Veterans Day 2014: Leading the Enterprise to Victory...

The 1% are soon to be recognized on Tuesday, November 11, Veterans Day.  CxO's across the country who have served in the military know all about "Operational Risk Management" (ORM). They understand that the safety and security of their personnel is paramount, if they are to achieve the mission assigned to them by the Board of Directors and the majority stakeholders.

It makes sense that if only 1% of the country serve in the military, and fewer make it to the rank of CxO in commercial industry, why ORM remains so esoteric.  Only an enlightened few truly understand the value of investing in continuous training, cultural and ethical development and the safety and security of not only employees, but also intellectual capital and information assets.

Indeed, this Veterans Day is a time to focus on our 1%.  Those who have served the United States of America in the Armed Forces.  At the top of each of these branches including the Army, Marine Corps, Navy, Air Force and Coast Guard are people that have seen, smelled, heard, felt and lived with the logic and the necessity for Operational Risk Management.  Why is the Navy leadership focused on ORM?

ORM is the guiding Navy instruction for implementing the ORM program. The naval vision is to develop an environment in which every individual (officer, enlisted and civilian) is trained and motivated to personally manage risk in everything they do on and off duty, both in peacetime and during conflict, thus enabling successful completion of all operations or activities with the minimum amount of risk. 

The most common idea of what ORM revolves around is a simple five-step process that is most frequently used in planning. These five steps are:

• Identify hazards

• Assess the hazards

• Make risk decisions

• Implement controls

• Supervise and watch for change

Another level of ORM is Time Critical Risk Management which involves a quick, committed-to-memory process and a set of skills that allow our people to manage risk when in the execution of a plan or event. The standard for the Navy is being developed, however it might be thought of in simple terms such as:

• What can go wrong or is changing

• How can I keep it from effecting the mission without hurting me

• Act to correct the situation

• Telling the right people if you are unable to take the right action

If you were retired from the Marine Corps and now the CxO of a Global 500 company, do you think that ORM would be a forgotten system?  Would you neglect to focus on this, if you were running FedEx?  Fred Smith is not a former pilot, but was vital as a "Forward Air Controller":

Frederick Wallace "Fred" Smith (born August 11, 1944), is the founder, chairman, president, and CEO of FedEx, originally known as Federal Express, the first overnight express delivery company in the world, and the largest in the world. The company is headquartered in Memphis, Tennessee. 

Smith was commissioned in the U.S. Marine Corps, serving for three years (from 1966 to 1969) as a platoon leader and a forward air controller (FAC), flying in the back seat of the OV-10. 

As a Marine, Smith had the opportunity to observe the military's logistics system first hand. He served two tours of duty in Vietnam, flying with pilots on over 200 combat missions. He was honorably discharged in 1969 with the rank of Captain, having received the Silver Star, the Bronze Star, and two Purple Hearts. While in the military, Smith carefully observed the procurement and delivery procedures, fine-tuning his dream for an overnight delivery service.[5] 

A primary function of a Forward Air Controller is ensuring the safety of friendly troops. Enemy targets in the Front line ("Forward Edge of the Battle Area" in US terminology) are often close to friendly forces and therefore friendly forces are at risk of friendly fire through proximity during air attack. The danger is twofold: the bombing pilot cannot identify the target clearly, and is not aware of the locations of friendly forces.

Fred Smith not only implemented the mindset of a "Forward Air Controller" running FedEx, he also has been able to build a culture focused on Operational Risk Management (ORM).

FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related business services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.

Now back to Veterans Day, November 11.  Are you starting to make the connection between the 1%, becoming a global CxO and the reason why ORM has such tremendous applications inside the global enterprise?

The opportunity now is for us to unleash our emerging and proactive "Vetrepreneurs," to take their years of knowledge and understanding of ORM and now apply it within the ranks of their new companies or new positions, just as Fred Smith has done at FedEx.  These veterans have the practical knowledge, skills and valuable use cases on how Operational Risk Management contributes to the overall mission.

If you are a 1% entrepreneur (Vetrepreneur) and have Co-founder or CxO as your title, then your proactive nature should allow you the opportunity to apply ORM within your organization.  Here are three places you can begin your program focus:

Inside:  Develop a culture of trust that begins by teaching employees how to find the truth.  A culture that promotes and teaches people how to apply the rules to the business that you are operating in.  A culture where no one can hide and that understanding our own vulnerabilities makes the overall organization more resilient each day.

Outside:  Architect the enterprise from the ground up to make more informed "Trust Decisions."  The architecture must first assemble and organize the rule-base and contextual framework associated with the environment that you will be operating in both physically and virtually.  The interdependencies of the automated machines developed to operate the enterprise, shall exist in a transparent and highly governed "system-of- systems". 

In-The-Middle:  Create new learning scenarios on a consistent but random basis.  Test the enterprise Inside and Outside with these exercise scenarios.  Determine how the humans and/or machines behave.  Establish what is normal and create your baseline. Continue to test and to measure the gaps of performance and make changes to improve the quality, accuracy or resiliency of the entire enterprise architecture.

On this Veterans Day 2014, scan the horizon for the organizations that stand out and are remarkable. With the 1% at the helm, in the cockpit or now the HQ Board Room, Operational Risk Management (ORM) is leading the enterprise to victory!

NewCo: Operational Risk Accelerators...

Operational Risk Management (ORM) is an essential component of any serious business.  These are the internal risks you take when you add people, processes and systems together and then operate in a specific industry or geography.  Innovation within the ranks of a new breed of business accelerator, has the opportunity to include "Operational Risk Strategy Execution" as a vital mechanism for the growth of the new born company.

