In the days since that conversation I’ve put some thought into the frameworks because in the end the aforementioned CISO was committed to finding the NIST experience and eventually did.  But what did that really mean?  Having fairly recently had the occasion to have both NIST 800-53 and the ISO 27000 documents  in front of me it was striking how similar they both were with only a few obvious distinctions to be made between the two.  Essentially the differences reflected more on the cultures that created them than the risk factors they were focused on (NIST = U.S.A and ISO = European).  But information technology architectures fundamentally are identical the world over so despite formatting and spelling they both are addressing the same challenges whether or not they realise it. And for those of us who have familiarity with both, to know one is to know both, even if those who are committed to either one disagree.  If you’ve worked on audit/assessment projects leveraging ISO 2700o material you’re immediately qualified to work on projects using the corresponding NIST framework and vice versa.   And if you have experience working with PCI standards guess what?  You can pretty much step in and work with either NIST or ISO content (except of course you have to expand your sights to include the entire infrastructure, not just on whatever touches PAN data).

My preference is that we would consolidate globally into the ISO frameworks where applicable and maybe even fit that in to the SSAE 16 process.  I’ve read enough toothless SAS 70/SSAE 16 reports to know that it’s easy enough to rig the system to your advantage.  And unless you’re a government agency that has to comply with NIST there’s little meaningful value to using NIST whereas being ISO 27000 certified carries a great deal of weight within the audit/assurance community.  Plus there’s the added benefit of having InfoSec practitioners all getting trained and practiced at both building out ISO 27000 compliant solutions and also knowing how to test the related controls.  Think about that, a single global security standard regardless of where you enter into the profession.  Having run a few practices in my career and way more than my fair share of engagements I can tell you that has great appeal.  Plus it would help eliminate awkward dialogues where my sixteen years of real and relevant experience is at least partially marginalized because it hasn’t all been with one particular standard.

Ultimately in the end a frameworks only meaningful advantage is that it theoretically ensures consistency in how controls are identified and assessed.  If you have someone who knows a framework but doesn’t really understand the details within that sort of defeats the process anyway, no matter how robust or thorough it may be.  Perhaps that’s why I consider it a non-issue when it comes to which frameworks a practitioner has used.  I’d much rather work with someone who understands the technology and has a good feel for the details rather than someone who knows that SDLC is addressed in SA-3 for NIST or Section 12.5 for ISO 27002.  But than again, I’ve always been more concerned with real risk, not perceived risk so this shouldn’t be surprising to anyone who’s read my content in the past.

A security framework by any other name would be just as comprehensive, you know what I mean?

Truth be told, while I’ve spent somewhere near seventy-five percent of my time over the past ten years working for financial institutions I’ve also done a fair amount of work for insurance companies, mostly centered on SOX with occasional diversions into general risk assessment work.  The drivers in the insurance industry are different in terms of oversight and requirements and so the volume of work isn’t nearly the same.  But that by itself begs a question: Why isn’t the insurance industry as regulated as financial institutions?

I’ve now done major audit and assurance work for financial institutions, insurance companies and health care providers and for most of them the risk profile is almost identical in terms of non-public personal information.  So why isn’t the level of scrutiny equal across all three of them?  While some might start spouting about how it is, about how states routinely audit insurance companies and how the health care industry has to comply with HIPAA the truth is that banks and credit unions are held to a much higher degree of accountability than any other vertical.  Why is that?

I’m fond of routinely, almost incessantly beating the drum about how it’s all about the risk.  I get my initial client opportunities because I have a deep resume with relevant experience but I generate repeat business because I tend to whittle things down to what matters most both to my clients and to their oversight providers (auditors and examiners alike).  Compliance exists because risks need to be addressed – if the risks aren’t credible or likely the work should be adjusted to reflect that.  But where the risks are real they’re really real.  The type  of data shared with an insurance company is in many ways even more sensitive than anything shared with a bank and most of what’s shared with insurance companies is also shared with health care providers.  Yet there’s no true Federal oversight for the insurance industry and HIPAA is about as much of a toothless tiger as anything I’ve ever encountered.

I recently completed a boatload of documentation to get my family on a new health insurance plan.  I turned over every piece of sensitive information I have for every member of my family minus my bank account information because that’s what was required.  I had to provide all of this online and follow that up by sending them an impressive array of hard-copy documents with even more sensitive information that should never be kicking around in the public domain.   In the past I’ve also been required to provide my bank account information because one plan in particular would only provide coverage if they could automatically deduct monthly premiums via ACH drafts.  So now the insurance industry has access to it all; name, address, social security number, date-of-birth, maiden name, medical history and banking information.  And yet there’s no true oversight agency that’s responsible for making sure they’re protecting all of MY information.

