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INFORMATION SECURITY
                            INFORMATION SECURITY




WHY THE BASE RATE FALLACY MATTERS TO INFOSEC
                           & HOW TO AVOID IT
                                September 14, 2012

                                            Patrick Florer
                                      Jeff Lowder, CISSP
Introduction         Natural Frequencies


      1         2             3            4




          Base Rate Fallacy       Fourfold Tables
          & InfoSec
Introduction         Natural Frequencies


      1         2             3            4




          Base Rate Fallacy       Fourfold Tables
          & InfoSec
Patrick Florer
      • Cofounder and CTO of Risk Centric Security.
      • Fellow of and Chief Research Analyst at the Ponemon Institute.
      • 32 years of IT experience, including roles in IT operations,
        development, and systems analysis.
      • In addition, he worked a parallel track in medical outcomes research,
        analysis, and the creation of evidence-based guidelines for medical
        treatment.
      • From 1986 until now, he has worked as an independent consultant,
        helping customers with strategic development, analytics, risk
        analysis, and decision analysis.



Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Jeff Lowder
      • President of the Society for Information Risk Analysts
        (www.societyinforisk.org)
      • Director, Global Information Security and Privacy, OpenMarket
      • Industry thought leader who leads world-class security organizations
        by building and implementing custom methodologies and frameworks
        that balance information protection and business agility.
      • 16 years of experience in information security and risk management
      • Previous leadership roles include:
                –     Director, Information Security, The Walt Disney Company
                –     Manager, Network Security, NetZero/United Online
                –     Director, Security and Privacy, Elemica
                –     Director, Network Security, United States Air Force Academy

Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Introduction         Natural Frequencies


      1         2             3            4




          Base Rate Fallacy       Fourfold Tables
          & InfoSec
Quick Check #1: How Good Are You at Estimating Risk?




                                                               “I saw an
                                                                orange
                                                                  cab”
                                                                                                                                  What color was
                                                                                                                                  the cab?

   The witness gets the color
   right 80% of the time


Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Quick Check #1: What is the probability the cab was orange?

      (a) 80%
      (b) Somewhere between 50 and 80%
      (c) 50%
      (d) Less than 50% (the cab was green)




Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Quick Check #2: How Good Are You at Estimating Risk?
                                                                             85% of the taxis on
                                                                             the road are green
                                                                                    cabs.


                                                                                   15% of the taxis on
                                                                                   the road are orange
                                                                                          cabs.

                                                               “I saw an
                                                                orange
                                                                  cab”
                                                                                                                                  What color was
                                                                                                                                  the cab?

   The witness gets the color
   right 80% of the time


Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Quick Check #2: What is the probability the cab was orange?

      (a) 80%
      (b) Somewhere between 50 and 80%
      (c) 50%
      (d) Less than 50% (the cab was green)




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All rights reserved.
Quick Check #3
      • 850 out of every 1,000 taxis are green cabs.
      • 150 out of every 1,000 taxis are orange cabs.
      • Of these 850 green cabs, the witness will see 170 of them as orange.
      • Of the 150 remaining orange cabs, the witness will see 120 of them
        as orange.
      • The witness says she saw an orange cab.




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Quick Check #3: What is the probability the cab was orange?

      (a) 80%
      (b) Somewhere between 50 and 80%
      (c) 50%
      (d) Less than 50% (the cab was green)




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Correct Answers
      Quick Check #1:
      Unknown. Without some idea of the base rate of orange cabs, it is impossible
      to estimate the probability that the witness is correct.

      Quick Check #2:
      (d) Less than 50% (the cab was green)

      Quick Check #3:
      (d) Less than 50% (the cab was green)

        The exact probability is 41%.




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Base Rates and the Base Rate Fallacy

      • Base Rate: “The base rate of an attribute (or event)
        in a population is the proportion of individuals
        manifesting that attribute (at a certain point in time).
        A synonym for base rate is prevalence.”
             Source: Gerd Gigerenzer, Calculated Risks: How to Know When Numbers
             Deceive You

      • Base Rate Fallacy: A fallacy of statistical reasoning
        that occurs when both base rate information and
        specific data about a specific individual is available.
        The fallacy is to make a conclusion about the
        probability (or frequency) by ignoring the base rate
        information and only considering the specific data.
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All rights reserved.
How Did Your Peers Do (with the Taxi Cab Question)?

   Jeff Lowder’s Research:
                                                                                                                        D
   How often do GRC                                                                                                    5%

   professionals commit
   the base-rate fallacy?                                                                            C
                                                                                                    15%



                                                                                                                                   A
                                                                                                                                  35%
    When presented with
    conditional probabilities
    (such as Quick Check #2),                                                                                               B
    95% of GRC professionals                                                                                               45%

    commit the base-rate
    fallacy
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Why the Base Rate Matters to InfoSec
      Example                                                      Output                                                         Relevant Base Rate
      Common Vulnerability                                         Vuln scores (0-10) used to Base rate of vuln
      Scoring System                                               prioritize remediation     exploitation
      Vulnerability Scanners                                       Scan results                                                   Base rate of
                                                                                                                                  vulnerabilities
      Intrusion Detection                                          Intrusion alerts                                               Base rate of intrusion
      Systems                                                                                                                     events
      Anti-Virus/ Malware /                                        Virus / Malware / Spyware                                      Base rate of virus /
      Spyware                                                      alerts                                                         malware / spyware
                                                                                                                                  events
      Risk Analysis                                                Residual Risk                                                  Base rate of hazard
                                                                                                                                  (part of inherent risk)
      Third-Party Assurance                                        Third-Party Audit Report                                       Base rate of compliant
                                                                                                                                  vendors
                                                                                                                                  Base rate of accurate
                                                                                                                                  audit reports