Do you know about a start-up company that is building a product or solution to address one of these Operational Risk categories?  The following lists the official Basel II defined seven event types with some examples for each category:

1. Internal Fraud - misappropriation of assets, tax evasion, intentional mismarking of positions, bribery
2. External Fraud - theft of information, hacking damage, third-party theft and forgery
3. Employment Practices and Workplace Safety - discrimination, workers compensation, employee health and safety
4. Clients, Products, and Business Practice - market manipulation, antitrust, improper trade, product defects, fiduciary breaches, account churning
5. Damage to Physical Assets - natural disasters, terrorism, vandalism
6. Business Disruption and Systems Failures - utility disruptions, software failures, hardware failures
7. Execution, Delivery, and Process Management - data entry errors, accounting errors, failed mandatory reporting, negligent loss of client assets

The start-up phenomenon has taken many metro areas around the United States by surprise.  The typical centers of innovation in Seattle, San Francisco, Los Angeles, Austin, Boston and Washington, DC are now being joined by newcomers such as Cincinnati:

The entrepreneurial world is not an easy one to take on, but for those brave enough to do so, Cintrifuse is here to help. Located in the heart of downtown Cincinnati, Ohio, Cintrifuse acts as a connecter and supporter to create a global destination for entrepreneurial success. 

Cintrifuse connects the region’s high-potential, venture-backable startups to advice, talent, funding, and customers. With over 30 ecosystem partners, 30+ participating local corporations, 75+ mentors and advisors, Cintrifuse leverages the power of its network to serve over 100 startup members and improve their chances of success. 

To amplify the efforts and extend the reach of the entrepreneurial community, Cintrifuse operates a $56MM Fund of Funds, which invests in early-stage venture capital funds both regionally and nationally. The Fund of Funds provides an avenue for corporations and venture capitalists alike to gain further insights into and engagement with the Cincinnati startup community. 

Cintrifuse’s efforts are made possible through support from some of Cincinnati’s most prominent companies. 

To connect more than 100 startups with venture capital firms, corporations and service providers, Cintrifuse uses a proven membership model. Entrepreneurs gain access to like-minded, driven and engaged individuals, venture capitalists, business leaders and services providers are introduced to startups on the rise.  Grow your business with Cintrifuse by signing up for membership today.

As the focus on innovation continues and NewCo's are being formed across the country, these new entrepreneurs need a foundation in truly understanding "Operational Risk Management". Why?

If these new entrepreneurs are better able to understand the core reasons why a business must operate within a universe of Operational Risks, then their innovation may adapt.  The ideas they have for better managing cyber security, detecting the insider threat or automating the continuity of operations planning may change.

Building a new company with an innovative new product also means understanding the problem sets that a much larger enterprise is encountering on a daily basis.  Innovators today sometimes lose sight of the operational risks that can be addressed by their products, as they are installed and implemented into the larger enterprise.  The value proposition that addresses the decrease in loss events, will soon get the attention of senior management.

What can a business accelerator like "Cintrifuse" do to make sure that the 100+ new start-ups better understand Operational Risk Management?  Perhaps even more importantly, how can their hot new NewCo product fit into the ORM matrix for addressing Enterprise Risk at a Fortune 500 company?

To answer this, just look more deeply at the 75+ mentors and advisors that Cintrifuse has at their disposal.  Has Cintrifuse developed a diagnostic tool to better understand the subject matter expertise of each of those mentors?

• First,  create an inventory of the skill sets and knowledge of these mentors and develop a database for the start-up entrepreneurs, then they can query who is the best mentor for a specific subject or business problem they are encountering.
• Second, the mentors themselves would need an orientation on how to assist the start-ups in seeing the nexus with operational risk in their own business model.
• Third, the mentors would demonstrate how the innovations that the enterprise requires have a nexus with the start-ups products being developed for the mass market.

Remember, ORM is the oversight of operational risk, including the risk of loss resulting from inadequate or failed internal processes and systems; human factors; or external events.

When you scan the companies being accepted and graduated from all of the incubators and accelerators across the globe, many will have a product solution that impacts some facet of Operational Risk Management.  The mission now is to make sure that those new entrepreneurs discover how their inventions and patents may address real-world scenarios.  Just look at the current cohort companies at the MACH37 Accelerator in Herndon, Va as one example:

iAspire 
Eric Whittleton, Cofounder and CEO
Arash Nejadian, Cofounder and CTO 
iAspire is currently addressing the significant pent up demand for fully implemented email encryption in large enterprises by enabling end-to-end encryption that also addresses the need for real-time and in-volume secure email access for forensics, e-Discovery and compliance requirements. Aspire develops standards-based digital key management products that serve as material enablers of the “Trusted Web”. Future products will include additional store and forward applications such as a cloud-based Secure Drop-box as well as mobility solutions.

Virgil Security
Michael W. Wellman Cofounder and CEO
Dmitry Dain, Cofounder and CTO 
Virgil Security provides easy-to-deploy and easy-to-use cryptographic software and services for use by developers and end-users. Virgil Security’s encryption libraries and services, along with an accompanying public key management infrastructure, ease the pain of developing, deploying, and using strong cryptography. Virgil Security enables a new generation of enhanced privacy and security for applications, cloud services, and the Internet of Things.

FireDrillMe
Marcus Carey, Founder
FireDrillMe provides a SaaS platform that orchestrates cybersecurity “fire drills” on production networks by imitating attackers. FireDrillMe helps organizations train personnel, evaluate products, and refine procedures for incident response.

Syncurity Networks 
JP Bourget, Cofounder and CEO
Ray Davidson PhD, CoFounder
Mike Volo, CoFounder 
Syncurity Networks develops software for Information Security Process Management and Automation focused on Incident Response (IR) incorporating standard IR processes, automated artifact collection, and standardized report generation. Syncurity helps mid-size businesses respond to incidents faster, document lessons learned, and collect metrics for continuous improvement.

