In light of the recent Epsilon data breach, it seems appropriate to chat briefly about the realities of balancing information risk. First and foremost, we need to make sure that we understand this thing called “risk.” In our context, risk is defined as “the probable frequency and probable magnitude of future loss” (based on Jack Jones’ FAIR definition). Put into practical terms, risk is the likelihood that we’ll experience a negative event. We then balance that out against the cost of defending against various scenarios (i.e., trying to reduce or transfer that risk), with the goal being to optimize cost vs. benefit. Let’s look at a couple practical examples.
My article, “Maddening Methods: Fundamentals of Risk Assessment and Analysis,” was published in the July 2010 edition of The ISSA Journal. It covers some of the key concerns around risk assessment today, including addressing common arguments posited against risk assessments and risk management. From the abstract: Considerable confusion exists in the security industry around the effectiveness of risk assessment and analysis methodologies. Points of contention often focus on specific attributes of a given method, such as data quality, statistical analysis, or a qualitative versus quantitative approach. There are reasonable, viable answers to these points of contention that resolve most of these concerns. I hope that you’ll find this piece informative and enjoyable.