To compound my frustration, of the four insurance companies I’ve conducted work for since 2006 (two of which are Fortune 5oo’s) exactly none of them have something akin to a Chief Information Security Officer.  They all have risk people focused on the business side of things (because that’s necessary to protect profitability) but that’s it.  There’s typically an information security manager who’s part of the infrastructure team but who almost never reports right into the senior-most technology person (e.g. CIO, CTO).  Any audit work that occurs is coordinated across multiple IT managers and on rare occasions there will be an audit/assurance manager.  However in the one example I personally know of where that position exists the person in the role was really just a converted IT manager who obtained a CISA designation – no fundamental audit or assessment experience.

The question has to be asked:  Why is it that banks and credit unions are heavily regulated regarding protection of non-public personal information but other industries with similar risk profiles are  not?  Why aren’t insurance companies required to comply with FFIEC-type guidance?  Why isn’t there a Federal regulatory agency that is responsible for keeping an eye on the insurance industry the way the FDIC, OCC, FRB and NCUA do so for their financial institutions?  And trust me, whatever oversight exists for the insurance and health care industry is largely ineffective.   Why is my sensitive information considered more at risk within a banking infrastructure than it is within an insurance infrastructure?  Having been on site for both and examined their internal controls  I can’t answer that question, that’s for certain.

Which is why I don’t much care for any manner of compliance-based assessments that are self-administered.

Companies have had this crazy notion for more than a decade now that the best way to identify and address risks inherent within the infrastructure is to ask key stakeholders a somewhat generic set of questions and use their responses to figure out what’s what.  Most of the time the people driving these initiatives are either information security professionals or corporate compliance people who either believe they already know where the problems are or are looking for the simplest and easiest way to satisfy some requirement.  But what they often fail to grasp is that it’s almost impossible to draft a common set of questions that either apply to the vast majority or worse, will be interpreted consistently across the stakeholder population.  Plus the perceived benefit of using a self-assessment approach to reduce effort and required support resources is almost always an illusion.  Most of the time saved in not having someone ask the questions and record the answers is instead consumed by needing to explain the format, explain the questions or trying to clarify and clean up the responses.  While supporting one such program recently each assessment required a kick-off meeting, a follow-up meeting to review the status of the assessment, a third meeting to review the initial draft of the questionnaire, a fourth meeting to review the resulting report(s) and a largely untracked number of hours to help generate all of the related support documentation.  Regardless of the size of the entity being assessed each one consumed somewhere close to eight hours.  While that might seem like a scary large number, the really scary part was that based on which risk analyst was responsible for the assessment and the personality/mindset of the stakeholder completing it the results looked very different from one another.  It was almost impossible to generate meaningful metrics across the assessment population because a “Yes” answer for one question might mean the same as an “N/A” in another; there was no way to know that.

Another issue I’ve always had with the self-assessment approach is that while some stakeholders take it seriously and do a remarkably thorough job, others race through it with little hesitation just to fill in the blanks and get it off their desk.  Sometimes you can detect which is which, sometimes you can’t.  Plus the approach fails to capture much of the rich and relevant information related to each question and the underlying risk behind it.  I recall conducting a team-driven risk assessment years ago where one stakeholder after the next covering a very broad sampling of the infrastructure kept lamenting on the lack of a proper disaster recovery plan.  They had something to show auditors/examiners but to a person no one believed it was a truly viable plan.  All but the CIO brought it up as a concern and when pressed a bit about why that was they all shared a common concern: If their main office was closed unexpectedly for twenty-four hours, regardless of the reason, they were likely out of business.  A related self-assessment question would ask “Do you have a current and recently tested DR plan?” – most respondents on that engagement would simply have selected “Yes” and moved on to the next question without ever being challenged to share their concerns.  Where’s the value in having a repository of questions and answers when it fails to capture the true essence or dimension of risk? 

And the biggest issue I’ve always had with self-assessment questionnaires and their related templates is that they’re so often poorly designed.  I can guarantee you that each of them has at least one question which makes zero sense to anyone who reads it.  They either answer it based on what they think it’s asking, answer with an “N/A” or require follow-up with the people managing the process to have it explained.  And you’d be amazed how many times even the author is challenged to provide a meaningful answer (including this guy).  One thing’s for certain, a self-anything needs to be designed and written so that everyone understands what they need to do without having their hand held.  Plus it’s rare that questionnaires are customized so that each stakeholder is only asked those questions that truly make sense.  An application owner should never be asked if their anti-virus solution is current and up-to-date.  A business process owner should never be asked about software change management.  Yet seldom have I encountered a self-assessment process which does anything like this and so the audience is burdened with time consuming yet unnecessary questions.