SecureDB
Karthik Bhat, Founder and CEO
SecureDB is an encrypted cloud database for storing sensitive customer information such as authentication credentials, PII, PHI and credit card numbers. SecureDB’s cloud based encrypted database and associated APIs will allow enterprises to secure their customer data by providing strong cryptographic protection against unauthorized access.

BiJoTi
Josh Marpet, Cofounder and CEO
Billy Boatright, Cofounder and CMO
Tim Krabec, Cofounder and CTO
Ben Huey, Cofounder and CRO
Compliance requirements are coming downhill to smaller companies, and the bad guys are going after data within companies of all sizes. BiJoTi's turnkey appliance packages the advanced compliance and security benefits that large enterprises enjoy from a dedicated security organization, but at a price that works for small and mid-market businesses.

Cyph
Ryan Lester, Cofounder and CEO
Josh Boehm, Cofounder and COO 
Cyph is a secure messaging app for Facebook users who aren't security experts, but demand a simple way to chat privately with their friends.

As Operational Risk Management is incorporated into the core capabilities of each new entrepreneurs business plan it will benefit their own launch and better serve their intended customers.

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."

1 WTC: Trust Decisions of Technology, Privacy and Rule of Law...

Technology, Privacy and the Rule of Law.  All three attributes for a robust Operational Risk Management (ORM) system.  The Operational Risk professionals in the critical infrastructure sectors that intersect with personal identifiable information (PII), are experts in the trio of changing technology, new laws and legal decisions while preserving the rights of privacy.  Financial services and Healthcare are currently under a significant barrage of attack.

All of these attributes are just small components of a much larger and more complex system.  The pursuit by all parties including consumers, technology innovators and those charged with our legal governance, is attaining a future state where the majority of humans will judge that system as trustworthy.

Trustworthiness begins with the basis by which you engage with a particular system.  Here is a fundamental example.  The trust that you put into the technology on your wrist or hold in your hand, requires you to take a leap of faith at first.  Can you believe that the chronometer on a MTM Patriot watch, at 132 feet below the surface of the Pacific ocean Scuba diving is accurate at 18 minutes 36 seconds?  If you can't trust the accuracy of this system to count minutes and seconds, a life may be in jeopardy from DCS.

An affirmative "Trust Decision" occurs when actions or rules are executed as a result of the systems design or planning.  A decision to ascend from 132 feet to 66 feet at 19 minutes into the dive is a "Trust Decision" leveraging the system programmed to keep accurate time and the divers planning in advance.

You have come to trust many systems in your lifetime.  Simple computers on your wrist or the complexity of the engineering associated with a BMW, Apple iPhone 6 or IBM Watson, requires the human to experience enough favorable outcomes, to begin to trust that particular system.  Those positive outcomes for safe and secure highway travel or the end-point IoT device will strive to establish trust over time. Even one of the virtual machines (VM) on the massive servers in over 100 Equinix Data Centers across the globe, are the basis for your trust as these particular invisible systems store and retrieve your most personal, sensitive intellectual property.

Think of a specific system that is trusted universally.  Think about all of the computers that support the system.  Each computer has been provided instructions coded in software or firmware.  For the most part, these rules have been programmed by humans.  In many cases, the software has automated a previous system that was manually operated by humans, for decades or longer.  Now this new trusted system is more efficient and the work that it performs saves us time.  It generates economic growth. Eventually, the system becomes trusted by a majority of humans and no one questions the calculus anymore.  Our current banking system in the U.S. is one that is top of mind.

When you have a fusion of Technology, Privacy and the Rule of Law that requires trust, not just by humans, but by systems-to-systems, then you must also have something else.  In order for the complete system and all of it's attributes to be accepted, adopted, codified, tested, ruled-upon, pervasive and universally utilized, it must be trusted by the other "systems" themselves.  Here is another example.

When you look at the architecture of the new "One World Trade Center" (Freedom Tower) scheduled for completion this year in New York City, do you think about:

Structural redundancy, enhanced fireproofing, biological and chemical air filters, extra-wide pressurized staircases, interconnected redundant exits, safety systems incased in three feet concrete wall, dedicated firefighter staircase, special "areas of refuge" on each floor.

You should think about it and so does Skidmore, Owings & Merrill, LLP.  The architect of the Freedom Tower.  If only we could utilize this metaphor for what we have learned about the architecture and construction of the new Freedom Tower.  Will you trust 1 WTC as a system?  Why?

The systems talking to other systems in order to design, build and occupy 1 WTC have been vast.  The technology incorporated to satisfy a complex set of business rules, building codes and privacy or security governance is extraordinary. "Trust Decisions" to accomplish affirmative outcomes have been executed for years by Skidmore, Owings and Merrill (SOM) not only in New York but on a global basis.

The trustworthiness of a system goes far beyond just the edifice.  The device.  The packaging.  The marketing.  The brand.  You will always have to look deeper for your "Trust Decisions".  You must discover how these trusted systems are being utilized, to provide you the affirmative economic results you seek.  And without the positive outcome of the creation of new found time or monetary assets, you will then abandon the tool, the machine, the system and simultaneously your trust.

TrustDecisions...

HSI: Homeland Security Intelligence...

What is the modern definition of U.S. Homeland Security Intelligence (HSI)? Many would differ on the jurisdiction, sources and nexus with specific intelligence that falls outside U.S. borders. The future of sharing relevant pieces of the vast mosaic of information may well lie with the definition and the interpretation of Homeland Security Intelligence.

One thing is certain about this topic of debate. If the information is being utilized to determine the nature of a threat within the confines of the U.S. Homeland, then that information will be treated according to the laws of the United States. This brings us to the next question. Are the current laws an impediment to more effective Homeland Security Intelligence (HSI) processes, methods and outcomes?  The following areas must be addressed in order to get closer to the truth.

