of the United States. It is this balance and equilibrium between the governance of information and the legality of obtaining it for the purpose of a terrorism related investigation that brings us to a potential digital paradox.

Where action against a person or organization involves the law, either civil or criminal, the evidence presented shall conform to the rules for evidence laid down in the relevant law or in the rules of the specific court in which the case will be heard. This shall include compliance with any published standard or code of practice for the production of admissible evidence.

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 law enforcement investigator or intelligence analyst 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 and you might get them to admit they have a sense that their organization will be the target of a data breach incident in the coming year or two. The complexity of IT systems, data networks and the hundreds of laptops circling the globe with company executives is enough to predict that a major breach will occur.

Being adaptive and having proactive intuition in the modern Homeland Security Intelligence enterprise or private sector company 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. Once you realize that all of the legal 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."

Privacy 3.0: The Genesis of EarthCom...

Information classification in the private sector is gaining traction again as the nature of sensitive national security leaks are published in the popular press.  Data breach laws and cyber legislation is a daily discussion on Capitol Hill.  CISOs and CSOs even at the Washington Post are in "Incident Response Mode" after a successful phishing exploit by the Syrian Electronic Army.  These Operational Risk Management (ORM) challenges are not only on the rise because of the amount of information that is exchanged each day in an era of the "Internet of Things"; these risks are now front and center as "Privacy 3.0" evolves in the Cloud.

Andrew Serwin of The Lares Institute puts it all in context:

The question confronting modern-day privacy scholars is this: Can a common law based theory adequately address the shifting societal norms and rapid technological changes of today’s Web 2.0 world where legislatures and government agencies, not courts, are more proactive on privacy protections?

As private sector companies produce the technology solutions to accomodate the exponential expansion of our global ICT ecosystem, we must acknowledge the genesis of it's origin.  Human beings.  The products, systems, software and patents are the result of inventions by mankind.  Yet there is evidence that the evolution of ICT, whether it be in hardware, software or the data itself has similarity to biological evolution.  For decades scientists have studied the similarity of the ecosystems of information to the biology of immune systems.  These same smart and bold people have written books, journals and peer tested papers on the subject of transformational systems thinking.  Growth and change in the digital universe follows a biological path found in nature.

The organizational growth cycles are:

• Forming = entrepreneurship
• Norming = production
• Integrating = diversification

This cycle of growth has many labels, yet systems and organizational experts will say that the integrating phase of growth will encounter a bifurcation point, where it is necessary for the system to again innovate and form something new.  To adapt to its new environment.  If the system does not break away and create a new forming stage of the growth cycle, it will eventually perish.  This is why organizational change experts invented such innovations as the "Skunk Works" or why a private sector company breaks off a business unit and creates a whole new company.

Privacy 3.0 is now four years old.  Are we now at the bifurcation stage of the societal information growth cycle and the speed of business is leaving existing government rule of law in the rear view mirror?  Andy Serwin from his 2009 paper said:

Given the changes in society, as well as the enforcement mechanisms that exist today, particularly given the FTC's new focus on “unfairness,” and the well-recognized need to balance regulation and innovation, a different theoretical construct must be created--one that cannot be based upon precluding information sharing via common law methods. Instead, the overarching principle of privacy of today should not be the right to be let alone, but rather the principle of proportionality. This is Privacy 3.0.

As information flows through the manmade veins of supersonic light or invisible waves of zeros and ones around our planet, we are approaching a "Breakpoint."  A place in time, where the system will need to bifurcate in order to survive.  The system of privacy proportionality in government circles has been four levels of classification:

• Restricted = For Official Use Only (FOUO)
• Confidential
• Secret
• Top Secret (TS)

In the years ahead, as you hold your IP Phone (iPhone) to update Twitter, Foursquare, Facebook or WordPress App, you are behaving in the Privacy 3.0 ecosystem.  While you are at work in the public or private sector using Google Business Apps in the cloud, your behavior and your words including personal data such as your semantics or GPS coordinates, are entering one of four levels of sensitivity.

In order to make the leap to our next systemic "Breakpoint", we will need to design in proportional privacy to our Operational Risk Framework.  Without it, the system will decay and ultimately cease to exist.  Is privacy an after thought in your organization?  What information governance education takes place on a continuous basis?  How do you monitor and measure?  Have you tagged the information into four levels of sensitivity?  These are just a few of the questions that the Privacy 3.0 enterprise is encountering, at the genesis of an ICT "EarthCom."

ID Analytics: Risk of the Unknown...

Operational Risk Management (ORM) has been at the top of the news in the past few weeks.  Digital media and the metadata of "Big Data" is the topic of choice.  It is a revealing look behind the curtain of what is possible these days, with the tools and capabilities that exist for exploitation and analysis.  Is too much privacy an operational risk to your personal and professional well being?