Really though in the end my overriding problem with the self-assessment approach is that it fails to capture the expertise and guiding hand of true risk and assurance people.  The process is often supported by analysts who don’t really have a feel for conducting assessments and are satisfied that all of the blanks are filled in.  I have a nose for when there’s something beyond a simple answer and know when to scratch at the surface to bring it to light.  By not allowing expert hands to guide the process potentially huge amounts of valuable and possibly critical details are being missed thus undermining any perceived value of the process.  When you consider that all tolled and tallied the self-assessment approach versus the guided assessment approach doesn’t really save you much time (if any) and that it results in a weaker finished product, why would you elect to use it?   One answer is that regulators push for it because perhaps it’s better than nothing (I can’t get any of those I know to comment).  Another is that the people sponsoring these initiatives lack the fundamental comprehension to understand their options and chose what they perceive as the less complicated approach (again, I don’t know for sure it’s just a theory).  What I do know is that when done right a risk assessment is managements best friend, a fundamental belief behind the recent spike in ERM activity.

While recently having my car serviced the mechanic discovered a nest of some sort in the engine block, he thinks it was probably squirrels.  Because of this discovery he went searching for all the wired connections to make sure they weren’t chewed up and destroyed, quite a few were as it turns out (the car had been idle for several months).  The bill only added the cost of the replacement wires but nothing significant for the time it took to first find which were affected and then replace them.  Had I attempted the repair myself I might have noticed the nest and likely would’ve cleared it but know for certain I never would’ve thought to check the wires, where to look for them or what to look for.  I was smart enough to rely on a professional with a nose for that sort of thing and it saved me time, money and best of all the aggravation of having the car break down somewhere unexpectedly.  Good thing I didn’t go the self-repair route.

Things are looking up a bit because I have a new favorite regulatory agency to follow, the Consumer Financial Protection Bureau (CFPB).  And here’s why:  They focus on things that impact my day-to-day life (and yours as well).

I started tracking what the CFPB was doing about five months ago by accident.  Someone I know who used to be an examiner for the FRB switched over to the newer agency right at its infancy and I noticed this courtesy of a LinkedIn update.  Because I consider the Fed to be the Big Kahuna of the regulatory agencies I was surprised (you don’t leave the Yankees to sign with an expansion team unless you have to, or so I thought).  Compelled a bit by the update I started poking around the CFPB website.  For the first few months of this year it seemed to have potential but was little more than brochure-ware.  But last month that all changed.

The first CFPB update that caught my attention was labeled 12 CFR Part 1070 and it was all about the protection of consumer data, only with a slight twist.  Basically it was all about how any information they received as part of their field work would be protected exactly the same way that any third party vendor would be required to.  Despite their being a Federal agency they weren’t going to hide behind that as a means to simplify their lives.  They spearheaded an update to the underlying regulation that frames their charter so that consumers and their institutions can be assured that all PII and NPPI would be protected.  For me it was a rare win-win topic; protection of PII and NPPI combined with a reference to vendor management (these are a few of my favorite things).  And really for me it was that much more significant because I’ve known of a few situations where representatives of Federal and State regulatory agencies were responsible for the outright loss of confidential and/or restricted data.  Beyond a slap on the wrist there wasn’t much else done to the offending examiner or their agency.  And the affected institution couldn’t really complain too loudly because it’s always a bad idea to challenge your regulators, even when you’re in the right.  So I thought this was all at once a compelling and remarkably sensible update by a regulator, not something I’d expect to see.  That was the first points on the board for the CFPB.

The second set of points were scored almost on the same day.  I wanted to check one of the details related to the aforementioned update and noticed this one “Consumer Financial Protection Bureau report finds confusion in reverse mortgage market“.  Because I have a parent who is a senior citizen and who I think might one day soon be open to at least exploring a reverse mortgage I read with great interest.  The report was in plain English, was oriented in such a way that I could share it with my family and have them understand the issues and concerns detailed within and most importantly it made sense.  Reverse mortgages are growing in popularity and its main audience is the senior citizens segment of society.  Seniors tend to be  more easily misled, they’re under greater pressures to find new money sources (courtesy of our recession) at a time in their lives where going back to work is often not an option.  And because a parent would do almost anything rather than turn to their children for financial assistance they see a reverse mortgage as a way out of their predicament.  So for me having this content available was quite the relief.  I can caution and advise all day and night but the risks presented by a reverse mortgage are much more credible coming from an authorized source.  And so I celebrated July 4th this year by declaring the CFPB my new FDIC (the Sheila Bair inspired version, not the current blah one).

