Managing Information RiskPutting the ‘I’ back in IT: Creating Tangible Value from the Intangible Asset
Colin LobleyDirector Information Strategy & Risk
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Webinar Aims & Structure Aims:
Provide evidence for taking an information risk approach rather than an IT/cyber security approach
Introduce practical concepts and approach to managing information risk
Why Bother with Information? The Information Opportunity Threats and Risks
Managing Information Risk Current Approaches, Weaknesses and Common Barriers Overcoming the barriers: concepts and approaches to managing information
and information risk management: Processes, Systems, Governance and Culture
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Manigent & Me
Director of Information Strategy & Risk.
14 years in strategy, programme and risk management; 6 years focused on the cyber threat environment.
2007 – Business Continuity Journal, Vol. 2, Issue 3: Ascertaining the behaviors and factors driving investment in high impact risks.
2008 – Manigent’s CEO created the Risk-Based Performance Management methodology.
Today – Building business resilience and enhancing performance by managing strategy and risk in today’s continuously turbulent, information-centric operating environment.
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WHY BOTHER WITH INFORMATION?
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The Value of Exploiting Information: FTSE 350 View A potential gain of £44bn gross operating profit per annum across the FTSE
350 from enhanced information exploitation.
Source: The Information Opportunity Report – Cap Gemini
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The Value of Exploiting Information: Sector Comparison
Source: The Information Opportunity Report – Cap Gemini
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The Value of Exploiting Information: Function Comparison
Source: The Information Opportunity Report – Cap Gemini
Other functions with >20% of respondents saying it would be a function of greatest potential: Marketing, HR, Logistics & Supply.
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Information Risks: Personal Data Breaches per Sector
Source: Cost of a Data Breach Survey 2013, Ponemon Institute
$215 (£129) per capita in financial services (direct). But the indirect impact on financial services is huge – insurance and compensation
claims.
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Personal Information Risk: Evolving Legislative Environment
New legislation and regulatory oversight likely to make this worse
Current: Data Protection Act (UK) Information Commissioners Office enforces
Maximum fine of £0.5m To date largely a public sector focus (& Sony - £350k in a £170m+ incident)
FCA also have the ability to fine Zurich - £2.3m in 2010
New EU Data Protection Regulation in 2015 (est.): Fines of 5% turnover? Criminal Prosecution?
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Information Risk: Financial Services Case Studies J.P.Morgan International Bank Limited, 2013, £3.1 million – direct fine by the FCA
for systems and controls failings. Highlighted issues: Client files which were not kept up to date A computer based record system that did not allow sufficient information to be retained,
suitability reports that failed to contain relevant client information. A 2 year persistent failing during which “JPMIB’s senior management did not have
sufficient information and oversight tools to identify and address these deficiencies”.
Sesame Limited, 2013, £6m - fine for failings between 2005-2009 during which the: “vast majority” of sales were flawed because of a “mismatch between customers stated
investment objectives and attitude to risk and the product sold” and “the suitability letters provided to customers stated incorrectly that income or capital
growth was guaranteed”
Many others – TJX, Citigroup, Barclays, De-Vere Group, NASDAQ …… and the list goes on.
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Information Risk: Evolving Regulation in FS
Emerging Financial Services Regulative oversight (UK) likely to lead to increased frequency and size of fines and stricter reporting.
FCA Risk Outlook 2013: “Increasing reliance on technology without fully understanding the consequent risks and dependencies”
UK’s Financial Policy Committee stated that: “market participants had increasingly highlighted concerns about operational risk, including threats of cyber-attack”. (June 2013) and “the boards of the relevant supervisory bodies to ensure that there was a concrete plan in place to deliver a higher level of protection against cyber-attacks for each institution at the core of the financial system, including banks and infrastructure providers.” (Sept 2013)
Waking Shark II report: “The PRA and FCA will coordinate to ensure dual-regulated firms are fully aware of the regulators’ incident reporting requirements and update frequencies.”