• Governance
• Policies
• Regulatory and Statutory Concerns
• Civil rights and Liberties

Yet the question begs the discussion on the structure and the purpose of the Intelligence Community (IC) itself. Is a policeman or fireman on the ground in every major city in the country part of the IC? Are they not collectors of Homeland Security Intelligence as they fill out their manual or electronic "Suspicious Activity Reports" (SARS)? If they are then as much a part of the greater HSI mechanism that is deemed collection and not analysis, so too will they be subjected to the laws of the land regarding privacy and information governance.

Getting to the point where we are spending even more than half of the time doing actual human analysis is a long way off in to the future. Software systems are getting automated crawlers to pull more relevant OSINT into the data bases for unstructured query yet what about the front line observer who is the witness to an incident. They must process this by interfacing with a paper based report that is filled in with a #2 pencil or an electronic form on a PDA to check boxes and select categories that best describe the observed event that risk managers, watch commanders and operations directors need for more effective decision support.

Regardless of how the collector gets the information it still remains a matter of relevance with other data that already exists in a repository or the addition of a future data set that suddenly creates a "Red Flag." It isn't until that "Red Flag" indicator goes off that the human analyst can then put grey matter on the issue to determine the relevance at that point in time and the implication of the law, policies and governance. This topic has been addressed in previous posts to this blog:

There are some that would say that the reason why the "Dots are not Connected" sooner, faster or more efficiently is because we are drowning in too much information to analyze. The automation of collection is the easy part. The filtering and pushing relevancy through the digital cheese cloth to get the most vital intelligence assets is a bit harder to accomplish. The human analysis and applying "Gray Matter" to the problem set and understanding the current "State-of-Play" is the ultimate challenge.

Beyond this, the average "John Q" citizen has probably never heard of 28CFR Part 23. The privacy assurance mechanism put into place in the 90's pertaining to the fusion of criminal intelligence. Perhaps this is the single greatest impediment we face to insuring our safety, security and threats from transnational eCrime syndicates, non-state actors and even the most sophisticated Nation States.

The topic of Homeland Security Intelligence is really about the Information Risk Governance and Consumer Privacy laws that protect us as U.S. citizens. At the same time, these same legal statutes might be the exact balance between what law enforcement and the intelligence community need to do their jobs without infringing on the rights of "John Q. Jihadist."  Here is a great example:

By LOGAN G. CARVER

AVALANCHE-JOURNAL

A Saudi student appeared to smile Friday morning as U.S. marshals escorted him to his first federal court appearance on a terror charge.

Khalid Ali-M Aldawsari, 20, stood before U.S. Magistrate Nancy Koenig charged with attempted use of a weapon of mass destruction.

The former Texas Tech student was suspected of purchasing chemicals and supplies to build a bomb and of researching possible targets in the United States before his arrest by federal officials late Wednesday.

Aldawsari came to federal attention after trying to have a large quantity of a suspicious chemical, which has both benign and nefarious uses, shipped to a Lubbock freight address, according to a sworn affidavit by an FBI agent filed in support of the warrant for Aldawsari’s arrest.

Subsequent electronic surveillance led to two secret searches of Aldawsari’s Lubbock apartment, where authorities found a makeshift lab that could be used to make explosives, as well as some of the ingredients and supplies necessary to build and detonate a bomb, according to the affidavit.

E-mails and his personal journal indicated an interest in planning attacks, ranging from an initial desire to start a local al-Qaida-type organization to researching nightclubs as a potential target, according to the FBI investigation.

Homeland Security Intelligence collected from a U.S. domestic chemical company, freight trucking line and as a result of legal searches of the suspects apartment all were utilized to interdict this potential plot of terrorism in the United States. Effective HSI will determine whether we continue to be as effective in the future. Gods Speed to us all....

Rule-based Design: The Future of HSI...

Levers in the Homeland Security Intelligence (HSI) ecosystem impact the performance and the health of the environment that the entities are sharing their respective insights. These HSI entities are people within the analytic ecosystem, who are diverse in the art and science they utilize to create and share insight.

The threat to any ecosystem in many cases is "too much" or "too little" of a key element of that environment that makes it thrive. Anything that occurs to offset the equilibrium in the ecosystem can have dramatic effects. What is the greatest killer of human beings on the planet earth over the past few decades? A good guess would be "Drought". Too much sun and too little water has killed millions.

Yet in the context of intelligence, if data is "The Sun" and shared insight is "The Water" then in order to mitigate the impacts of upsetting the equilibrium of our HSI ecosystem a prudent course of action is required. The levers should assist in the governance of the right amount of data and the right amount of shared insights so no one entity is at risk. Now we must examine the topic of "Rule-based Design."

Homeland Security Intelligence analysts who are experiencing too much data and not enough insight is many times the argument at hand. They are indeed at the mercy of the compliance and data governance mechanisms that are in place, because of the civil liberties, legal framework and privacy statutes across 50 U.S. states. To add to the complexity are the systems and analytic software solutions that have been developed over the past ten plus years. The software designers must incorporate "Rule-based Design" if they are to assist in the entire equilibrium of the HSI ecosystem. Jeffrey Ritter explains:

Clearly, for the IT architect, there are lessons to be learned. For each step taken by the IT architect to better account for all of the rules that a solution must navigate, before the design process begins and long before construction of the solution is underway, the IT architect is able to better assure the timely completion of the solution, and the compliance of the systems and resulting data with applicable rules. Yet, even in this second decade of the 21st century, we are witnessing a continued failure of IT systems to be designed for compliance. Time and again, systems are designed, built and implemented without early and complete evaluation of the rules that must be satisfied. The result is that corporations (and their lawyers) are often patching compliance onto the systems after the fact. Expenses are increased, compliance is less assured, and the IT architect often gets stuck with the responsibility.

“Rules–based design” means that IT solutions are designed with a fully-informed awareness of all of the rules, including the legal rules, that the solution and the data must satisfy. With cloud computing, data that is dynamic and volatile, and mobile users, the challenge is genuine – how do we anticipate all of the legal rules that may apply?

