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Risk Management

CS5493. Risk Management. Risk Management. The process of identifying, assessing, prioritizing, and mitigating risks. Risk Management. An ongoing process that has a life-cycle (sustainability cycle). Risk Management. Minimize the effects of negative risks

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Risk Management

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  1. CS5493 Risk Management

  2. Risk Management The process of • identifying, • assessing, • prioritizing, and • mitigating risks

  3. Risk Management • An ongoing process that has a life-cycle • (sustainability cycle)

  4. Risk Management • Minimize the effects of negative risks • Maximize the effects of positive risks

  5. Risk Management • Asset – anything of value

  6. Risk Management • threat – anything that can exploit, obtain, damage or destroy an asset via a vulnerability intentionally or accidentally. A threat is what you wish to protect against.

  7. Risk Management • Vulnerability – weaknesses exploited by threats that compromise assets. A vulnerability is a weakness

  8. Define a Risk Equation • Risk = Threats x Vulnerabilities • Threats = frequency of an adverse event • Vulnerability = the probability that a threat will succeed. • Risk = the risk probability

  9. Risk Management • The exposure cost is the product of the risk-probability value times the loss (of the asset) in dollars. Cost = RiskProbability * AssetLoss

  10. Example (annual) • Probability of a fire in the data center resulting in a loss: 0.75% • Probability of the fire destroying all assets in the data center: 15% • Risk Probability = .0075*.15 = .001125

  11. Example (annual) • Replacement value of the data center: $750,000. • Estimated annual loss due to fire = $843.75 • (risk probability * value of the asset)

  12. Risk Identification • The process of determining the risks to assets. • Create the “risk register”

  13. Risk Register • Creation: • Brainstorming meeting to identify the risks • Surveys • Other events to collect information.

  14. Risk Register • Content • A description of each identified risk • Probability of the risk event occurring • Steps to mitigate • Rank each risk in the register • Describe the impact if the risk-event actually occurs and include the cost.

  15. Risk Register • Ranking risks • Limited budget will require dropping some perceived risks. • Concentrate on the most important issues.

  16. Risk Analysis • Qualitative • Quantitative

  17. Risk Analysis • Qualitative • Risk classification • High • Medium • Low • risk impact : how would it impact the overall business.

  18. Risk Analysis • Quantitative • Use math

  19. Risk Analysis • Quantitative • EF = Exposure Factor • SLE = Single Loss Expectancy • SLE = Asset Value x EF • ARO = annual rate of occurrence • ALE = annual loss expectancy • ALE = SLE x ARO

  20. Quantitative Risk Table

  21. Risk Response Planning • Negative Risks • Positive Risks

  22. Risk Response Planning • Responses to negative risks • Eliminate • Transfer • Mitigate • Accept

  23. Negative Risk Response • Eliminate – implies that the threat has been eliminated (probability of zero). • Transfer – insurance is used to transfer risk • Mitigate – reduce the probability of the event from occurring by taking some action. • Accept – take no additional action.

  24. Risk Response Planning • Response to positive risks • Exploit • Share • Enhance • Accept

  25. Positive Risk Response • Exploit – S-A-P is packaged and sold. • Share – finding a partner to purchase in bulk and capture a lower price. • Enhance – meeting a deadline ahead of schedule and collecting a bonus • Accept – take no action

  26. BIA • Business Impact Analysis, BIA • A formal analysis separating an organization's functions into critical and non-critical categories

  27. BIA RPO • RPO - Recovery Point Objective, • Determine the amount of asset loss that is acceptable

  28. BIA RTO • RTO - Recovery Time Objective, • The maximum allowable time to recover from asset loss.

  29. Risk Management • BIA- Business Impact Analysis • BCP- Business Continuity Plan • DRP - Disaster Recovery Plan

  30. BIA • Business Impact Analysis, • Classifying business functions and activities into critical or non-critical categories. • Determining the prerequisites to support each function/activity. • Determine the maximum amount of time each function/activity can be unavailable.

  31. BCP • BCP – Business Continuity Plan • A response plan to interruptions of critical functions • An interruption is an event that lasts for a short period and while it will result in measurable loss, is not fatal. • Creation of an IT intrusion response team

  32. DRP • DRP – Disaster Recovery Plan • A plan for responding to losses and interruptions critical to the sustainability of the enterprise. • Creation of an IT disaster response team

  33. DRP • DRP – Disaster Recovery Plan • Fire • Flood • Hurricane • Tornado • Earthquake

  34. DRP Requirements • Contact list of critical personnel • Complete inventory of physical assets • Inventory of IT software applications for critical business functions. • Data/system backups • Alternate or redundant facility planning

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