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Information Risk: Linked with Conduct Risk
Customer Management was the #1 area businesses felt could be improved through better information exploitation
Root cause of many FCA fines can be identified as poor management and analysis of customer data
Conduct Risk Agenda: To make relevant markets work well so consumers get a fair deal. Consumers get financial services and products that meet their needs, from firms they
can trust; Markets and financial systems are sound, stable and resilient, with transparent pricing
information; and Firms compete effectively, with the interests of their customers and the integrity of the
market at the heart of how they run their business.
The risk of poor information management will lead to bad conduct.
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Conclusion: Information Exploitation and Risk
“Early adopters of effective information exploitation strategies are seeing real and tangible business performance
improvements. Those that chose to do nothing have seen the gap between themselves and the market leaders widen.”
There are significant risks to: The information you have driven by the cyber threats Failing to exploit what you have already Not having the right information to exploit Compliance with changing laws and regulation
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MANAGING INFORMATION & INFORMATION RISK
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The Traditional Approach …..
HACKERS CHINA LOSS OF REPUTATION
IT (CYBER) SECURITYLED BY CISO / IT DIRECTOR
REACH FOR A STANDARD (ISO 27001)
….. Is immature and clearly not working.
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Barriers to Exploiting Information
Source: The Information Opportunity Report – Cap Gemini
1. PROCESSES (110) 2. SYSTEMS (66) 3. PEOPLE – governance and culture (121)
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Barriers to Managing Information Risk
The Survey says ….. Poor alignment between:
Information security strategy and business strategy Information security strategy and risk appetite or tolerance Security policies and business objectives Security spending and business objectives
Budget constraints / Insufficient capital funding A lack of leadership from the CEO or Board A lack of vision on how future business needs will impact security
I say …. PROCESSES: Complete failure of many businesses to articulate, manage and report the value
of information and information risk linking the benefits and risks to business drivers SYSTEMS: Too much focus on IT systems and not enough on information systems – the asset
of real business value PEOPLE: CIO’s focus on technology not information; lack of Board engagement on an “IT
issue”; no ownership of information assets
Source: EYs Global Information Security Survey; PwC Global State of IT Security Survey 2013 and associated PwC blog
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ICT
DECISIONS
DATA
KNOWLEDGE
INFORMATION
Information-centric Business Systems & ProcessesICT & more importantly, information, are the key enablers of any modern business.
ACCESS
STORE
ANALYSE
PROCESS
COLLECT / GENERATE
USE
(ACQUIRE)
STRATEGIC
STRATEGIC OBJECTIVES
OPERATIONAL
OPERATIONS
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People: Changing the Information Culture
Think of information as an asset of value:
“The value of the server [...] is probably negligible—it can be replaced quickly or its function can be moved to another server—however, the information asset stored on the container is not as easily replicated if compromised, and the impact to the organization is much more extensive.”
“An information asset is a body of information, defined and managed as a single unit so it can be understood, shared, protected and exploited effectively.”
“60% of the senior executives felt that the information within their organisation was being used for retrospective reporting rather than to point a path to the future – a clear sign of failure to use information for competitive advantage”
Source : Information Asset Profiling; James F. Stevens; June 2005, Carnegie Mellon University; The National Archives – Information Asset Factsheet; Harnessing information to enhance business performance, Cap Gemini
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Process: Determine Information Value Drivers “An organisations information assets were felt to be unique and therefore impossible to
compare to the information assets of other organisations.” Valuing information is unique to each business, depending on its business drivers.
Source: Harnessing information to enhance business performance, Cap Gemini; Manigent assignments
Other drivers identified by businesses we have worked with include:
- Brand value- Revenue generation- Contribution to UK
National Security- Supplier expectations
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ICT
DECISIONS
DATA
KNOWLEDGE
INFORMATION
People: Governance of Business Systems & Processes
ACCESS
STORE
ANALYSE
PROCESS
COLLECT / GENERATE
USE
(ACQUIRE)
STRATEGIC
STRATEGIC OBJECTIVES
OPERATIONAL
OPERATIONSCIO & KIMs
CTO
COO
Main Board & Operating Board / Exco
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Risk Systems & Processes
MULTIPLE THREAT VECTORS
MULTIPLE THREAT ACTORS
INSIDER THREAT / INCIDENT
MALICIOUS NON-MALICIOUS
OPERATIONAL DOWNTIME
REPUTATION
REVENUE
EXTERNAL THREAT / INCIDENT
THEFT OR LOSS OF DEVICE OR SYSTEM COMPROMISED
THEFT OR LOSS OF INFORMATION
LOSS OF INFORMATION INTEGRITY UNAVAILABLE ICT
POOR DECISIONS
INFORMATION UNAVAILABLE
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People: Changing the risk culture
“Before the risks to an information asset can be assessed, the tangible and intangible value of the asset must be known.”