Here’s my really bizarro advice to any of you with even the slightest interest in regulatory oversight; if you haven’t already done so visit www.cfpb.gov and take a look around.  It’s oriented towards lay people, not just lawyers and regulators (and practitioners like me) and addresses topics and concerns that affect the majority of our population.  Basically it’s what I would expect from a regulator that still has that new agency smell but nothing like I’ve come to know from those that preceded it.  To those who have had a hand in defining its charter and organizing its content, great job!   Now repay my kind words by going out and getting me some juicy enforcement stories to write about.

Of course the truth is much more complicated.  I don’t just focus on computers, my scope expands to include anything that involves sensitive information.  While that always includes a variety of devices it also includes paper-based and people processes as well.  I frequently share stories about the enormous amount of printed content that’s to be found throughout an institutions physical locations.  I occasionally tell stories about how careless people can be when on the phone or in conversation and sharing all manner of sensitive information.  It’s never just about computers, it is however always about information and how it needs to be protected.

Truthfully though what I really do is search for controls that protect information, identify those that I find and try and measure their effectiveness and more importantly identify where controls are missing and work with my clients to remedy that.  At the heart of the regulatory requirements I focus on it’s all about the risk introduced by the presence of information, from personally identifiable (PII) to non-public personally identifiable (NPPI).  Risk: It’s what drives every single project I work on, it’s what drives every product and process I help develop.  And really, if you take the time to read through the literature, it’s what’s behind just about every piece of regulation known to the banking world.  Risk, risk, risk and risk.

One of the reasons I’ve enjoyed spending so much time working with the community banking and credit union sector over the past few years is that it’s a simple enough argument to make with fewer people to convince; everything you do to comply with the regulations should be risk-based.  It doesn’t really make a difference if it’s complicated to do or time consuming, you prioritize based on where they are found and make decisions accordingly.  But that gets much more difficult to do as the institutions grow in size and complexity.  Over the fifteen years I’ve been building and supporting compliance initiatives I’ve worked with Fortune 50′s, 100′s and 500′s and a whole lot of financial institutions that merely read Fortune magazine.  But while their overall size varies widely risk is still risk and that never changes.

I wish more practitioners embraced this simple concept.  While some do, many still don’t.  There’s often a rush to come up with a standard set of decision criteria to drive the work based on factors not necessarily aligned with risk factors.   Those who have worked with or for me will tell you that when presented with questions about which vendors or applications to assess or what to look for when conducting any type of assessment my first line of logic is to try and figure out where the greatest possible exposures to be found.   Assessing a low risk application yields little value  no matter how complete it may be.  And reviewing a vendor where the dollar spend is high but the risk factors are low does little to protect the institution.

Beware the practitioner who wields a hammer for they only know to look for nails.

Your regulator doesn’t want you to blindly implement compliance programs, they want you to identify and manage risks, real risks.  They want to be able to understand the logic and approach being used and find credible evidence that you’re focusing your efforts on the right things.   Go back and read through the library of FFIEC documentation and pay close attention to the hooks inserted throughout where they talk about conducting assessments and talk about using approaches which are appropriate for the size and complexity of your institution.  Then scan through your related program inventory and figure out if you’ve designed things accordingly.  Are they actually protecting your institution from credible threats and risks or are they just filling binders on your compliance officers shelves?

For me, professionally I’d prefer to always only do meaningful work and in the audit and assurance world meaningful is code for risk-based.

That first experience has arguably tainted my opinion of the role played by internal audit for nearly twenty years.  Subsequent to that first encounter I’ve been audited a few more times, assisted clients in preparing for internal audits many times and have had hundreds of interactions either directly or indirectly with a variety of companies internal audit function.  And despite all of this experience and having eventually become an auditor myself I’m not sure I could present a credible argument as to where there’s real value being generated by the process beyond maintaining appearances.

The first problem is that for most companies there’s an unhealthy fear of auditors.  There’s often real concern that if any major issues are uncovered someone’s head will roll.  At the aforementioned Fortune 100 company, it was widely believed that if your group was found to have a material finding (or anything remotely resembling one) the highest ranking person in the group was doomed.  To their credit the company also had a mechanism in place so that if you figured out that you had a problem before anyone else and self-reported it you were allowed appropriate time to remediate.  But that wasn’t always effective enough because most application and business managers weren’t auditors and couldn’t always recognize when a control was either missing or failing and so there was still an enormous amount of work and panic leading up to a scheduled audit.  I remember thinking that the company should remove the threat of termination and encourage both auditor and auditee to work openly and honestly together so that in the end issues were surfaced, defined and repaired.  In the two decades since I’ve worked with and for a few companies who believed they had this healthier sort of dynamic in place between their internal audit department and its business and technology functions but really in the end it’s almost always the same problem.  Internal audit is viewed as an unforgiving and punishing agent and no one ever want them snooping around.

