State of the CSO 2012: Ready for anything

The 2012 State of the CSO survey shows progress toward a deeper level of business understanding and a wider knowledge of risk management

The saying goes that in every crisis, there is an opportunity. Compliance requirements, data and privacy demands, and the threat landscape are constantly evolving, forcing companies to realize the importance of security and invest accordingly. As security concerns expand, so does the role of the security leader.

recognizing risk management's value

Our annual State of the CSO survey finds a continuation of a two-part trend that we have been tracking for many years: First, there is more awareness of security and risk among companies, and second, in response, many organizations are using more formal enterprise risk management (ERM) programs. These policies, processes, methods, metrics and measurements help shape the strategic decisions for their organization. The goal is to make security strategy both targeted and holistic, proactive and defensive.

The survey gathered responses from 228 security professionals in a broad range of industries. Among those polled, 66 percent say their organization's leadership (that is, the CEO and board of directors) placed more value on risk management in the past year. That's a solid number, even higher than the 61 percent result in 2011.

[Also read The decade of the CSO]

And with that perceived value comes corresponding support, in the form of money and staff. Thirty-two percent of respondents expect to add to their full-time security headcount, and 45 percent expect their organization's overall security budget to increase in the coming year. Another 42 percent think their budget will stay the same; just 11 percent expect it to decrease. (Two percent were not sure.)

While the budget is growing, the prevalence of formal ERM programs is holding steady. The survey found that 56 percent of those polled say their organization now uses a formal ERM process or methodology that incorporates multiple types of risk and that goes beyond just physical and IT security. That's consistent with our findings in the past two years.

who's involved in ERM?

The State of the CSO results demonstrating the maturation of the security leader role are mirrored in IT-specific research from Wisegate, a professional network for security executives to share information. Wisegate found that the CISO's role is shifting from "a glorified IT security administrator, babysitting firewalls and cleaning malware from infected systems, to holistic risk management—from firefighting security breaches to anticipating fires before they start."

According to a recent Wisegate member poll, close to 100 percent of participants say they have combined information security and risk management responsibilities. Growing compliance requirements and the general threat landscape were cited as the two primary drivers of their increasing risk management responsibilities.

Philip Agcaoili, CISO with Cox Communications, the third-largest cable operator in the United States, has been a security executive for over a decade. A self-proclaimed "joiner," he says he has been networking with others in security since he became Verisign's first CSO in 1998, and he has since held several CSO positions. He has seen these changes coming for years, he says.

"I think gravity took its course," says Agcaoili. "At the end of the day, no security organization I've been a part of has ever had infinite resources. Risk management was a way to ingest findings or issues, determine the risk to the company, and articulate to the business what the risks were. And it helped us prioritize with the business with what needed to get done."

security budgets, personnel, duties

Formal ERM programs have begun to show up in many organizations. Obviously, the components of these programs vary from place to place, industry to industry. But they all have at least one thing in common: They seek to ensure the success of the organization through "sound, proactive thinking and strategy relative to risk," according to David Sherry, CISO of Brown University.

"By identifying and quantifying the probability and impact of security events, the security mission is supported by language that the board can understand, without relying on fear, uncertainty and doubt," Sherry says.

Dennis Treece, director of corporate security for Massport—the public authority that oversees airports, seaports and many transportation services in Massachusetts—works with many departments and staff within his organization. Leading security for one of the most scrutinized transportation hubs in the world demands a risk strategy that encompasses both physical and digital security.

"To me, ERM implies an all-hazards approach that takes into account everything from utilities infrastructure failure to bad weather, to pandemics, to accidents, to building things on the cheap and poor maintenance, to terrorism," says Treece.

"Also, to me, ERM is collaboration among all the people who understand the risk components the organization faces and who are involved in the risk process, accept risk, or reduce it or transfer it—or any combination of those things."

Consequently, Treece's team comprises a diverse set of individuals. "The insurance broker here is on my team, the internal auditors are on my team, two legal counsel, police and rescue, the operations and facilities staff," Treece noted. "We cannot exist today without them because security is so technology-driven and -dependent."

But working with personnel from various departments is not without its challenges, both for the CSO and for the professionals who come from backgrounds not typically associated with security.

Dave Notch, who was until recently the CISO with business-data provider Thomson Reuters, says he saw the difficulties that can result when bringing in employees from other disciplines and trying to make them all part of one security and risk team. His experience tells him that a one-size-fits-all approach cannot work in many industries.

business methods and calculations

"One of the most direct examples was when we had discussions about integrating physical and IT security, which, ultimately, we never did," recalled Notch, who was responsible for managing the corporate programs for information security, business continuity, disaster recovery and technology-related audit and compliance activities. "But, I think regardless of which department they are coming from, it's difficult to find people that can cross those boundaries and talk about all areas of risk intelligently."

Brown's Sherry says sometimes the challenge is making headway in a culture that doesn't always understand the issues around risk. Sherry, who has been in IT management for 20 years, first became interested in security during the Y2K scare over a decade ago. In his four years with Brown, he has seen his role become much broader and more focused on risk management and compliance, and it now includes areas such as "records management, copyright law, all kinds of things they throw at me," he says. But while the university increasingly puts value on security and risk management, Sherry still finds it tough at times to make the case for investment.

"The challenge in higher ed is creating relevance for the security mission and the privacy and compliance mission," says Sherry. "It's making sure the university understands the implications of not following best practices and regulatory mandates."

As Sherry's experience shows, selling security has always been difficult. So one of the goals of ERM programs is to give security managers a quantifiable set of metrics that help clarify the case for investing.

"As I have defined it and as I implement it here, I have a risk chart that lists our top 20 risk cases in order of significance to the organization," says Treece. "I use this to then determine what gaps we have between this list and efforts to address those risk cases. Where we need to do more, I use [the chart] to influence the budget process, to reduce or transfer the risks we find to be unacceptable."

[Learn 7 most common risk management blunders]

In order to succeed in ERM-driven environments, CSOs and CISOs agree that security managers need to bone up on business skills—nothing surprising there. Communicating with the executive management team (which is engaged in 86 percent of respondents' ERM programs) takes a new level of business understanding among security pros.

"In the last decade, it's been helpful to have a business discussion using risk terms. And business leaders have gravitated toward it," says Agcaoili. "In security, there is always a new problem, and risk management has allowed me to identify risk based on issues or findings, develop what the risks are, and then prioritize and work with the business to actually invest in that."

"I work with a lot of other CSOs from banks, from universities, from all over," says Treece. "We are all different; we have different cultures and budgets. But we all have the same basic requirements to secure the business defensively in an affordable way. In order for that to happen, security people today need to learn to speak business."

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