This document provides an overview of key concepts related to risk management, including definitions of risk, vulnerability, probability, and impact. It discusses approaches to assessing risk such as quantifying probability and impact, analyzing threats and vulnerabilities, and measuring the effectiveness of security controls. The document is authored by Phillip Banks and copyrighted by The Banks Group Inc., which provides risk consulting and security services. It references numerous standards and guidelines for risk and security management.

2. Phillip Banks PE, CPP © The Banks Group Inc. - 2017

3. “If we don’t understand vulnerability we
won’t understand risk.”
Unknown
“Risk management is a systematic response
to uncertainty.”1
1CSE/RCMP Harmonized Threat and Risk Assessment Methodology, October 23rd, 2007

4. Risk
Is a person or situation
that poses a possible
threat to the security of
something.
The effect of
uncertainty on
objectives1.
Vulnerability
Is a weakness or gap in
a security protections,
control measures or
processes that can be
exploited by an
adversary to remove,
damage or destroy an
asset.
1Risk Management Principles and Guidelines, AS NZS ISO 31000:2009

5. Risk has three key characteristics1:
It looks ahead into the future;
There is an element of uncertainty e.g. a
condition or a situation exists that might
cause a problem for the project in the future;
It is related to the outcome.
1Project Complexity and Risk Assessment Tool, Version 1.4,. Treasury Board of Canada Secretariat

7. Risk = P x I
Risk = P x I x V
Risk = PA (1 – PI) C
Risk = P x I x M
Risk = Probability x Impact
Security Controls
Risk = P X E (Exploitability of Protection)

8. Adversary?
Threat(s)?
Adversary
Objectives?
Capabilities
and Strengths?
Adversary
Determination?
Knowledge,
Training and
Experience?
Timeline?
???????

9. © The Banks Group Inc. - 2016

11. Risk is never static.
Risk can be within or outside
our sphere of control.
Risk is affected by both the
adversary and the target.
A convertible asset requires
multi-stage “risk continuum”
consideration.
What can be done to positively
affect the “risk triangle”?
Corporate “Risk Appetite”?
Probability

12. Quantifiable Risk
Risk we can precisely measure
and record with numbers:
How many security controls are
present?
Is the control strength rated?
How many attacks per day do we
see?
How many times did this happen
in the past?
How many vulnerabilities exist?
etc.
Qualifiable Risk
Risk we have an idea about
but can't accurately measure
and is thus subjective:
How confident are we with the
code-base?
Do we think the project has had
sufficient review?
Do we think this control is
efficient?
etc.

13. Possibility – An event
that could occur.
Probability – The
likelihood of the event
occurring.
A “possibility” is any event which has a
“probability” of occurrence which is greater
than “0”.

14. A threat-event will take
place?
The threat-event will be
mitigated to some degree?
The adversary will be 100%
successful?
What probability?
Impossible?
Even Chance?
Certain?

15. Historical record
Anecdotal info
Police sources
Industry sources
Networking
Credible intelligence
Security technology
inputs
Industry experience
…………………….?

16. Probability of a six being
on the upper surface of
one dice…?
Probability of two sixes
being on the upper
surface of two dice…?
Probability of three sixes
being on the upper
surface of three dice…?

17. A system with three
components fails if one
or more components fail.
The probability that any
given component will fail
is 1/10.
What is the probability
that the system will fail?

18. Business impact analysis
S.W.O.T analysis
Past experience
Risk manager
In-house counsel
Public relations
Employees
Etc...

19. Probability
Impact
Critical
Medium
Low
High

20. • R = Risk to the facility of an adversary gaining access to
assets (ranges from 0 to 1.0).
• PA = Probability of an adversary attack during a period of
time.
• PE = Probability of Preventing the Event.
• = P(I) INTERUPTION x P(N) NEUTRALIZATION
• C = Consequence Value.
Note: If PE is the probability of preventing the event then [1-PE] must be the
probability of the adversary being successful
R = PA * [1-(PE)] *C
* The Design and Evaluation of Physical Security Systems, Garcia, Mary Lynn, Butterworth-Heinemann, 2001
Risk = Probability Vulnerability Impact

21. Vulnerabilities are
always present?
Vulnerabilities are not
static.
Vulnerabilities
become transparent
if not treated.
Vulnerabilities are
measurable.

23. Control Measures
Vulnerability Parameters?

24. What is vulnerable?
Why is it vulnerable?
What makes it vulnerable?
Is the vulnerability easily exercised?
Can the vulnerability be mitigated?

25. Management and Measurement
Identify vulnerabilities.
Establish parameters.
Identify options.
Implement options.
Measure outcome.
Remediate as required.
Monitor and report.
Vulnerability Register.

26. Vulnerability
Vulnerability
Type
Threat
Relationship
Dependency
?
Remediation
WHAT IS IT? P, P or T
Tailgating People Daily Operations
Access
Management
Protocol
Education and
Awareness,
Signage, Anti-
Passback

27. Pareto Analysis
Pair-wise Comparison
Fault Tree Analysis
Attack Tree Analysis
Failure Mode & Effect Analysis
Failure Modes, Effects & Criticality
Analysis
C.A.R.V.E.R (modified)
Cause & Effect (Ishikawa)
Monte Carlo Simulation
_____________________?
Qualitative vs Quantitative

28. Fit-for-Purpose:
A protection/control measure which is
formally selected and mitigates the
known and reasonably foreseeable
threats.
State-of-Readiness:
A protection/control measure which is
implemented, operated, maintained and
demonstrably capable of mitigating
known or reasonably foreseeable
threats.