The solution will emerge incrementally. But the first step is to accept the principle that IT systems, and their data, can be designed differently. We can take into account prior to the design process, and not after the completion of construction, all of the rules that the systems and the data must successfully navigate.

Now we must examine the "Civil Liberties and Privacy Policy" and the applicability within the Department of Homeland Security.

The Policy applies to “protected information,” which the ISE defines as information about U.S. citizens and legal permanent residents that is subject to information privacy, civil rights, and civil liberties protections required under the U.S. Constitution and Federal laws of the United States. DHS has instituted a policy whereby any personally identifiable information (PII) that is collected, used, maintained, and/or disseminated in connection with a mixed system is treated as a system of records subject to the administrative protections of the Privacy Act regardless of whether the information pertains to a U.S. citizen, legal permanent resident, visitor, or alien. As a result, this Policy also applies to information about nonresident aliens contained in “mixed systems.”

When you combine the complexity of a vast and endless data ecosystem with the rule-based design to try to accomplish the civil liberties and privacy of U.S. citizens; you have the basis for a significant challenge and a simultaneous opportunity. The governance of Homeland Security Intelligence is in the hands of policy makers and software systems designers. The drought metaphor utilized earlier to illustrate the point on "too much data" and "too little insight" can now be clarified in our focus post 9/11. As of this writing, the system is working and has prevented a terrorist attack in the U.S. homeland on the magnitude of that unforgettable Tuesday in September, 2001.

The entities within our Homeland Security Intelligence ecosystem will continue to be enabled or impeded by the policy decisions of civil liberties and privacy laws. The degree to which the software systems and rule-based design are commensurate with these policies may very well determine whether the equilibrium continues it's success in the United States.

The levers to improve our HSI in the midst of a dynamic and asymmetric enemy are a constant ambition. Looking into the future, we can only pray our analytic entities execute in an ecosystem that perpetuates our successes so far and minimizes our failures. The governance factors designed by our policy makers and software developers will determine our abilities to save lives and protect our vital national assets for years to come.

9/11 2014: Never Forget This Anniversary...

On this anniversary of the four terrorist attacks on the United States, September 11, 2001, we pause and remember.  We reflect on where we were at 8:46, 9:03, 9:37 and 10:07AM on that horrific morning, as the two planes crashed into the World Trade Center Towers in New York City, followed by the Pentagon in Washington, DC and a field near Stonycreek Township outside Shanksville, Pennsylvania.

The Islamic State fight continues 13 years later in an arena of global asymmetric warfare.  This includes YouTube videos, Twitter, Special Operators from USSOCOM and  other "Quiet Professionals" on the Internet or in the shadows of Istanbul and Cairo, that you will never read about.

When any moral person watches the replay of the video news reporting on 9/11, emotions are evident. Telling the story to those who were not born or are too young to remember is imperative.  No different than the importance of other historic events of evil during two World Wars, Vietnam or the continued wars across Iraq, Afghanistan and the Middle East.

Over the past 13 years our lives have been forever impacted in the midst of conflict over religion, real estate and resources.  This is nothing new from a historical perspective until you add the technology components.  The Internet and mobile phone technologies have brought the reporting, intelligence and dissemination of real-time information to us in seconds or minutes.  No longer days or hours.

On this 9/11 anniversary, we can only pray that our humanity endures the kinetic evil and the light speed of digital information that will continue to evolve in the decades and milliseconds ahead of us...

Cyber Insurance: The Future of Enterprise Risk Management...

There has been great debate over the years on the topic of cyber security insurance to complement a comprehensive Operational Risk Management (ORM) strategy.  Does the existence of a robust Enterprise Risk Management (ERM) program that includes substantial components of Operational Risk benefit the organization in the eyes of the insurer?

Could the Cyber Insurance industry be heading towards a future model for making the case for "Enterprise Risk Management" in the Cyber Risk Space?  As a parallel example, the banking industry requires homeowners insurance before loans are approved.  This is because there are a hundred plus years of history on fires as a potential threat and the actuaries know the odds for a loss event, especially with the new building materials and the rules on sprinkler systems in certain areas.

We are getting close to the point where data analytics and the history of cyber attack information will be used to assist insurers in writing a "Cyber Risk policy" based upon your industry sector and geographic location. The data being analyzed now on the banking sector and energy sector is vast and these are just two critical infrastructure sectors that have a long history of being attacked by criminal network bots and also nation states, on an hourly basis.

The U.S. Department of Homeland Security (DHS) has been looking into the multi-factors surrounding Enterprise Risk Management in the context of cyber insurance for the past few years:

Based on what it had learned, NPPD hosted an insurance industry working session in April 2014 to assess three areas where it appeared progress could lead to a more robust first-party market: the creation of an anonymized cyber incident data repository; enhanced cyber incident consequence analytics; and enterprise risk management evangelization.

The evangelization of ERM is vital not only for those Global 500 organizations but also for the INC. 500.  The companies that are the supply chain to the enterprise are even more at risk of attack since they provide an on-ramp for modern malware to seek new vulnerabilities.  These supply chain companies will soon be asked about their Enterprise Risk Management (ERM) program strategies and for good reason.

In order for the Global 500 to continue to have confidence in a robust ERM strategy, they must have ways to validate their own supply chain organizations maturity in the cyber risk management domain. So what did the participants in the DHS NPPD cyber insurance roundtable in 2014 recommend as elements of a successful ERM program?

