In a recent discussion, I took the stance that "risk = threat X vulnerability X asset replacement cost" is not a good formula for sound business decisions.
I will admit to having "poked fun" at their belief that the above is a "security formula". It isn't. It's a business formula, used to decide how much money is safe to throw at a department with no ROI.
I took the stance that the formula is usually a rationalization used to support a business decision that's already been made. That the formula comes from a "recognized" organization of security "professionals", makes it that much more of a problem. My argument follows...
Let's get "threat" and "vulnerability" out of the way. Both are binary in nature or, at least, that was the original intent. You either have the vulnerability or you don't. If you have the vulnerability, it's either exposed or it isn't. The formula becomes "risk = (1 or 0) X (1 or 0) X asset replacement cost".
You can state that "threat" and "vulnerability" are quantitative values ("1" or "0") unless you attempt to put a "degree" on it. If the terms "degree" or "percentage" are applied to either value, that value becomes subjective and I no longer have to argue the point. Unfortunately, you'll usually hear "degree of exposure" or threat described as a percentage (i.e., "how much of a threat is it?").
The real trouble lies within "asset replacement cost". It's an oversimplification and a subjective value hiding behind a number. (i.e., it isn't quantitative!) Don't think so? Try this:
- The basic "asset replacement cost" works best with a standalone system. If it's connected to any other asset, networked or not, the value quickly becomes a WAG (nice version: Wild Assumed Guess) (not-so-nice: drop "um" from the middle word and add a hypen between the first two words)
- The basic "asset replacement cost" works best with a dedicated system. In other words, it's not used for anything else. If the system is used for any additional function, "asset value" gets complicated and other systems may be dragged into the equation. If the equation is artificially limited to the system under discussion, the value loses it's integrity.
- "Asset replacement cost" is only valid when applied to hardware or programs. It fails horribly when applied to data. Normal business types will attempt to say that data replacement cost is nil ("we have a backup, don't we?"). I've yet to see any organization, outside of federal, that will attempt to actually recover "lost" data. Oh, and a law suit does not meet the definition of "recovery". At best, an organization might take into account penalties for lack of due care and/or due dilligence.
The end result is that the formula usually ends up being "risk = estimate X guess X stubbornly narrow error", losing it's security "value" entirely and becoming a rationalization for a business action that might not improve security at all.
In any case, I enjoyed the argument, though it would have been better demonstrated if a white-board was involved. I also won't deny that I enjoyed tormenting two people who actually needed it. Many people who obtain certifications often "stop" once they get them. If a person stops thinking about (and practicing) security, the certification becomes little more than a badge to hang on the wall.