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Why the Base Rate Matters to InfoSec
      Example                                                                                        Questions to Ask
      Common Vulnerability Scoring System                                                            What is the base rate of vuln
                                                                                                     exploitation?
      Vulnerability Scanners                                                                         What is the base rate of each type of
                                                                                                     vulnerability?
      Intrusion Detection Systems                                                                    What is the base rate of intrusion
                                                                                                     events?
      Anti-Virus/ Malware / Spyware                                                                  What is the base rate of virus /
                                                                                                     malware / spyware events?
      Risk Analysis                                                                                  What is the base rate of the hazard
                                                                                                     (part of inherent risk)?
      Third-Party Assurance                                                                          What is the base rate of compliant
                                                                                                     vendors?
                                                                                                     What is the base rate of accurate
                                                                                                     audit reports?


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All rights reserved.
Introduction         Natural Frequencies


      1         2             3            4




          Base Rate Fallacy       Fourfold Tables
          & InfoSec
Use Natural Frequencies to Avoid the Base Rate Fallacy

                                                                                    1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                   680 seen as                       170 seen                       120 seen                      30 seen as
                                    green by                        as orange                      as orange                       green by
                                     witness                        by witness                     by witness                      witness


                                                          Pr (orange | witness says it was orange)

                                                                        120
                                                          =         ---------------- = 41%
                                                                     170+120

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All rights reserved.
Use Natural Frequencies to Avoid the Base Rate Fallacy

                                                                                    1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                   680 seen as                       170 seen                       120 seen                      30 seen as
                                    green by                        as orange                      as orange                       green by
                                     witness                        by witness                     by witness                      witness


                                                          Pr (Green | witness says it was orange)

                                                                        170
                                                          =         ---------------- = 59%
                                                                     170+120

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All rights reserved.
Natural Frequencies Work!

                                                                          “People tend to get the right answers
                                                                          using natural frequencies much more
                                                                          often than using conditional
                                                                          probabilities: 80% vs. 33%.”



        Gerd Gigerenzer
        Max Planck Institute (Berlin),
        former Professor of Psychology (University of Chicago)




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True Positives (aka “hits”)
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                     680 seen                      170 seen as                     120 seen as                    30 seen as
                                     as green                       orange by                       orange by                      green by
                                    by witness                       witness                         witness                       witness


      𝐿𝐿𝐿 𝑇𝑇 = # 𝑜𝑜 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃
      𝑇𝑇 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑔𝑔𝑔𝑔𝑔)
      𝑇𝑇 = 𝟔𝟔𝟔



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False Positives (aka “false alarms” or “Type I errors”)
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                   680 seen as                     170 seen as                     120 seen as                    30 seen as
                                    green by                        orange by                       orange by                      green by
                                     witness                         witness                         witness                       witness


      𝐿𝐿𝐿 𝐹𝐹 = 𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃
      𝐹𝐹 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑜𝑜𝑜𝑜𝑜𝑜)
      𝐹𝐹 = 𝟑𝟑



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True Negatives
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                   680 seen as                     170 seen as                      120 seen                      30 seen as
                                    green by                        orange by                      as orange                       green by
                                     witness                         witness                       by witness                      witness


      𝐿𝐿𝐿 𝑇𝑇 = 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁
      𝑇𝑇 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑜𝑜𝑜𝑜𝑜𝑜)
      𝑇𝑇 = 𝟏𝟏𝟏



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False Negatives (aka “misses” or “Type II errors”)
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                   680 seen as                       170 seen                      120 seen as                    30 seen as
                                    green by                        as orange                       orange by                      green by
                                     witness                        by witness                       witness                       witness


      𝐿𝐿𝐿 𝐹𝐹 = 𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁
      𝐹𝐹 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑔𝑔𝑔𝑔𝑔)
      𝐹𝐹 = 𝟏𝟏𝟏



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Summary
   Assumption:
   The cab was green                                                                1,000 cabs


                                                                                      Green Cab                                       Orange Cab
                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs
               Seen as Green Cab                                              680 True Positives                                   30 False Positives
                                                                                  (TP=680)                                             (FP=30)
                                     680 seen                        170 seen                       120 seen                       30 seen as
                                     as green                       as orange                      as orange                        green by
                                    by witness                      by witness                     by witness                       witness

               Seen as Orange Cab False Positive True Negative
                     True Positive       170 False Negatives                                                                      False Negative
                                                                                                                                   120 True Negatives
                                                (FN=170)                                                                               (TN=120)




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Introduction         Natural Frequencies


      1         2             3            4




          Base Rate Fallacy       Fourfold Tables
          & InfoSec
A question:
                Let’s assume a technology that detects malicious
                packets:

                          95% accuracy in detecting malicious packets

                          15% false positive rate

                What is the probability that a packet identified as
                malicious is really malicious?

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What are fourfold tables?


                                                                                                                                   Does not exist/
                                                                                     Exists/True                                   Not True/False



               Identified/Detected as                                          True Positive (TP)                                 False Positive (FP)
               Existing/True/Positive                                                (+ +)                                               (- +)



               Identified/Detected as                                       False Negative (FN)                                   True Negative (TN)
               Not                                                                 (+ -)                                                 (- -)
               Existing/False/Negative




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What are fourfold tables?




                A fourfold table, also called a 2 x 2 table, is a
                four cell table (2 rows x 2 columns) based
                upon two sets of dichotomous or ”yes/no”
                facts.



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What are fourfold tables?