29. Rating
Fit-for-Purposes
Scoring Rationale
5
Protection selected based on
recognized standard or leading
practice. A formal performance
level was identified and is still
being met or exceeded.
3
Protection not specifically
appropriate for the threat,
operational or functional
environment or it is only nominally
achieving the required level of
performance.
1
Protection is inappropriate for
threat, operational or functional
environment or is not meeting a
required level of performance.
Rating
State-of-Readiness
Scoring Rationale
5
Protection is functioning as
designed and is operational in all
respects. There is little or no
down-time and there is no record
of it being compromised.
3
Protection is primarily functioning
as designed although there is
occasional down-time due to loss-
of-service or periodic break-
down.
1
Protection is not functioning or
not being in a State-of-Readiness
due to periodic loss-of-service or
break-down.

30. Fit-for-Purpose and State-of-Readiness ratings are
independent so the overall rating is the product of the
two.
A protection which is both fully Fit-for-Purpose and in
a complete State-of-Readiness should achieve a score
of 25.
If the assessor believes Fit-for-Purpose = 5 but the
State-of-Readiness = 3 then the overall rating of the
protection is 15 or 60% effective and it has a
vulnerability level of 40%.

31. 1. Develop the protection design to meet
DBT.
2. Identify appropriateelements of the
design.
3. Identify how protection system will be
evaluated for effectiveness over time.

32. Characteristic Insider Criminal Organized Crime
Objective Steal assets such as tools, parts. Steal large quantity of valuable assets. Steal large quantities of finished product.
Motivation Personal gain, revenge. Personal gain. Large gain for criminal organization.
Base Enhanced Base Enhanced Base Enhanced
Planning/System
Knowledge
Good depending on
position.
Significant. Some, opportunistic.
Significant if in
collusion with
insider.
Good to high level.
Extensive
information and
level of access.
Weapons None Edged weapons Edged weapons
Hand guns, shot
guns
Unlikely
Wide array of
weapons
Tools and Equipment
Access keys or
credentials.
Access keys,
credentials &
combinations.
Hand tools or readily
available tools at the
facility.
Hand and power
tools.
Hand tools or
readily available
tools at the facility.
Access keys,
credentials and
combinations. Hand
and power tools.
Contaminants N/A N/A N/A N/A N/A N/A
IMPACT (damage) to
Asset(s)
Minimal Notable Notable Significant
Notable to
Significant
Significant to Critical
Injury to Persons No
Possible but
unintentional
Possible but
unintentional
Possible
Possible but
unintentional
Possible and
intentional
Fatalities No No No
Possible but
unintentional
Possible but
unintentional
Possible and
intentional

34. 1The Design and Evaluation of Physical Protection Systems, Mary Lynn Garcia, Sandia National Laboratories, Albuquerque, New Mexico, Butterworth- Heinemann, 2001

35. Define the Context – Measuring What?
Identify all contributing security
element(s).
Use known or reasonably foreseeable
threat(s).
Step through the process and assign
scores – Does it make sense?
Team approach/peer review.

36. Protection Deter Deny Detect Delay Respond Protection
Score
%
Cont.
Comments
Fence 3 3 0 3 0 9 11
Bldg Const. 5 5 0 5 0 15 19
AM & IDS 1 3 5 3 3 15 19
CCTV 3 1 5 0 5 14 18
Sec Guards 5 3 3 3 5 19 24
Employees 1 0 3 0 3 7 9
18 15 16 14 16
Actual Score = 79
Possible Score = 115
Overall Effectiveness = 69%

39. PROBABILITY
IMPACT
VULNERABILITY
1. Collecting, recording and analyzing
information and data to develop security
intelligence.
2. Networking and contact development.
3. Modeling and threat forecasting
1. Business impact analysis.
2. Identification of critical structures,
operations and people.
3. Implementation and maintenance of
organizational resilience.
1. Criticality analysis.
2. Threat and threat event identification.
3. Vulnerability analysis e.g. Pareto, CARVER
& Monte Carlo Simulation etc.
4. Vulnerability assessment and reduction.

40. Practice risk management or become
very good at crisis management.
Your choice…..
Risk
Management
Crisis
Management?

41. Phillip Banks PE, CPP
The Banks Group Inc.
#4 – 1310 Wilkinson Road
Comox, British Columbia
Canada
V9M 0B3
604.762.5852
pbanks@thebanksgroup.ca www.thebanksgroup.ca
© The Banks Group Inc. - 2017

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Pareto-Optimal Situation Analysis for Selection of Security Measures, Andres Ojamaa, Enn Tyugu, Jyri Kivimaa, IEEE, 2008
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http://www.algebra.com/algebra/homework/Probability-and-statistics/Probability-and-statistics.faq.question.419808.html