The second problem is that there’s a degree of incompetence found within many internal audit functions.  While conducting my first technical audit back in 1997 (my company was managing an outsourced audit plan) I identified a significant issue with the methodology used to make production changes in a certain database environment.  It resulted in there being virtually no clear or simple way for the DBA to back out a change if it didn’t work.  If a change failed it would require bringing down production for several hours in order to restore things to the previous state.  The first person who challenged my finding was the internal auditor who had audited the same platform for years and didn’t either understand or agree with the finding.  It took me nearly an hour to first educate him as to why the technical issue existed, prove that it did and finally to agree with the associated risks.  He had worked there for years, had never had the chance to see how other companies managed similar infrastructures and was way more concerned with his authority and capabilities being challenged than with the fact that his company had a significant risk to be repaired.  In the time since I’ve met many more people just like that one, auditors who stay at one company for years, fall into bad habits and fail to keep their skills relevant.  They wind up relying too much on the Internet to try and update their knowledge base, don’t have the perspective of understanding how other companies are managing similar challenges and are happy enough to bring out the same whipping stick and a feeling of empowerment to scare the daylights out of internal control owners while conducting their audits.  It results in poorly formed and often irrelevant findings that waste everyone’s time.  I wish I had a ten dollar bill for every instance I knew of where something was being fixed because it was easier to appease the auditor than it was to convince them their finding was flawed or even wrong.

Now I’m not saying all internal auditors are incompetent, they’re not.  I’ve met some brilliant and extremely effective internal auditors along the way.  And in those environments audits weren’t feared because there was a high degree of confidence that if an issue was identified it was something worth knowing about.  But in almost all of those cases the auditors involved had only been with their company for a few years, not decades.

The third problem is that audit needs to be seen as adding value, not creating unnecessary delays or work.  Practically speaking internal audit is playing for the same team as the control owners whose processes they assess.  Their primary goal shouldn’t be to notch as many findings as possible on the board but rather to identify weaknesses and deficiencies so that they can be remediated and help further harden the infrastructure and reduce risks.  I understand the need for the function to maintain independence and separation but only so they can remain objective not so they can operate as if though they’re the ultimate authority on right and wrong and beyond reproach.  If they’re invited to participate early in a project and find issues they should issue interim findings so that small problems don’t become bigger problems further on down the project road.  If you wait for the post-implementation audit to document early stage issues you’re not really helping anyone.  If they abuse being granted access to meetings and documentation long before the audit function is typically engaged the only predictable outcome is that access will be denied until someone forces the issue.  And one more major issue I routinely find with internal audit is that no matter how strong or weak a finding may be, no matter how poorly or strongly worded, no matter how relevant or irrelevant they all too often defend it as if though it’s gospel that’s beyond reproach.  Why is that?  Why can’t the control owner question the finding, demand clarity or try to frame it’s relevancy?  All auditors should feel an obligation to issue a final report which resonates with everyone involved as being accurate and hopefully fair.

Until internal audit is seen as part of the solution, not part of the problem it’s going to remain, well, a problem.  Until control owners gain a sense that by developing a healthy dialogue with their auditors it will only help things and not hurt them it will continue to be a problem.  And until all involved parties working for the company feel as if though they’re working towards a common goal it will remain a problem.

Now we have GRC software solutions that oddly enough promise to automate GRC-related tasks.

The first problem with any such assertion is that GRC is too broad a spectrum of activities and disciplines – most solutions are focused on addressing subsets therein.  On one end you have the security-centric solutions, on the other end you have the risk-centric platforms and somewhere in the middle is a crowd of offerings that try and touch on everything but none particularly deeply.  So the first thing a stakeholder needs to understand is what they’re looking to accomplish before they set out to select a product.  You can select ten different GRC vendors and discover ten different interpretations of the discipline.  And within those ten solutions there are vastly different approaches.  Some are similar to ERP packages where their approach is somewhat hard-coded and you have to do things their way (or spend big bucks to customize).  Some are remarkably configurable and can be made to fit your processes like a glove (but that requires a steep learning curve and expanded time frames).