“The existence of a significant [IT] vulnerability does not mean that an organization is at a significant risk. A vulnerability is only significant if it places a critical asset at risk. This is an important distinction because assets and their value to the organization determine the context for risk rather than the vulnerability itself.”
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Risk Appetite
Identify
Assess
Treatment
Mitigation
Monitor & Report
Process: Risk & Risk Appetite
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People: Risk Governance
MULTIPLE THREAT VECTORS
MULTIPLE THREAT ACTORS
INSIDER THREAT / INCIDENT
MALICIOUS NON-MALICIOUS
OPERATIONAL DOWNTIME
REPUTATION
REVENUE
EXTERNAL THREAT / INCIDENT
THEFT OR LOSS OF DEVICE OR SYSTEM COMPROMISED
THEFT OR LOSS OF INFORMATION
LOSS OF INFORMATION INTEGRITY UNAVAILABLE ICT
POOR DECISIONS
INFORMATION UNAVAILABLE
Board
CIO, CTO, CISO, Physical Security, Personnel Security / HR
COO
CRO & Risk Managers
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Risk-Based Performance Management (RBPM) puts it all together
Performance Management
Risk Management
Strategy Management
Appetite
What are we trying to achieve?
Are we on track?
What is our Risk Appetite?
Are we operating within appetite?
Governance & Communications
Culture
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The Risk-Based Performance Management methodology
1. Set Strategy
2. Manage Performance
3. Manage Risk
5.Governance
6.Communications
7.Culture
Shareholder Value Compliance ProfitSustainability Image
4. Appetite AlignmentAppetite Appetite
Business Drivers Our People Exploitable Reserves
Our Environment Our Operation Our Economic
Profit
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The Risk-Based Performance Management change process
Define Strategic
Goals
Define Strengths & Weaknesses
Define Business Drivers
Define the Strategy
Define Assets,
Systems & Processes
Define Initiatives
Define Operational
Risks
Define Operational
Controls
Define Indicators
Assess Risks & Controls
Monitor Appetite
Alignment
Define Strategic
Risks
Define Strategic Controls
Define the Business Model
Define Risk Appetite
Align Risk Appetite &
Strategy
Define Strategic
Objectives
Board Executive
Formulation Execution
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Summary & Conclusion Enhanced Information Exploitation offers huge opportunities – +27% operating
profit in Financial Services, £44bn across the FTSE 350
Failure to manage the risks to your information and information processes leads to poor decisions, operational downtime and will ultimately have significant financial and reputational impacts
The regulatory environment is changing – act now to future proof your organisation and move beyond compliance to information performance
Managing information risk can help manage conduct risk
To embrace the opportunity and manage the risks we need to enhance our: Processes, Systems, and People
An integrated strategy and risk approach would be beneficial in develop a robust framework and implementing change.
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Thank You for Listening! Future Events
Managing Information Risk in FS Workshop. More detail and practical tools and techniques for managing information and its risks
More detail on the threat and additional case studies Detailed discussion on the Information Lifecycle Methods and approaches to identifying information assets and value The use of value profiles to monitor and report on both value and risks / losses Practical hands-on sessions
Date: 16th April Time: 09:00 – 17:00 Location: London Cost: £500 per delegate
Future webinars and workshops Risk Based Performance Management Driving Value from Conduct Risk Integrating Balanced Scorecard and Risk Management Building better indicators
If you want to talk further please get in touch
Colin Lobley | Tel: +44 (0)77 9519 6283 | E: [email protected]
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QUESTIONSColin Lobley | Tel: +44 (0)77 9519 6283 | E: [email protected]