Engagement of senior leadership. A reinsurer commented that effective ERM programs must be implemented at the senior leadership level. Specifically, he advised that they should reflect a corporate culture that features cyber-related ERM discussions at all board meetings and that subjects itself to regular oversight – including through periodic internal risk audits and audits by outside, independent organizations.
Engagement of general counsels. A broker described general counsels and chief compliance officers as key players in successful ERM programs and stated that her company’s risk assessment workshops for corporate leaders are always more successful when these leaders are involved.
Engagement of CISOs. An underwriter added that it is similarly valuable to include a company’s CISO in the ERM process – particularly a CISO who understands the role that insurance can play as part of a comprehensive risk management strategy.
Establishing direct lines of communication. A third underwriter asserted that when it comes to cyber security specifically, a company should establish a direct line for ERM reporting to its board of directors rather than a hierarchal chain that requires many approvals before funds can be spent on someone (e.g., outside cyber forensics support) or something (e.g., a new technology) to address a cyber risk or incident.

So what does all this mean, if my INC. 500 company is part of the supply chain of a Global 500 organization?

It means that your ERM program will be under the magnifying glass if not now, very soon.  If you are considered to be a vital supplier to the Global 500 enterprise, then you most likely are cyber-connected for data exchange or even more.  The digital systems level decisions and the speed of business require that you have cyber data handshakes every few minutes or seconds.  The ability for your product or service to perform, requires this high degree of "Trust Decisions."

The time has come for Cyber Risk insurance to mature and to become another standard component in the Operational Risk Management (ORM) portfolio.  We look forward to seeing the language of the policies themselves as they evolve.  Will attribution of the origin of the cyber attack be a factor in a first-party coverage claim?  We think you can count on it...

HSI Governance: Equilibrium of Privacy and Security...

When people are faced with increasing Operational Risk Management (ORM) 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."

Inspect v. Study: Quality of Operational Risk Management...

As this weblog reaches it's 1,060th post in the next few months, much has been documented on the course of "Operational Risk" over the past ten years. We have continuously witnessed the dawn of new threats and vulnerabilities that could only have been imagined in the last millennium.

At the same time, we could not have predicted the new found solutions, to many of the same operational risk related incidents that have plagued our institutions, governments and the planet we call Earth. Every time you think you have heard or witnessed it all and that all new future risk events will just be some variant of those that have preceded us in history, we are surprised and blind-sided. The "Black Swan" has visited us once again.

Yet one item that remains consistent over the course of risk incidents and numerous after action findings is this fact. We have not devoted enough resources in preparation and in scenario-based exercises to improve our resiliency. We remain in denial that we could ever be subjected to the 1-in-100 year event. However, there is someone named Warren Buffet who to this day, is still adding reinsurance companies to the Berkshire Hathaway portfolio. Do you think it is because Mr. Buffet is betting on more risk or less in the world over the next decade?

Risk Managers think about the "What if" more than anyone else, in many cases because they are paid to do this on behalf of their employer. Yet as human beings, we take risks every day without even thinking twice about how much risk we are taking on and what the possible outcomes could be. We just move through life in a wait and see totally reactive mode. So how do you get at least a majority percentage of the people walking around the halls of your organization to think more like a savvy risk manager? What does it take to inject a little more "What if" into the consciousness of each person and the roles and jobs that they play in your institution?

The first is to design and engineer your management system to incorporate a risk-based standard for operations. Secondly, to incorporate the applicable risk management controls to produce the rules-based behavior that you are adopting. Finally, to test the rule-sets with a continuous approach to ever so incremental improvement over time. Sounds familiar doesn't it. Plan-Do-Check-Act.

Whether you are trying to improve the awareness, implementation and/or measurement of Operational Risk on the deck of the aircraft carrier, at the FOB, on the trading or manufacturing floor or within the supply chain of the vital resources that fuels your organization, "Plan-Do-Check-Act" (PDCA) works. And you have heard it before, those who are hit by the "Black Swan" event will die or go out of business relative to the previous attention they have paid over the years to PDCA.

PLAN

Establish the objectives and processes necessary to deliver results in accordance with the expected output (the target or goals). By making the expected output the focus, it differs from other techniques in that the completeness and accuracy of the specification is also part of the improvement.

DO

Implement the new processes, often on a small scale if possible, to test possible effects. It is important to collect data for charting and analysis for the following "CHECK" step.

CHECK

Measure the new processes and compare the results (collected in "DO" above) against the expected results (targets or goals from the "PLAN") to ascertain any differences. Charting data can make this much easier to see trends in order to convert the collected data into information. Information is what you need for the next step "ACT".

ACT

Analyze the differences to determine their cause. Each will be part of either one or more of the P-D-C-A steps. Determine where to apply changes that will include improvement. When a pass through these four steps does not result in the need to improve, refine the scope to which PDCA is applied until there is a plan that involves improvement.

It's clear to the "Operational Risk" professional why PDCA has one little flaw. The "Check" could and should be replaced by "Study" to emphasize analysis over inspection as Dr. W. Edwards Deming has said. To analyze and study takes us to the core of the issue. People are always looking for expected results, not unexpected outcomes. If we are to expect "unexpected" results, perhaps the "Analyze-Study" mindset would then perpetuate the plethora of risk professionals who are still caught up on the "Check". Inspection will get you killed and it will produce more "Black Swans" in your lifetime than you would ever expect. Check = Inspection. Study = Analyze.

So we think it is safe to say, that Warren Buffet is betting on the current trend of a mentality of inspection and not study. He is investing in the future of insurance companies needing insurance to hedge their own underwriting failures. Study and analysis are the ingredients of success for the most sought after risk managers on the globe. Unfortunately, too many still have not figured out that "Check" is out and "Study" is in.

The future quality of Operational Risk Management will lie in the hands of practitioners who are analyzing and studying before they apply new changes to gain new improvements. Now think about your organization. Where are the people who are patient? How long do they take to study the business problem or assess the climate you operate in every day? When you find these individuals you need to keep them close and you will soon find that you are well on your way to a more resilient future.

Insider Threat: CSO Priorities...