The second problem is that because most vendors selling to the GRC market tend to use common terms their internal definitions can be quite different.  Some solutions pitch risk assessments which are little more than questionnaires (e.g. very little to no risk-related elements such as inherent and residual risk) whereas others provide questionnaires that are absolutely risk assessments but only appear as such upon inspection.  If you’re looking for a true risk-oriented solution you might go with the former when it’s the latter you truly need.  But the terminology is so similar it’s hard to differentiate and the only way you’ll get to realizing that is after you take the software out for a test drive, not something every vendor is willing to provide (and I’m not talking about a two hour demo, I’m talking about a true trial period).  You think you’re comparing apples to apples and it may turn out that you were comparing apples to car batteries without knowing it.

The third problem is that after a while it’s easy to become snow-blind during the selection and evaluation process.  Because of the common language, because of apparently similar functionality you start looking for factors unrelated to what you really need to focus on as a way to separate out the solutions from one another.  You’ll consider solutions as prequalified because a competitor is using it thinking that their needs are similar to yours.  But they may be focused on information security activities where your institution is looking for automated risk assessment capabilities.  You’ll start shopping on price and contract terms thinking that competing solutions are so similar it really comes down to who offers the best deal.  But software vendors usually know their market and the correct price points based on what their solutions offer – if two or more products appear evenly matched on functionality but one is much cheaper there’s usually a reason.  The more expensive solution may come pre-loaded with all the related content you’ll need to effectively use it whereas the cheaper solution might require you to obtain your own licenses.  It’s not intentionally misleading but that’s a detail easy to overlook during the vetting process.

GRC is an awesome concept working towards one day becoming an awesome discipline but it’s not quite there just yet (a point I routinely beat to death, I know).  It’s spread out too far and wide and depending on who you’re talking to about it can get widely (if not wildly) varying definitions of what it is.  So it’s no wonder that trying to find an automated GRC solution is equally challenging, the vendors are trying hard to figure out what nail to hammer as well.   They all do some things remarkably well but at the expense of doing some things either partially or not at all.  Thus the reason that it’s not uncommon in larger companies to find multiple GRC solutions installed; different business functions have unique needs and they purchase whichever is closest to meeting those needs.  It’s an expensive approach but for the foreseeable future an necessary evil.

I think we’re getting closer to a point in time where a common dialogue will be accepted by the audit and compliance community.  The OCEG folks have poured the foundation and it just needs a little more time to harden in terms of broad acceptance.  When I see their content displayed prominently next to all the COBIT binders at my clients I’ll know that time has come.  I predicted in 2007 that once we’re in the midst of a full-blown economic recovery GRC will quickly rise in prominence due to increasing regulatory pressures, almost identical to the way COBIT soared into the forefront of the industry fueled by SOX.  I see no reason to alter that prediction, I’m just not sure when the recovery will officially begin.

In the meantime keep participating in the dialogue, keep trying to define what GRC means to you and to your organization and every now and again share those ideas with some of the decision makers who are shaping the discipline, they need to hear from everyone as they mature the thing.  As long as we in the audit and compliance domain keep moving things forward we’ll get GRC to where we need it to be, I’m certain of it.

But these past four years has allowed me more than ample opportunity to rectify that heretofore unknown blind-spot in my career.  We don’t just sell a solution, we support it and that involves the establishment and maintenance of what can most aptly be classified as a relationship.  While we have a large number of clients we seldom hear from there are some who call us all of the time.  Often it’s to ask about how best to exploit functionality, sometimes it’s because they forgot how to do something (and we advocate calling to ask rather than reading through the user guides) and on more than one occasion it’s because they have an exam looming large on the horizon and they still haven’t quite finished setting everything up.  It’s the latter that has proven to be a revelation.

The entire reason for purchasing a solution is so that you don’t have to first figure out what needs to be done.  If the solution is designed right there should be a series of relatively basic steps that are clearly outlined and once followed have you up and running.  Instead of wasting precious time and effort getting started you can pretty much start focusing on conducting the related work so that everything is kept current.  That’s not to say that it’s easy, only simple.  And because most compliance-based work is spread out over the course of a full year it should never require herculean efforts to maintain.  Our vendor management solution pretty much requires a few hours of setup time then roughly a few hours per week going forward on average.  And when properly supported it works, it actually works the way it’s intended to.

But here’s the problem: Developing or purchasing the right solution to comply with any regulation or mandate is just the very first part of what’s necessary.  You actually have to properly implement and use that solution.  All too often that part is missed.

It’s not just with my current collection of clients but also with those that I’ve provided consultative support to over the years.  I have one client who has somewhere close to $2M in purchased software sitting locked in a file cabinet having never been implemented due to shifting prioritization by management.  Shocking?  Yes but also frustrating because some of the very problems that software was intended to address still existed.  I have another client I conducted a risk assessment for that had multiple solutions that were near identical to each other but were subsequently replaced by something different because as management changed they wanted only those solutions they already knew.  The result was hundreds of thousands of dollars per year being spent on maintenance costs because they needed to keep the data contained in each solution and there was no straight-forward way of extracting from one and merging with another.