      The two sets of facts could be:

                Something that exists or is true, or doesn’t exist/isn’t
                true, and
                Something else related to #1 that exists or is true, or
                doesn’t exist/isn’t true, including “something” that
                attempts to identify/detect whether #1 exists/is true or
                #1 does not exist/is not true.


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What are fourfold tables?


                The “something” that exists or doesn’t exist could be a disease,
                a virus or worm, malware, exploit code, or a malicious packet:
                i.e: you have a disease or you don’t; a piece of code is
                malicious or it isn’t, etc.

                The “something else” that “identifies/detects” could be a
                medical diagnostic test, anti-virus/anti-malware software,
                IDS/IPS systems, etc. The diagnostic test or software either
                correctly identifies the disease, virus, or malware, or it doesn’t.




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What are fourfold tables?

                True Positive: “something” does exist/is true and is correctly identified as
                existing/true.

                False Positive: “something” does not exist/is not true, but is incorrectly identified
                as existing/true.

                True Negative: “something” does not exist/is false, and is correctly identified as
                not existing/false.

                False Negative: “something” does exist/is true, but is incorrectly identified as not
                existing/not true.




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How do fourfold tables work?


                Using the previous example:

                          95% accuracy in detecting malicious traffic

                          15% false positive rate

                And, assuming that 3% of all traffic is malicious
                (prevalence)

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How do fourfold tables work?



                Out of 1 million packets:

                          3% are malicious = 30,000

                          97% are non-malicious = 970,000


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How do fourfold tables work?



                Out of 30,000 malicious packets:

                          95% are correctly identified as malicious =
                          28,500 (True Positive)

                          5% are incorrectly identified as harmless =
                          1,500 (False Negative)
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How do fourfold tables work?



                Out of 970,000 non-malicious packets:

                          15% are incorrectly identified as malicious
                          = 145,500 (False Positive)

                          85% are correctly identified as non-
                          malicious = 824,500 (True Negative)
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How do fourfold tables work?



                                                                                      True                                        False

                      Positive                                            True Positive                                 False Positive
                                                                              (TP)                                          (FP)
                                                                             28,500                                        145,500
                      Negative                                         False Negative True Negative
                                                                            (FN)          (TN)
                                                                           1,500         824,500


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Questions we can answer with fourfold tables :

                What is the probability that a packet identified
                as malicious is really malicious?

                          P(mal)                                 = TP / (TP + FP)
                                                                 = 28,500 / (28,500 + 145,500)
                                                                 = 16.3%

                What happened to the 95% accuracy rate?
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Questions we can answer with fourfold tables :


                What is the probability that a packet identified
                as non-malicious is really non-malicious?

                          P(<>mal) = TN / (TN + FN)
                                   = 824,500 / (824,500 + 1,500)
                                   = 98.8%


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All rights reserved.
Questions we can answer with fourfold tables :


                Some things to remember:

                          The numbers in the four cells must add up
                          to 100% of the total number being analyzed
                          (1M in this example)

                          As the base rate approaches 100%, the
                          base rate fallacy ceases to apply
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
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Contact Info
      Patrick Florer                                                                              Jeff Lowder
      CTO and Cofounder                                                                           President, Society for Information
      Risk Centric Security, Inc.                                                                 Risk Analysts (SIRA)
      • Web:                                                                                      • Web: www.jefflowder.com
         www.riskcentricsecurity.com                                                              • Blog: bloginfosec.com and
      • Email:                                                                                       www.societyinforisk.org
         patrick@riskcentricsecurity.com                                                          • Twitter: @agilesecurity




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APPENDIX
Accuracy (aka Efficiency)
   Assumption:
   The cab was green                                                                 1,000 cabs




                                                            850 green                                           150 orange
                                                              cabs                                                 cabs



                                            680 seen as                170 seen as                120 seen as                30 seen as
                                             green by                   orange by                  orange by                  green by
                                              witness                    witness                    witness                   witness




 What is the percentage of correct observations made by the witness?
                    𝑇𝑇 + 𝑇𝑇
 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 =
               𝑇𝑇 + 𝑇𝑇 + 𝐹𝐹 + 𝐹𝑁
              # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 + # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜
 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 =
                                            # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠
                    680 + 30
 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 =                           = 𝟕𝟕𝟕
              680 + 120 + 30 + 170
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True Positive Rate (aka “Sensitivity”)
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                     680 seen                        170 seen                      120 seen as                    30 seen as
                                     as green                       as orange                       orange by                      green by


                                             𝑇𝑇
                                    by witness                      by witness                       witness                       witness


      𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) =
                                          𝑇𝑇 + 𝐹𝐹
                                         # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔
      𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) =
                                                 # 𝑜𝑜 𝑔𝑔𝑔𝑔𝑔 𝑐𝑐𝑐𝑐
                                            680
      𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =             = 𝟖𝟖𝟖
                                         680 + 170
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
False Positive Rate (aka “False Alarm Rate”)
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                   680 seen as                     170 seen as                      120 seen                      30 seen as
                                    green by                        orange by                      as orange                       green by


                                    𝐹𝐹
                                     witness                         witness                       by witness                      witness


      𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝛼) =
                                 𝐹𝐹 + 𝑇𝑇
                                # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔
      𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝛼) =
                                         # 𝑜𝑜 𝑜𝑜𝑜𝑜𝑜𝑜 𝑐𝑐𝑐𝑐
                                   30
      𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝛼) =          = 𝟐𝟐𝟐
                                30 + 120
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
True Negative Rate (aka “Specificity”)
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                   680 seen as                     170 seen as                      120 seen                      30 seen as
                                    green by                        orange by                      as orange                       green by


                                           𝑇𝑇
                                     witness                         witness                       by witness                      witness


      𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =
                                        𝑇𝑇 + 𝐹𝐹
                                        𝐶𝐶𝐶𝐶 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝑆𝑆𝑆𝑆 𝑎𝑎 𝑂𝑂𝑂𝑂𝑂𝑂
      𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =
                                              # 𝑜𝑜 𝑂𝑂𝑂𝑂𝑂𝑂 𝐶𝐶𝐶𝐶
                                         120
      𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =          = 𝟖𝟖𝟖
                                       120 + 30
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
False Negative Rate
   Assumption:
   The cab was green                                                                1,000 cabs




                                                     850 green                                                     150 orange
                                                       cabs                                                           cabs



                                     680 seen                        170 seen                      120 seen as                    30 seen as
                                     as green                       as orange                       orange by                      green by


                                    𝐹𝐹
                                    by witness                      by witness                       witness                       witness


      𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 (𝛽) =
                                 𝐹𝐹 + 𝑇𝑇
                                # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜
      𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 (𝛽) =
                                             # 𝑜𝑜 𝑔𝑔𝑔𝑔𝑔 𝑐𝑐𝑐𝑐
                                   170
      𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 (𝛽) =            = 𝟐𝟐𝟐
                                170 + 680
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Summary



                                                                                      Green Cab                                     orange Cab


               Seen as Green Cab                                                 80% TP Rate                                       20% FP Rate
                                                                               (Sensitivity=80%)                                     (α=20%)



               Seen as orange Cab                                                   20% FN Rate                                     80% TN Rate
                                                                                     (β = 20%)                                    (Specificity=80%)




Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Why the Base Rate Matters to InfoSec
      Example                                                                                        Questions to Ask
      Common Vulnerability Scoring System                                                            What is the base rate of vuln
                                                                                                     exploitation?
      Vulnerability Scanners                                                                         What is the base rate of each type of
                                                                                                     vulnerability?
      Intrusion Detection Systems                                                                    What is the maximum acceptable
                                                                                                     false positive rate for my
                                                                                                     organization’s IDS?
      Anti-Virus/ Malware / Spyware                                                                  What is the base rate of virus /
                                                                                                     malware / spyware events?
      Risk Analysis                                                                                  What is the base rate of the hazard
                                                                                                     (part of inherent risk)?
      Third-Party Assurance                                                                          What is the base rate of compliant
                                                                                                     vendors?
                                                                                                     What is the base rate of accurate
                                                                                                     audit reports?

Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
True Positive Rate (aka “Sensitivity”) for
      IBM AppScan and SQL Injection Vulns
 Source: “The SQL Injection
 Detection Accuracy of Web                                                              146 Test
 Application Scanners”                                                                   Cases
 SecToolMarket.com


                                                                                                                    10 non-
                                                          136 vulnerable
                                                                                                                vulnerable test
                                                            test cases
                                                                                                                     cases



                                             136 detected               0 detected as              7 detected as
                                                                                                                             3 detected as
                                             as vulnerable                  non-                   not vulnerable
                                                                                                                             vulnerable by
                                                by IBM                  vulnerable by                  by IBM
                                                                                                                             IBM AppScan
                                               AppScan                  IBM AppScan                  AppScan




                                          𝑇𝑇
   𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) =
                                       𝑇𝑇 + 𝐹𝐹
                                      # 𝑜𝑜 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣
   𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) =
                                                  # 𝑜𝑜 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐
                                        136
   𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =           = 𝟏𝟏𝟏𝟏
                                      136 + 0

Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
True Negative Rate (aka “Specificity”) for
      IBM AppScan and SQL Injection Vulns
 Source: “The SQL Injection
 Detection Accuracy of Web                                                              146 Test
 Application Scanners”                                                                   Cases
 SecToolMarket.com


                                                                                                                    10 non-
                                                          136 vulnerable
                                                                                                                vulnerable test
                                                            test cases
                                                                                                                     cases



                                              136 detected              0 detected as             7 detected as
                                                                                                                             3 detected as
                                              as vulnerable            non-vulnerable             not vulnerable
                                                                                                                             vulnerable by
                                                 by IBM                    by IBM                     by IBM
                                                                                                                             IBM AppScan
                                                AppScan                   AppScan                   AppScan




                                       𝑇𝑇
  𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =
                                    𝑇𝑇 + 𝐹𝐹
                                    𝑇𝑇𝑇𝑇 𝐶𝐶𝐶𝐶𝐶 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑎𝑎 𝑁𝑁𝑁 − 𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉
  𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =
                                             # 𝑜𝑜 𝑁𝑁𝑁 − 𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉 𝑇𝑇𝑇𝑇 𝐶𝐶𝐶𝐶𝐶
                                     7
  𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 =       = 𝟕𝟕𝟕
                                   7+3



Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Positive Prediction Value (PPV)
   Assumption:
   The cab was green                                                                  1,000 cabs




                                                            850 green                                           150 orange
                                                              cabs                                                 cabs



                                            680 seen as                170 seen as                120 seen as                30 seen as
                                             green by                   orange by                  orange by                  green by
                                              witness                    witness                    witness                   witness




    If the witness says the cab was green, what’s the probability the witness is right?
                𝑇𝑇
     𝑃𝑃𝑃 =
             𝑇𝑇 + 𝐹𝐹
                     # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔
     𝑃𝑃𝑃 =
            # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 + 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔
               680
     𝑃𝑃𝑃 =            = 𝟗𝟗. 𝟕𝟕𝟕𝟕𝟕
            680 + 30
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Negative Prediction Value (NPV)
   Assumption:
   The cab was green                                                                  1,000 cabs




                                                            850 green                                           150 orange
                                                              cabs                                                 cabs



