The link Between a Company’s Supervisory Board and its Security Strategy

Companies Need New Security Strategies

With regard to cloud computing, Bring Your Own Device (BYOD) or Social Networks companies have to think about their security strategy. Whereas the principle of prevention was effective for a long time it is not effective any more. Having a huge number of mobile devices in place, using various storage systems within the enterprise or outside and the demand for flexible and fast collaboration with clients, partners and suppliers nobody is able to predict where a certain piece of data is right now, how often it has been copied or will be tomorrow.
It is just a fact that business critical information does not reside within the perimeters of the enterprise any more.
Given this fact a company can protect its perimeters with huge efforts and be almost save, a weak system outside the enterprise like a social network or a pubic cloud system destroys all efforts of protecting the assets by preventing intrusion in the own infrastructure. The enterprises are simply not in control of prevention system any more.
Another challenge is the complexity of of attacks against enterprise infrastructures. Nowadays more often zero day exploits and strongly customized malicious code is being used, applying advanced persistent threat techniques which leads to the situation that most of the high sophisticated attacks are not recognized by any prevention system like antivirus, intrusion detection / prevention system or firewalls.
These attacks are simply below the radar screen of the traditional security systems.

What are the new Security Strategies to be applied better today than tomorrow?

The prevention of the future is detection! What does that mean? This means that enterprises have to improve their ability to register anomalies in the data flows leading to a more reliable and faster detection of security incidents. There are two main areas of improvement:

  1. Time to detect a security incident caused by APTs or other high sophisticated techniques
  2. Time to fix the issue

Especially the time to detects requires companies to have intense monitoring capabilities in place to ensure reliable detection. By building these capabilities not only the requirements of companies are in scope but also the personal rights of employees are affected. A company going this way will need to have trust within their working councils and from my perspective it is even better to integrate the employees to build trust that these facilities are not only a requirement to secure the enterprise but also the individual.

Any requirement for the supervisory board?

With respect to the supervisory boards requirements to monitor and give advise to C-Levels, a few questions have to be clarified:

  1. Does the internal control system of the enterprise reduce the risk of exposure of employees and management against threats from the outside (e.G. Use of eMail, websites, unknown documents)?
  2. Is a reporting system in place to to indicate potential threats and suspicious activities?
  3. Does the enterprise have a stable detection system in place to uncover security incidents?
  4. Did the company test the effectiveness of detection techniques and includes the results in a continuous improvement process?
  5. Are security incidents adequately reflected in the board of management’s report on the business situation of the company?

Conclusion

In the end this means that companies have numerous options in place to improve security, deal with liabilities of board members and the supervisory board and drive efficient security measures.

I would suggest to keep an eye on two work streams:

  1. Switch of non effective security measures that simply address prevention – Just talk to me and I will assist you to go this way based on a success fee.
  2. Establish a process too ensure that materiality and severity of security incidents becomes transparent to board members and their supervisory boards to ensure conformity to financial reporting standards.

Just in case that you do not believe that security is to be reflected in the financial reporting you should read the Corporate Finance Disclosure Guidance No. 2: Cybersecurity issued by the SEC. You might also want to use Google to find out who was already addressed by the Regulators of the US to have not properly addressed this issue!

Leave a Reply

Your email address will not be published. Required fields are marked *