If you are the CSO of a Fortune 50 company these days you have a few top of mind Operational Risk Management (ORM) priorities. There is only so much you can do with the resources you have been given, to preempt attacks on your enterprise regardless of the origin, internal or external. The time and resources for exercising plans and testing contingencies are getting more scarce. So where and how do you apply your knowledge and priorities to gain the most effective results?

In alphabetical order, here are some of the known attack methods to bring severe economic and human losses to bear on your business and the homeland:

• Aircraft as a weapon
• Biological Attack: Human Disease, Livestock, Crop
• Chemical Attack
• Cyber Attack
• Food or Water Contamination
• Hostage Taking
• Improvise Explosive Device (IED)
• Maritime Vessel as a Weapon
• Nuclear Attack
• Radiological Dispersal Device
• Standoff Weapons: Guided
• Standoff Weapons: Unguided
• Vehicle-Borne Improvised Explosive Device

Now one could discuss the probability of each of these threats to determine the best strategies for preparing for one vs. another. More importantly, you could group these into clusters so that investing in prevention and preemption activities and tools would impact more than one attack method. Yet as you analyze your own specific critical infrastructure assets in your enterprise, you will then see those attack methods that will have the greatest affinity for that location or type of asset.

It is well known that the private sector owns and operates a majority of these critical assets for national security, now estimated around 85%. If you look at the list of known attack methods and realize who is "perceived" to be responsible for protecting these assets, the problem becomes more clear. The private sector expectation that the government or public sector is going to protect the critical assets that the private sector owns is the going logic. How far from the truth and reality could this perception be today?

As the Chief Security Officer (CSO) of a Fortune 50 company you no doubt have already cataloged your facilities and sub-categorized the assets within each of these facilities. You have included the "Intellectual Property" (IP) considerations for each location such as key people, R&D, Engineering, Software Development and others. You understand the value of these tangible and intangible assets as it pertains to the survivability of your organization. You have already developed the systems to recognize the moves, adds and changes to these facilities and assets so the portfolio of critical infrastructure and intellectual assets is up to date in real-time.

For many of you the last big push was to make sure that the Continuity of Operations and BCP Plans or Disaster Recovery strategies are in place to provide the peace of mind for "What if" scenarios. Your off site hot back-ups and mirrored data are functioning perfectly. The exercises have told you that operating these plans when the time comes will be touch and go but you are confident that you will get through it.

Now let's go back to our original question. So where and how do you apply your knowledge and priorities to gain the most effective results?

Your worst enemy now is your perception that the government is there to protect you first and to keep your private sector assets safe before the company next door or across the street. Your complacent attitude towards sharing vital information with the public sector authorities in your city, county and region is where you have your greatest vulnerability. How can these people who serve the local, state and federal agencies know anything about what is valuable to you if you don't tell them?

You see, it doesn't matter what your adversaries utilize as the their favorite attack method to do you harm. Of course they will want to use the ones that will have the most economic impact on our nation and it's people. Yet, without the continuous exchange of information flow from the private sector to those government officials, your business is just another casualty waiting to happen.

So if the government is working on the external threat through the Department of Homeland Security (TSA), Border Patrol, Coast Guard, CERT and the FBI on Counter Terrorism, Counter Intelligence and Cyber Crime what should you the CSO at your Fortune 50 company be focused on? The Insider Threat. Pure and simple.

“An individual with the access and/or inside knowledge of a company, organization, or enterprise that would allow them to exploit the vulnerabilities of that entity’s security, systems, services, products, or facilities with the intent to cause harm.”

• Due to a lack of hard data, threat definition remains difficult;
• While education and awareness can be provided, cultural change remains more difficult and requires: 

• Investment in structured programs and risk management; 

• Corporate culture where trust does not run counter to prevention programs; and 

• Improved workforce communication and cooperation so targeted efforts can address insider threats

• Use of background checks varies among sectors and are not universally accepted; regulation is controversial; and
• Multiple legal environments complicate Insider Threat mitigation strategies, not only domestically, between Federal, State, local jurisdictions, but also and more significantly, for those companies operating in multinational environments, complicating cohesive or comprehensive policy efforts.

The Insider Threat is real and requires continuous vigilance across the private sector. Secondly, the interface with your local first responders and law enforcement should be established early and often. Establish your own "Homeland Watch" mechanisms in your business park or metro area mapped to the local fire and police substations. Understand and get to know how they prioritize their response and investigations of suspicious activity and how it could impact you.

Finally, get very familiar with the NIPP. It could be your key to better understanding the mindset of the public sector and safeguarding your corporate assets.

4th Paradigm: Predictive Risk Innovation...

21st century innovation requires new thinking, new tools and the application of a creative mind.  When it comes to innovating Operational Risk Management (ORM), take a leap towards "Predictive Intelligence".  What has been holding you back?  Is it the right combination of new thinking, new tools and the applications you haven't even thought of yet?

How could we apply the use of a High Computing Cluster (HPC) using Amazons Elastic Compute Cloud (EC2) with the right haystack of data to get the answers we seek?  Without building a new data center and for under $5K.  Think about the possibility of 10,000 plus server instances running across five data centers, with the results we seek in hours.  Utility Super Computing is here today for white hats and also even the "Black Hats."

Predictive Analytics is an art and a science, that is thriving with the use of "Fusion Infrastructure" by the hour. Why do we need to spend tens of millions of dollars on our own data center anymore, to get the rapid answers we require to run our business or to defend our nation?

Now the debate has gone beyond the infrastructure, to look at the other bottle necks.  What about the database architecture itself?  Is the traditional implementation of the disk intensive real-time Relational Database Management System (RDBMS) paradigm over?  Hadoop is here, yet requires new language learning curves and is a batch solution.  This could be one of the answers to predictive risk innovation:

MemSQL is the distributed in-memory database that provides real-time analytics on Big Data, empowering organizations to make data-driven decisions, better engage customers, and discover competitive advantages. MemSQL was built from the ground up for modern hardware to leverage dozens of cores per machine and terabytes of memory. We are entering an era that will be defined by distributed systems that scale as you need capacity and compute, all on commodity hardware.