                                             680 seen as               170 seen as                120 seen as                 30 seen as
                                              green by                  orange by                  orange by                   green by
                                               witness                   witness                    witness                     witness




    If the witness says the cab was orange, what’s the probability the witness is right?
                𝑇𝑇
     𝑁𝑁𝑁 =
             𝑇𝑇 + 𝐹𝐹
                     # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜
     𝑁𝑃𝑃 =
            # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 + 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜
                120
     𝑁𝑃𝑃 =               = 𝟒𝟒. 𝟑𝟑𝟑𝟑𝟑
            120 + 170
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Example: PPV for IBM AppScan and SQL Injection Vulns
 Source: “The SQL Injection
 Detection Accuracy of Web                                                              146 Test
 Application Scanners”                                                                   Cases
 SecToolMarket.com


                                                                                                                    10 non-
                                                          136 vulnerable
                                                                                                                vulnerable test
                                                            test cases
                                                                                                                     cases



                                             136 detected               0 detected as              7 detected as
                                                                                                                             3 detected as
                                             as vulnerable             non-vulnerable              not vulnerable
                                                                                                                             vulnerable by



    If IBM AppScan says a SQL injection vulnerability is present, what’s the probability
                                                by IBM                     by IBM                      by IBM
                                                                                                                             IBM AppScan
                                               AppScan                    AppScan                    AppScan




    that IBM AppScan is right?
                𝑇𝑇
     𝑃𝑃𝑃 =
             𝑇𝑇 + 𝐹𝐹
                   # 𝑜𝑜 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣
     𝑃𝑃𝑃 =
            # 𝑜𝑜 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 + 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣
              136
     𝑃𝑃𝑃 =           = 𝟗𝟗. 𝟖𝟖𝟖
            136 + 3
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Bayes Theorem:


            P(A|B) = P(B|A) * P(A)
                          P(B)
                     Where:

                          P(A) = prevalence of malware
                          P(B) = probability of a positive finding
                          P(B|A) = probability of correctly identifying malware
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Bayes Theorem:

           Using the malware example:
                P(A) =     3%                                                        (prevalence of malware)
                P(B|A) = 95%                                                         (detection rate)
                P(B) = 17.4%                                                         (true positive rate)

                          P(A|B)                                 =                   (.95 * .03) / .174
                                                                 =                   .1637
                                                                 =                   16.4%
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Speaking of prevalence and incidence -

                What’s the difference?
                          Prevalence: cross-sectional, how much is out
                          there right now?

                          Incidence: longitudinal, a proportion of new
                          cases found during a time period

                          Both prevalence and incidence can be
                          expressed as rates.
Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.
Monte Carlo Simulation


                How can the use of Monte Carlo simulation
                improve the use of fourfold tables?

                          Examples in Excel




Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com).
All rights reserved.