In the spirit of full disclosure, if you are reading this now, we tracked how you found this blog and perhaps what search terms you used to be referred here.  Some of you, revealed their company identity.  So why do we do this?  The main reason is that we want to make sure that we understand what is on your mind these days, when it comes to the global Operational Risk Management (ORM) universe.  Here are a few examples in the past day or so that caught our eye:

• management of operational risk - Latvia
• operational risk management - Nigeria, Illinois, South Dakota, The Vanguard Group
• common board of directors mistakes - Turkey
• lessons learning from fail in operational risk - Malaysia
• predictive intelligence - North America
• rogue trader operational risk - United Kingdom
• fund industry operation management discussion topic - Luxembourg
• operational risk management game - Unknown
• reputation risk management process - Unknown
• operational risks in bank call center - Qatar
• coso definition of operational risk - Unknown
• black swan incident that occurs once in a lifetime - Unknown
• ubs operational risk case analysis - Unknown
• business resiliency definition - JP Morgan Chase
• "operational risk" outliers - France
• a risk effect on a daily operation - DeVry
• examples of smart objectives risk - United Kingdom
• black swan incident\ - South Carolina
• black swan incident - Computer Sciences Corporation
• what is a black swan incident - South Carolina
• duty of care board of directors - United Kingdom

Collection of data is one thing.  Relevance and sense-making is another.  Can you imagine some of the search terms that are tracked just by Google or Bing?

What about the companies that know us the best?  Those marketing and personal data sites that keep track of where you live, how much you spend on your credit cards and where, or even the name of your pets.  How often do you give them your phone number or e-mail address at the point-of-sale (POS) to get a discount at the local retailer, gas station or pharmacy?  Believe us when we say that there are hundreds of organizations that know more about you in the private sector than some government across the world.

The trail of "digital finger prints" you leave behind everyday are vast.  A snap shot of your face at the local ATM or a snap shot of your desktop when you login to the online banking web site.  In either case, these examples are just a few of the ways that your habits, locations, preferences and lifestyle are profiled each and every day.  Where did all of this begin?  Fraud Management.  Not Homeland Security.

As a citizen traveling across the country or a consumer, you willingly give up these digital bread crumbs of your journey through life.  Your goal now, is to make sure that you are not mistaken for someone else.  After all, you or your organization have developed a profile and a reputation that is being recorded and therefore, it could be a prudent strategy to make sure that you are not mixed up with another person or organization with the same name or brand identity.

How can you do this?  Operational Risk Management (ORM) is about monitoring yourself and your organization to make sure you understand your competition (good or bad) for the same personal or business identity space.  Do you have Biometric and DNA samples of all of your key executives?  If you don't, then the question is why not?  You may have considered this in light of some of the places that your executives are traveling.  Cities and countries across the globe with the risk of kidnapping, improvised explosive devices (IED) and other risks to their lives.

As we look into the crystal ball of our digital futures, we see the scenes from movies past that have already captured our own human imagination.  A world where everyone is known and you may even choose to "opt-in" to be tracked.  After all, you are unique.  You make your own choices in life.  The risks that you face may very well be greater, for those who choose a life to remain private, anonymous and even unknown.

Legal Risk: Over-The-Horizon Digital Radar...

Operational Risk Management is a primary responsibility with an organizations General Counsel. Why?

"The definition includes Legal risk, which is the risk of loss resulting from failure to comply with laws as well as prudent ethical standards and contractual obligations. It also includes the exposure to litigation from all aspects of an institution’s activities."

So if you are a General Counsel or the Chief Legal Officer, your radar is consistently tuned to the "Over -The-Horizon" (OTH) risks that may impact your company, right?  The fact is that managing risk from the General Counsels office may be significantly different than what managing risk means from the CIOs office.

Loss events associated with peoples workplace behavior are many times treated differently than those events associated with a computer "intrusion" or a data breach, that was also caused by human behavior.  The law is a battleground that continues to keep an entire industry busy with offensive and defensive activities and the transfer of risks from one party to another.

What is the legal risk difference between the diversion of company funds to pay bribes in a foreign country and the theft of company trade secrets?  You see, the laws associated with these loss events have different statutes, penalties and legal risk:

On December 17, 2012, Germany-based insurance and asset management company Allianz SE paid more than $12.4 million to settle with the SEC over violations of the books and records and internal control provisions of the FCPA. The activity in question concerned improper payments to government officials in Indonesia. Following common FCPA procedure, Allianz did not deny or admit the SEC’s inquiry. The company disgorged $5.3 million in profits, paid a penalty of $5.3 million, with $1.8 million in prejudgment interest. 