How long will it take you to stand-up your own "Operational Risk Intelligence Center"?  One or two days or a week, with the right people and skill-sets in place.  What kinds of questions and answers will allow you to predict the future, faster than your competitor or your latest cyber adversary?

If you throw enough money at a problem there’s bound to be a solution, some think. That’s the logic of security expert Dan Geer, who this week told the Black Hat conference in Las Vegas that the U.S. government should throw a heck of a lot of greenbacks at people who discover vulnerabilities. 

How much? Ten times more than anyone else, he said in a keynote address.
Geer, chief information and security officer at In-Q-Tel, a not-for-profit venture capital company that invests in early stage companies making products aimed at U.S. intelligence agencies, maintained the U.S. should corner the market on vulnerabilities.
“Then we make them public and reduce to zero the inventory of cyber weapons that others have,” he was Geer said. “I believe that exploitable software vulnerabilities are scarce enough that if we corner the market, we can make a difference.” including eSecurity Planet and ThreatPost.com.

A number of companies have so-called bug bounty programs, including Microsoft and Google. Nor is Geer the first to say governments should open their wallets. In January, researchers at NSS Labs issued a report arguing that only drastic measures can bring cyber threats under control.

Innovation in the Operational Risk Management spectrum is on the verge of massive change. Operations Security, Fraud Analytics and Supply Chain Management are just the beginning.  The Board of Directors of the commercial enterprise, Military Strategic Commands and virtual chat rooms on the deep web, are debating these very subjects.  Application of "Utility High Performance Computing" in combination with 4th Paradigm databases, puts innovation back at the forefront of the creative mind.

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?  What "Trust Decisions" did you make to arrive on this page in the universe of the Internet?

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.

4th of July: Resilience of Your Team...

The United States is celebrating the birth of the American nation this weekend.  238 years ago the formation of the Republic set the course for the country that it is today.  The Declaration of Independence was born.

A key aspect of any prudent Operational Risk Management (ORM) program is focused on people.  The risk of people and the whole dynamics of what is going on in peoples lives.  As Thomas Jefferson, John Adams, Ben Franklin, Robert Livingston and Roger Sherman toiled over the draft; what do you think was also going on in their individual lives at the time?

While political maneuvering was setting the stage for an official declaration of independence, a document explaining the decision was being written. On June 11, 1776, Congress appointed a "Committee of Five", consisting of John Adams of Massachusetts, Benjamin Franklin of Pennsylvania, Thomas Jefferson of Virginia, Robert R. Livingston of New York, and Roger Sherman of Connecticut, to draft a declaration. Because the committee left no minutes, there is some uncertainty about how the drafting process proceeded—accounts written many years later by Jefferson and Adams, although frequently cited, are contradictory and not entirely reliable.[62]What is certain is that the committee, after discussing the general outline that the document should follow, decided that Jefferson would write the first draft.[63] The committee in general, and Jefferson in particular, thought Adams should write the document, but Adams persuaded the committee to choose Jefferson and promised to consult with Jefferson personally.[2] Considering Congress's busy schedule, Jefferson probably had limited time for writing over the next seventeen days, and likely wrote the draft quickly.[64] He then consulted the others, made some changes, and then produced another copy incorporating these alterations. The committee presented this copy to the Congress on June 28, 1776. The title of the document was "A Declaration by the Representatives of the United States of America, in General Congress assembled."[65]

The ecosystem of this set of committed custodians of a new nation also included the personal lives of each one of them.  No different than the ranks of any organization who has executives and key staff members who are steering the daily direction of the enterprise.  Each individual on that team has a work life and a personal life they are managing simultaneously while doing the work of the country or the corporate business.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness, That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

So think for a minute about your team within the enterprise.  Each person on your staff or within your division is managing and coping with life events that are occurring in real-time each day.  How much are you in tune with all those emotions and potential changes in a fellow employees life, to see how it may impact their work?

Organizations across the globe utilize Operational Risk Management (ORM) as a discipline for those safety and security events that could produce significant risks.  The same can be applied to each person and their individual ecosystem.  Each person on the team may be in different phases of their lives and need only a few pieces of the entire ORM mosaic for their personal lives.  Contingency planning however is still one of those easy exercises that most people can do on their own and in their own personal environments.

The power of the "What if" questions that you ask yourself on a daily basis is a healthy way to begin and to continuously provide effective Operational Risk Management (ORM) outcomes.  "What if" you developed a ORM college within the enterprise to educate all those new employees and existing with the skills, knowledge and capabilities available to them?  As they say "Life Happens."  Each person shall have an ecosystem of both personal and professional risks that they are encountering every day.

It could be imagined that people such as Ben Franklin had a few other items on his mind at the time.

The person to your right and to your left on the front lines of the organization, who you engage with everyday; has their own set of risks to manage in life.  A strategy for each individual to better plan, develop and deploy effective risk management individually provides the entire team with the focus they require long term.  They have been trained on using the effective continuous process for ORM:

• Identify
• Assess
• Decide
• Implement
• Audit
• Supervise

Imagine your organizational unit, whether it be Congress, your Family, your work out partners at Pilates or the entire executive staff all in synchronicity, with the use of Operational Risk Management. The principles of enhancing your life or your country will require a life long devotion to the rules and to the risks to a breakdown in rules of governance.  Personally or professionally.

Consider the peace of mind as your country endures the challenges to it's "Declaration of Independence" and knowing that it has a longevity of 200 plus years.  Think about the confidence and the assurance you will have about your team or family unit as each of them manage their life events and risks.  The resilience factor is strong and the safety and security of the people you care about the most, will endure.