Whatever solution you decide to go with from a simple spreadsheet all the way through to a seven-figure software package it makes little difference if nothing happens beyond setting it up.  Our advice to clients is that when they purchase one of our solutions they can often get a one-year pass with their examiners as long as they can actually display the solution and provide a real and credible plan on how they’re going to be using it.  Typically the examiner will give you points for taking a step in the right direction and will allow you the additional time necessary to get it up and running.  But that’s Year One – Year Two you’d better be able to show progress.

It’s why when I’m engaged with any implementation be it one of our own solutions or when I’m serving in a pure consulting role I often caution that it’s a good first step but only the first of many needed to be successful.  Everyone gets sort of caught up in the potential of the project and starts seeing their better selves once it’s fully implemented.  But I’ve witnessed too many projects where after the initial success fades and resources start getting pulled onto newer initiatives momentum is lost and progress stalls.  I was on one business continuity project where they all but had the plan updated to address an examination finding.  I left right before they submitted the BCP for Board of Director approval and found out a year later that although that part had been properly completed they never actually deployed the plan.  Someone in senior management felt that the plan itself would satisfy the examiners and because of resource constraints decided to delay the implementation and training necessary.  Management gambled and they were tattooed by their examiner the following year.  How frustrating is it to know that the hardest part of the project was already done but not enough so to make the finding go away?  It happens all the time.

I understand the pressures in play for most institutions, honestly I do.  Too few resources, too little time and trying to figure out the right balance between running a business and meeting regulatory requirements.  But that doesn’t explain why you’d implement a solution but not maintain it.  And does it ever make business sense to invest in anything but not leverage the benefits associated with that investment?  Besides, who want to be the one standing in front of the CEO explaining that while it’s true that the money was spent to solve the problem the problem still exists?

Seriously, go the distance, finish what was started and then put someone in charge of keeping the thing current.  In the end you’re going to have to anyway so why wait?  Oh, and before you run out and purchase a brand new solution check the file cabinets and make certain you don’t already own one.

This was someone who for all intents and purposes had nothing to gain from doing something so blatantly stupid.  As an auditor he was likely aware of the logging capabilities available on the host (mainframe system).  He also had direct knowledge of the audit culture and the degree of scrutiny they placed on certain internal artifacts and/or repositories.  But in the end his basic human nature created an override allowing him to indulge his curiosity.  For me that meant that you could never assume that any manner of stored information was ever truly safe and secure

Thus began my basic mistrust of storing sensitive information in electronic repositories.

With that in mind imagine my horror as technology began a rapid progression away from centralized storage and started spreading out first within the infrastructure to distributed applications and eventually breaching the walls of the data center and finding new homes elsewhere in other companies  so-called data centers.   Beyond the fact that you don’t truly know how secure your data ever truly is (notwithstanding reports and attestations to the contrary), it now also has to traverse communication lines that despite what you may want to believe are vulnerable in a number of very real ways.  And we’re not just talking business data, we’re talking social security numbers, bank account numbers, credit card numbers and, and, and……

I simply don’t trust that any sensitive data is ever truly protected anymore.  I operate under the assumption that there are two common states with regards to data security, known breaches and those yet to be discovered.  When I’m challenged with the logic that we’re always told about confirmed breaches eventually and so we know exactly how much has been exposed I laugh.  All that means is that the hackers and criminal element slipped up along the way; a confirmed breach indicates someone made a mistake.  I truly believe that a successful breach is never detected, that the perpetrators behind it figure out the proper balance between skimming data and moving it around for illicit gains so that it never hits the radar.

And I think the threat comes from all over the map.  I think it’s often internal, someone on the inside behind the firewall and locked doors or someone with legitimate access to databases.  I think it’s sometimes along the way between a transmissions point of origin and its destination.  And I think it’s often at points of exposure along the way.  I just don’t believe that there aren’t rogue employees at offsite storage facilities that know how to rig the system and grab media with all manner of PII and NPPI with no one ever the wiser.  I reject the notion that it’s impossible for employees of the popular SaaS companies to gain undetected access to a wide variety of information typically considered private and secured.  I think this happens regularly (if not often) and that as long as we remain blissfully ignorant this will continue to happen indefinitely.

I use only one rule when it comes to how best to protect sensitive data: if the human element is involved in any way your data is at risk.