The SEC stated that it uncovered 295 insurance contracts on government projects that were obtained or kept by improper payments totaling $650,626. The payments were made by Allianz’s Indonesian subsidiary. 

The conduct occurred from 2001 to 2008, at which time Allianz was considered an “issuer” under the FCPA because of its activity on the New York Stock Exchange. Even though it was not listed on the exchange, the presence of its bonds and shares on the market made it an issuer and subjecting it to the jurisdiction of the FCPA. The investigation was initiated internally using outside counsel after a whistleblower complaint in 2009.

On December 28, 2012, President Obama signed the Theft of Trade Secrets Clarification Act. S. 3642 (112th). The Clarification Act is a direct response to the Second Circuit’s decision in U.S. v. Aleynikov, 676 F.3d 71 (2nd Cir. 2012). (See details below.) In Aleynikov, the Second Circuit overturned a criminal conviction under the Economic Espionage Act 18 U.S.C. § 1831, et seq., after the court determined that the stolen source code was only used internally for a high-frequency trading system and was not “related to or included in a product that is produced for or placed in interstate or foreign commerce.” The Clarification Act expands Section 1832(a) to cover internal trade secrets “related to a product or service used in or intended for use in” commerce. In addition to the source code at issue in Aleynikov, this expansion could include internal processes of doing business or gathering information that may not qualify for traditional patent protection. More broadly, the quick reaction shows the importance that Congress attaches to this area of the law and puts individuals and companies on notice that increased indictments may occur down the line.

The ethics, compliance and legal components of Operational Risk Management comes down to "Achieving a Defensible Standard of Care" in your organization.  The risk exposures that face your organization will also occur from a more immediate impact, due to a loss of reputation and potential loss of market value.  On all fronts, the stakes remain high.

The modern day legal enterprise is still reactive and slow to respond to the changing environment around it.  The daily battle with legal risk is slow, compared with other risk management fronts within the institution.  The speed of response and the focus on preventive, preemptive or proactive actions is what sets apart the mental states of all of your security risk professionals.  Some people have seconds or minutes to decide and act, others have the luxury of days, months and years.

Unfortunately, for most the costs associated with legal risk are high, no matter who prevails in an incident or case. This fact alone, is why the introduction of a new generation of automated tools and the memory of computer-based evidence is so important.  Decision Advantage.  The law and the law industry is quickly playing catch up.  Practitioners from the technology and legal industry are now even more integrated, while the courts interpret the implications of their rulings on an accelerating mobile digital global society.

You and your team have a tremendous amount of new knowledge to gain, or your enterprise will be consumed by the volume of new Operational Risks unfolding before it.  How complex could this be?

From 'WarGames' to Aaron Swartz: How U.S. anti-hacking law went astray

The 1983 movie "WarGames" led to an anti-hacking law with felony penalties aimed at deterring intrusions into NORAD. Over time, it became broad and vague enough to ensnare the late Aaron Swartz.

Top Ten Mistakes: Board of Directors Risk...

A few years ago, Randy Myers article in Corporate Board Member Magazine discussed a Top Ten List for the Board of Directors. In light of the current state of corporate performance, we would like to revisit the most common mistakes.

General Counsel to Directors: Your 10 Most Common Mistakes

The in-house lawyers think that you've got a lot to learn about risk, trust, and reward. And when there's trouble, you too often fail to follow the Boy Scout creed: Be Prepared. By Randy Myers

1. Not Asking Questions
2. Failing to Understand the Company and the Risks it Faces
3. Failing to Lead on Ethics and Compliance
4. Not Insisting on a Crisis-Management Plan
5. Speaking out in a Crisis Before the Facts are in
6. Relying on the Wrong Outside Counsel
7. Failing to Understand Attorney-Client Privilege
8. Underestimating Regulators
9. Giving too Much Leeway to Rainmakers
10. Getting Caught Up in the dilemma of False Options

And as Randy so clearly states: "Serving on a corporate board isn't easy. Avoiding these common mistakes should be."

We can't accept that No. 4 even is on this list. No. 2 and No. 3 is ever so common place. And No. 7 is not a surprise. But what continues to amaze even those professionals associated with consulting to the Board of Directors is No. 8.

The Chief Risk Officer (CRO) is the independent keeper of oversight in the corporate enterprise. Should any organization be the subject of an investigation by the SEC, FTC or any other government regulator, they need to look to the CRO. It's the job of any CRO to keep regulator awareness at a high level and to let the business be in charge of risk management. Whenever you see a CRO getting involved in managing the risks of the business, then the independence and clarity of oversight has been extinguished.

The General Counsel and the Chief Risk Officer must work hand-in-hand to follow the Boy Scout creed:

Be Prepared.