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Source seattle 2012

  • 1. INFORMATION SECURITY INFORMATION SECURITY WHY THE BASE RATE FALLACY MATTERS TO INFOSEC & HOW TO AVOID IT September 14, 2012 Patrick Florer Jeff Lowder, CISSP
  • 2. Introduction Natural Frequencies 1 2 3 4 Base Rate Fallacy Fourfold Tables & InfoSec
  • 3. Introduction Natural Frequencies 1 2 3 4 Base Rate Fallacy Fourfold Tables & InfoSec
  • 4. Patrick Florer • Cofounder and CTO of Risk Centric Security. • Fellow of and Chief Research Analyst at the Ponemon Institute. • 32 years of IT experience, including roles in IT operations, development, and systems analysis. • In addition, he worked a parallel track in medical outcomes research, analysis, and the creation of evidence-based guidelines for medical treatment. • From 1986 until now, he has worked as an independent consultant, helping customers with strategic development, analytics, risk analysis, and decision analysis. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 5. Jeff Lowder • President of the Society for Information Risk Analysts (www.societyinforisk.org) • Director, Global Information Security and Privacy, OpenMarket • Industry thought leader who leads world-class security organizations by building and implementing custom methodologies and frameworks that balance information protection and business agility. • 16 years of experience in information security and risk management • Previous leadership roles include: – Director, Information Security, The Walt Disney Company – Manager, Network Security, NetZero/United Online – Director, Security and Privacy, Elemica – Director, Network Security, United States Air Force Academy Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 6. Introduction Natural Frequencies 1 2 3 4 Base Rate Fallacy Fourfold Tables & InfoSec
  • 7. Quick Check #1: How Good Are You at Estimating Risk? “I saw an orange cab” What color was the cab? The witness gets the color right 80% of the time Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 8. Quick Check #1: What is the probability the cab was orange? (a) 80% (b) Somewhere between 50 and 80% (c) 50% (d) Less than 50% (the cab was green) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 9. Quick Check #2: How Good Are You at Estimating Risk? 85% of the taxis on the road are green cabs. 15% of the taxis on the road are orange cabs. “I saw an orange cab” What color was the cab? The witness gets the color right 80% of the time Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 10. Quick Check #2: What is the probability the cab was orange? (a) 80% (b) Somewhere between 50 and 80% (c) 50% (d) Less than 50% (the cab was green) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 11. Quick Check #3 • 850 out of every 1,000 taxis are green cabs. • 150 out of every 1,000 taxis are orange cabs. • Of these 850 green cabs, the witness will see 170 of them as orange. • Of the 150 remaining orange cabs, the witness will see 120 of them as orange. • The witness says she saw an orange cab. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 12. Quick Check #3: What is the probability the cab was orange? (a) 80% (b) Somewhere between 50 and 80% (c) 50% (d) Less than 50% (the cab was green) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 13. Correct Answers Quick Check #1: Unknown. Without some idea of the base rate of orange cabs, it is impossible to estimate the probability that the witness is correct. Quick Check #2: (d) Less than 50% (the cab was green) Quick Check #3: (d) Less than 50% (the cab was green) The exact probability is 41%. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 14. Base Rates and the Base Rate Fallacy • Base Rate: “The base rate of an attribute (or event) in a population is the proportion of individuals manifesting that attribute (at a certain point in time). A synonym for base rate is prevalence.” Source: Gerd Gigerenzer, Calculated Risks: How to Know When Numbers Deceive You • Base Rate Fallacy: A fallacy of statistical reasoning that occurs when both base rate information and specific data about a specific individual is available. The fallacy is to make a conclusion about the probability (or frequency) by ignoring the base rate information and only considering the specific data. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 15. How Did Your Peers Do (with the Taxi Cab Question)? Jeff Lowder’s Research: D How often do GRC 5% professionals commit the base-rate fallacy? C 15% A 35% When presented with conditional probabilities (such as Quick Check #2), B 95% of GRC professionals 45% commit the base-rate fallacy Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 16. Why the Base Rate Matters to InfoSec Example Output Relevant Base Rate Common Vulnerability Vuln scores (0-10) used to Base rate of vuln Scoring System prioritize remediation exploitation Vulnerability Scanners Scan results Base rate of vulnerabilities Intrusion Detection Intrusion alerts Base rate of intrusion Systems events Anti-Virus/ Malware / Virus / Malware / Spyware Base rate of virus / Spyware alerts malware / spyware events Risk Analysis Residual Risk Base rate of hazard (part of inherent risk) Third-Party Assurance Third-Party Audit Report Base rate of compliant vendors Base rate of accurate audit reports Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 17. Why the Base Rate Matters to InfoSec Example Questions to Ask Common Vulnerability Scoring System What is the base rate of vuln exploitation? Vulnerability Scanners What is the base rate of each type of vulnerability? Intrusion Detection Systems What is the base rate of intrusion events? Anti-Virus/ Malware / Spyware What is the base rate of virus / malware / spyware events? Risk Analysis What is the base rate of the hazard (part of inherent risk)? Third-Party Assurance What is the base rate of compliant vendors? What is the base rate of accurate audit reports? Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 18. Introduction Natural Frequencies 1 2 3 4 Base Rate Fallacy Fourfold Tables & InfoSec
  • 19. Use Natural Frequencies to Avoid the Base Rate Fallacy 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen 120 seen 30 seen as green by as orange as orange green by witness by witness by witness witness Pr (orange | witness says it was orange) 120 = ---------------- = 41% 170+120 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 20. Use Natural Frequencies to Avoid the Base Rate Fallacy 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen 120 seen 30 seen as green by as orange as orange green by witness by witness by witness witness Pr (Green | witness says it was orange) 170 = ---------------- = 59% 170+120 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 21. Natural Frequencies Work! “People tend to get the right answers using natural frequencies much more often than using conditional probabilities: 80% vs. 33%.” Gerd Gigerenzer Max Planck Institute (Berlin), former Professor of Psychology (University of Chicago) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 22. True Positives (aka “hits”) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen 170 seen as 120 seen as 30 seen as as green orange by orange by green by by witness witness witness witness 𝐿𝐿𝐿 𝑇𝑇 = # 𝑜𝑜 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑇𝑇 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑔𝑔𝑔𝑔𝑔) 𝑇𝑇 = 𝟔𝟔𝟔 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 23. False Positives (aka “false alarms” or “Type I errors”) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen as 120 seen as 30 seen as green by orange by orange by green by witness witness witness witness 𝐿𝐿𝐿 𝐹𝐹 = 𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝐹𝐹 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑜𝑜𝑜𝑜𝑜𝑜) 𝐹𝐹 = 𝟑𝟑 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 24. True Negatives Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen as 120 seen 30 seen as green by orange by as orange green by witness witness by witness witness 𝐿𝐿𝐿 𝑇𝑇 = 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑇𝑇 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑜𝑜𝑜𝑜𝑜𝑜) 𝑇𝑇 = 𝟏𝟏𝟏 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 25. False Negatives (aka “misses” or “Type II errors”) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen 120 seen as 30 seen as green by as orange orange by green by witness by witness witness witness 𝐿𝐿𝐿 𝐹𝐹 = 𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝐹𝐹 = # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 & (𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤 𝑔𝑔𝑔𝑔𝑔) 𝐹𝐹 = 𝟏𝟏𝟏 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 26. Summary Assumption: The cab was green 1,000 cabs Green Cab Orange Cab 850 green 150 orange cabs cabs Seen as Green Cab 680 True Positives 30 False Positives (TP=680) (FP=30) 680 seen 170 seen 120 seen 30 seen as as green as orange as orange green by by witness by witness by witness witness Seen as Orange Cab False Positive True Negative True Positive 170 False Negatives False Negative 120 True Negatives (FN=170) (TN=120) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 27. Introduction Natural Frequencies 1 2 3 4 Base Rate Fallacy Fourfold Tables & InfoSec
  • 28. A question: Let’s assume a technology that detects malicious packets: 95% accuracy in detecting malicious packets 15% false positive rate What is the probability that a packet identified as malicious is really malicious? Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 29. What are fourfold tables? Does not exist/ Exists/True Not True/False Identified/Detected as True Positive (TP) False Positive (FP) Existing/True/Positive (+ +) (- +) Identified/Detected as False Negative (FN) True Negative (TN) Not (+ -) (- -) Existing/False/Negative Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 30. What are fourfold tables? A fourfold table, also called a 2 x 2 table, is a four cell table (2 rows x 2 columns) based upon two sets of dichotomous or ”yes/no” facts. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 31. What are fourfold tables? The two sets of facts could be: Something that exists or is true, or doesn’t exist/isn’t true, and Something else related to #1 that exists or is true, or doesn’t exist/isn’t true, including “something” that attempts to identify/detect whether #1 exists/is true or #1 does not exist/is not true. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 32. What are fourfold tables? The “something” that exists or doesn’t exist could be a disease, a virus or worm, malware, exploit code, or a malicious packet: i.e: you have a disease or you don’t; a piece of code is malicious or it isn’t, etc. The “something else” that “identifies/detects” could be a medical diagnostic test, anti-virus/anti-malware software, IDS/IPS systems, etc. The diagnostic test or software either correctly identifies the disease, virus, or malware, or it doesn’t. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 33. What are fourfold tables? True Positive: “something” does exist/is true and is correctly identified as existing/true. False Positive: “something” does not exist/is not true, but is incorrectly identified as existing/true. True Negative: “something” does not exist/is false, and is correctly identified as not existing/false. False Negative: “something” does exist/is true, but is incorrectly identified as not existing/not true. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 34. How do fourfold tables work? Using the previous example: 95% accuracy in detecting malicious traffic 15% false positive rate And, assuming that 3% of all traffic is malicious (prevalence) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 35. How do fourfold tables work? Out of 1 million packets: 3% are malicious = 30,000 97% are non-malicious = 970,000 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 36. How do fourfold tables work? Out of 30,000 malicious packets: 95% are correctly identified as malicious = 28,500 (True Positive) 5% are incorrectly identified as harmless = 1,500 (False Negative) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 37. How do fourfold tables work? Out of 970,000 non-malicious packets: 15% are incorrectly identified as malicious = 145,500 (False Positive) 85% are correctly identified as non- malicious = 824,500 (True Negative) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 38. How do fourfold tables work? True False Positive True Positive False Positive (TP) (FP) 28,500 145,500 Negative False Negative True Negative (FN) (TN) 1,500 824,500 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 39. Questions we can answer with fourfold tables : What is the probability that a packet identified as malicious is really malicious? P(mal) = TP / (TP + FP) = 28,500 / (28,500 + 145,500) = 16.3% What happened to the 95% accuracy rate? Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 40. Questions we can answer with fourfold tables : What is the probability that a packet identified as non-malicious is really non-malicious? P(<>mal) = TN / (TN + FN) = 824,500 / (824,500 + 1,500) = 98.8% Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 41. Questions we can answer with fourfold tables : Some things to remember: The numbers in the four cells must add up to 100% of the total number being analyzed (1M in this example) As the base rate approaches 100%, the base rate fallacy ceases to apply Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 42. Contact Info Patrick Florer Jeff Lowder CTO and Cofounder President, Society for Information Risk Centric Security, Inc. Risk Analysts (SIRA) • Web: • Web: www.jefflowder.com www.riskcentricsecurity.com • Blog: bloginfosec.com and • Email: www.societyinforisk.org patrick@riskcentricsecurity.com • Twitter: @agilesecurity Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 44. Accuracy (aka Efficiency) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen as 120 seen as 30 seen as green by orange by orange by green by witness witness witness witness What is the percentage of correct observations made by the witness? 