And if you’re not truly yet at risk, if there’s been no concerning or inappropriate attempts to access your choice data that’s either because they haven’t gotten to you yet on their to-do list or your choice data isn’t as choice as you might think.

If I had it my way everything would be moved back to Big Iron in an internal data center and I’d go hog-wild slapping every conceivable monitoring tool and detection devices wherever possible.  Short of that I’d select solutions that could only be run behind my firewall and on telecom pipes that I directly controlled to further minimize my exposure.  Oh and I’d probably fire anyone who ever even mentioned migrating to the cloud just to set an example.

Does anyone know why vendor management is such a big issue for banking regulators?  I mean, I’ve long advocated that most of what GLBA covers makes sense and should be part of a healthy business strategy anyway.  But when working with clients I’m often surprised to discover that they just see it as another something they have to do and don’t fully appreciate why that is.  So does anyone know?

One of the basic tenets of GLBA, perhaps the MOST basic goal is to protect customers sensitive data.  Sure you can make the argument that it has hooks into disaster recovery and business continuity planning, both also covered by regulatory requirements.  And you can also claim it has to do with service level agreements and gauging the vendors performance.  But really in the end the primary driver behind why your regulator wants you to do a better job of managing your vendors is to make sure they’re protecting your customers where applicable.  Think about it, it’s so simple it’s almost too simple.

Which is why I’m always amazed how so many institutions fail to not only figure out what they need to do but also never really seem to get where they need to be.  It so often becomes about the document collecting game; do they have a SAS 70?  Do they have an Information Security Program?  Who cares?  That’s not what vendor management is intended to address.  What you’re really supposed to do is step back and assess the nature of the relationship, the types of products and/or services the vendor provides and try and identify where threats to your customers sensitive information may exist.  Vendor management is seldom a thinking exercise but rather an attempt to standardize on what artifacts are required in order to prove compliance with the program.  It blows me away how this important activity gets boiled down to something little better than a baseball card collection.

I offer for example my favorite blind spot in every vendor management program I’ve ever conducted a first ti me review of.  Where’s the information for the vendor who cleans the facilities? It’s almost always contracted out and the vendor who owns the contract is responsible for staffing the work.  Where’s proof that they properly screen the people they’re sending into your allegedly secure facilities to make sure they’re not convicted felons?  Where’s proof that they properly police their crews to make sure they’re not behaving in a reckless manner and perhaps letting their friends and family into your secured facilities to drop off dinner or stop by and say “hello”?  When I challenge the clients on this relationship they look at me like I’m nuts.  Almost all of them fail to even include that particular vendor (and those who do tend to include every single vendor they’ve ever done any business with – another big issue).  But all you’ll ever need to do in order to see why this is a potentially huge threat is to walk around the office after hours and see what’s been left out on desks, in printer and fax queues and examine what sort of documentation has been tossed in with the regular trash.

And because vendor management is never truly approached from the right angle it fails to address the very spirit of the exercise and why the three senators who authored GLBA wanted you to pay more attention to it.  But it really reveals a fundamentally bigger issue with most of the compliance domain – no one really approaches most of the work with a true risk oriented perspective.  Compliance isn’t simply about creating checklists and ticking off all the to-do’s – it’s about really trying to identify relevant risks and make sure your institution has controls in place to manage them properly.  And I know for those of you who read my blog with any regularity you’re thinking I’ve written about this before.   That’s true, I bring this up every chance I get because it’s still a huge issue and those of us who have any practitioners attention need to constantly bang on this particular drum.

This is one of the reasons why whenever I’m given a chance to discuss how any of my clients approaches vendor management I try never to tell them what they need to do but rather try and instead have a conversation about what they think they should be doing.  The back-and-forth often helps them expand on their thinking and come up with better, more effective ways in which they can properly categorize and assess their business relationships.

Oh and as for my “Who cares” comment about collecting documentation, there’s a place for that to be sure.  But when you tell your examiner or auditor that you’re OK because the vendor provided a recent SAS 70 and can’t really discuss any of the details you’ve fallen way short of what you needed to do.  Waving documentation in my face never convinces me you’ve done your job and it absolutely never proves that your customers sensitive information is protected.  Remember, SAS 70′s (and now SSAE 16) are subjective and what each one covers can vary wildly from one to another.  And it absolutely does not prove that they’ve successfully addressed all the items in your checklist either.  One of my favorite cut-through-the-weeds tricks is to pick a single checklist item and ask the person waving the report to show me where that’s addressed in the report.  I’ve met a few who could do it and prove to me they’ve actually read the thing but most just start flipping through pages like a poorly prepared student during an open book exam.

Why is this so hard for so many to do a reasonable job on?