IO Convergence: Cyber Warfare Unified Taxonomy...

Information Operations (IO) is an Operational Risk Management priority in both the public and private sector these days.  Is it lawful for a U.S. company and U.S. citizens to train and perform cyber warfare activities on behalf of a foreign country?

The Washington Post reports:

By Ellen Nakashima, Published: November 22

In the spring of 2010, a sheik in the government of Qatar began talks with the U.S. consulting company Booz Allen Hamilton about developing a plan to build a cyber-operations center. He feared Iran’s growing ability to attack its regional foes in cyberspace and wanted Qatar to have the means to respond. 

Several months later, officials from Booz Allen and partner firms met at the company’s sprawling Tysons Corner campus to review the proposed plan. They were scheduled to take it to Doha, the capital of the wealthy Persian Gulf state. 

That was when J. Michael McConnell, a senior vice president at Booz Allen and former director of national intelligence in the George W. Bush administration, learned that Qatar wanted U.S. personnel at the keyboards of its proposed cyber-center, potentially to carry out attacks on regional adversaries. 

“Are we talking about actually conducting these operations?” McConnell asked, according to several people at the meeting. When someone said that was the idea, McConnell uttered two words: “Hold it.”

A common taxonomy was developed years ago for the cyber terms of the computer and network incident domain. Now we need to make sure we all understand what we mean when we say Information Operations policy as it pertains to the digital world.

As an example, in the context of the digital attacker we have Sandia Labs Taxonomy:

• Hacker
• Spies
• Terrorists
• Corporate Raiders
• Professional Criminals
• Vandals
• Voyeurs

Each is unique and has its own domain or category. We are sure that the same could be used for the context of attackers in the non-digital world, possibly with the exception of Hacker. However, the definition of corporate raider in the off line domains may not be synonymous with the on line domain of cyber incidents.

If we look at the categories that make up the entire "Incident" that Sandia Labs has utilized, we see the following:

• Attackers
• Tool
• Vulnerability
• Action
• Target
• Unauthorized Results
• Objectives

Without combining the context under each category, we lose the impact of what we are trying to make contextual with regard to an "Incident". We need to make sure that the anti-terrorism taxonomies of the off line and on line domains can be utilized together to describe the attributes of an "Incident". We need to break down the sub-categories as well. For instance, in the Sandia Labs Taxonomy for the Objectives category we have:

• Challenge, Status, Thrill
• Political Gain
• Financial Gain
• Damage

When we move to the off line domain and are doing risk mitigation and preparedness exercises for anti-terrorism we utilize another set of words to describe and evaluate infrastructure threats and hazards. Five factors here are:

• Existence addresses the question of who is hostile to the assets of concern?
• Capability addresses the question of what weapons have been used in carrying out past attacks?
• History addresses the question of what has the potential threat element (aggressor) done in the past and how many times?
• Intention addresses the question of what does the potential threat element hope to achieve?
• Targeting addresses the question of do we know if an aggressor is performing surveillance on our assets?

The Washington Post reports:

By Ellen Nakashima, Published: November 14 

President Obama has signed a secret directive that effectively enables the military to act more aggressively to thwart cyber­attacks on the nation’s web of government and private computer networks. 

Presidential Policy Directive 20 establishes a broad and strict set of standards to guide the operations of federal agencies in confronting threats in cyberspace, according to several U.S. officials who have seen the classified document and are not authorized to speak on the record. The president signed it in mid-October.  The new directive is the most extensive White House effort to date to wrestle with what constitutes an “offensive” and a “defensive” action in the rapidly evolving world of cyberwar and cyberterrorism, where an attack can be launched in milliseconds by unknown assailants utilizing a circuitous route. For the first time, the directive explicitly makes a distinction between network defense and cyber-operations to guide officials charged with making often-rapid decisions when confronted with threats. 

The policy also lays out a process to vet any operations outside government and defense networks and ensure that U.S. citizens’ and foreign allies’ data and privacy are protected and international laws of war are followed. 

“What it does, really for the first time, is it explicitly talks about how we will use cyber-
operations,” a senior administration official said. “Network defense is what you’re doing inside your own networks. . . . Cyber-operations is stuff outside that space, and recognizing that you could be doing that for what might be called defensive purposes.”

We believe that as our cultures, countries, agencies and professionals work together on Information Operations (IO) and online counter-terrorism initiatives, we are going to have to develop a solid taxonomy. It will provide the foundation for our clear and accurate risk management methodologies and incident management systems, being developed by relevant organizations in mutual collaboration.

Once we have accomplished this fundamental understanding, then true Critical Infrastructure Protection (CIP) cooperation and coordination will occur.