𝑇𝑇 + 𝑇𝑇 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 = 𝑇𝑇 + 𝑇𝑇 + 𝐹𝐹 + 𝐹𝑁 # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 + # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 = # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 680 + 30 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 = = 𝟕𝟕𝟕 680 + 120 + 30 + 170 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 45. True Positive Rate (aka “Sensitivity”) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen 170 seen 120 seen as 30 seen as as green as orange orange by green by 𝑇𝑇 by witness by witness witness witness 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) = 𝑇𝑇 + 𝐹𝐹 # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) = # 𝑜𝑜 𝑔𝑔𝑔𝑔𝑔 𝑐𝑐𝑐𝑐 680 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = = 𝟖𝟖𝟖 680 + 170 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 46. False Positive Rate (aka “False Alarm Rate”) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen as 120 seen 30 seen as green by orange by as orange green by 𝐹𝐹 witness witness by witness witness 𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝛼) = 𝐹𝐹 + 𝑇𝑇 # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝛼) = # 𝑜𝑜 𝑜𝑜𝑜𝑜𝑜𝑜 𝑐𝑐𝑐𝑐 30 𝐹𝐹𝐹𝐹𝐹 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝛼) = = 𝟐𝟐𝟐 30 + 120 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 47. True Negative Rate (aka “Specificity”) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen as 120 seen 30 seen as green by orange by as orange green by 𝑇𝑇 witness witness by witness witness 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = 𝑇𝑇 + 𝐹𝐹 𝐶𝐶𝐶𝐶 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝑆𝑆𝑆𝑆 𝑎𝑎 𝑂𝑂𝑂𝑂𝑂𝑂 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = # 𝑜𝑜 𝑂𝑂𝑂𝑂𝑂𝑂 𝐶𝐶𝐶𝐶 120 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = = 𝟖𝟖𝟖 120 + 30 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 48. False Negative Rate Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen 170 seen 120 seen as 30 seen as as green as orange orange by green by 𝐹𝐹 by witness by witness witness witness 𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 (𝛽) = 𝐹𝐹 + 𝑇𝑇 # 𝑜𝑜 𝑡𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 (𝛽) = # 𝑜𝑜 𝑔𝑔𝑔𝑔𝑔 𝑐𝑐𝑐𝑐 170 𝐹𝐹𝐹𝐹𝐹 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 (𝛽) = = 𝟐𝟐𝟐 170 + 680 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 49. Summary Green Cab orange Cab Seen as Green Cab 80% TP Rate 20% FP Rate (Sensitivity=80%) (α=20%) Seen as orange Cab 20% FN Rate 80% TN Rate (β = 20%) (Specificity=80%) Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 50. Why the Base Rate Matters to InfoSec Example Questions to Ask Common Vulnerability Scoring System What is the base rate of vuln exploitation? Vulnerability Scanners What is the base rate of each type of vulnerability? Intrusion Detection Systems What is the maximum acceptable false positive rate for my organization’s IDS? Anti-Virus/ Malware / Spyware What is the base rate of virus / malware / spyware events? Risk Analysis What is the base rate of the hazard (part of inherent risk)? Third-Party Assurance What is the base rate of compliant vendors? What is the base rate of accurate audit reports? Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 51. True Positive Rate (aka “Sensitivity”) for IBM AppScan and SQL Injection Vulns Source: “The SQL Injection Detection Accuracy of Web 146 Test Application Scanners” Cases SecToolMarket.com 10 non- 136 vulnerable vulnerable test test cases cases 136 detected 0 detected as 7 detected as 3 detected as as vulnerable non- not vulnerable vulnerable by by IBM vulnerable by by IBM IBM AppScan AppScan IBM AppScan AppScan 𝑇𝑇 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) = 𝑇𝑇 + 𝐹𝐹 # 𝑜𝑜 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 (𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆) = # 𝑜𝑜 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐 136 𝑇𝑇𝑇𝑇 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = = 𝟏𝟏𝟏𝟏 136 + 0 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 52. True Negative Rate (aka “Specificity”) for IBM AppScan and SQL Injection Vulns Source: “The SQL Injection Detection Accuracy of Web 146 Test Application Scanners” Cases SecToolMarket.com 10 non- 136 vulnerable vulnerable test test cases cases 136 detected 0 detected as 7 detected as 3 detected as as vulnerable non-vulnerable not vulnerable vulnerable by by IBM by IBM by IBM IBM AppScan AppScan AppScan AppScan 𝑇𝑇 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = 𝑇𝑇 + 𝐹𝐹 𝑇𝑇𝑇𝑇 𝐶𝐶𝐶𝐶𝐶 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑎𝑎 𝑁𝑁𝑁 − 𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = # 𝑜𝑜 𝑁𝑁𝑁 − 𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉 𝑇𝑇𝑇𝑇 𝐶𝐶𝐶𝐶𝐶 7 𝑇𝑇𝑇𝑇 𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 = = 𝟕𝟕𝟕 7+3 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 53. Positive Prediction Value (PPV) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen as 120 seen as 30 seen as green by orange by orange by green by witness witness witness witness If the witness says the cab was green, what’s the probability the witness is right? 𝑇𝑇 𝑃𝑃𝑃 = 𝑇𝑇 + 𝐹𝐹 # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 𝑃𝑃𝑃 = # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 + 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑔𝑔𝑔𝑔𝑔 680 𝑃𝑃𝑃 = = 𝟗𝟗. 𝟕𝟕𝟕𝟕𝟕 680 + 30 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 54. Negative Prediction Value (NPV) Assumption: The cab was green 1,000 cabs 850 green 150 orange cabs cabs 680 seen as 170 seen as 120 seen as 30 seen as green by orange by orange by green by witness witness witness witness If the witness says the cab was orange, what’s the probability the witness is right? 𝑇𝑇 𝑁𝑁𝑁 = 𝑇𝑇 + 𝐹𝐹 # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 𝑁𝑃𝑃 = # 𝑜𝑜 𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 + 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑜𝑜𝑜𝑜𝑜𝑜 120 𝑁𝑃𝑃 = = 𝟒𝟒. 𝟑𝟑𝟑𝟑𝟑 120 + 170 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 55. Example: PPV for IBM AppScan and SQL Injection Vulns Source: “The SQL Injection Detection Accuracy of Web 146 Test Application Scanners” Cases SecToolMarket.com 10 non- 136 vulnerable vulnerable test test cases cases 136 detected 0 detected as 7 detected as 3 detected as as vulnerable non-vulnerable not vulnerable vulnerable by If IBM AppScan says a SQL injection vulnerability is present, what’s the probability by IBM by IBM by IBM IBM AppScan AppScan AppScan AppScan that IBM AppScan is right? 𝑇𝑇 𝑃𝑃𝑃 = 𝑇𝑇 + 𝐹𝐹 # 𝑜𝑜 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑃𝑃𝑃 = # 𝑜𝑜 𝑡𝑡𝑡𝑡 𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 + 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑎𝑎 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 136 𝑃𝑃𝑃 = = 𝟗𝟗. 𝟖𝟖𝟖 136 + 3 Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 56. Bayes Theorem: P(A|B) = P(B|A) * P(A) P(B) Where: P(A) = prevalence of malware P(B) = probability of a positive finding P(B|A) = probability of correctly identifying malware Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 57. Bayes Theorem: Using the malware example: P(A) = 3% (prevalence of malware) P(B|A) = 95% (detection rate) P(B) = 17.4% (true positive rate) P(A|B) = (.95 * .03) / .174 = .1637 = 16.4% Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 58. Speaking of prevalence and incidence - What’s the difference? Prevalence: cross-sectional, how much is out there right now? Incidence: longitudinal, a proportion of new cases found during a time period Both prevalence and incidence can be expressed as rates. Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.
  • 59. Monte Carlo Simulation How can the use of Monte Carlo simulation improve the use of fourfold tables? Examples in Excel Proprietary. Copyright © 2012 by Jeff Lowder (www.jefflowder.com) and Risk Centric Security, Inc (www.riskcentricsecurity.com). All rights reserved.