Internal Audit Enjoys Home-field Advantage in the Fight for Cybersecurity

Cybersecurity continues to be a major concern for businesses, with seven in 10 chief audit executives surveyed identifying it as a high or critical priority, according to the just-released 2015 North American Pulse of Internal Audit report. This is not unexpected, but what I do find troubling is something that I’m hearing more and more in my discussions with CAEs around the world.

There appears to be a growing view that cybersecurity issues should reside in the domain of IT and security experts, with internal audit providing little more than support. The question I’m hearing too often is, “What can internal audit contribute?”

The answer is, plenty.

The fundamental truth about cybersecurity is that it is as much a business risk as it is a security risk, and it is imperative that our stakeholders understand this so that internal audit is sought out to provide the necessary assurance and governance guidance in this critical area.

Perhaps there is reticence in leading the fight against cybercrime because of the high stakes involved or the potential for negative publicity around high-profile failures. But our profession has never been one to shrink from complex risks or hard tasks.

Here’s something that should provide some reassurance. There is a dirty little secret about cybersecurity risks that cybercriminals would rather we not know — we have home field advantage.

Cybercriminals have to come into our house, so to speak, so we have a natural advantage. In the large majority of cyber assaults, the cybercriminal does not know what we have of value, where to find it in the system, or what protections we have around that most valuable data. We do and, with proper planning, can force the attackers to play the game according to our rules. This knowledge should color our approach to creating the protocols that secure and protect our data.

Experts in data protection recommend a basic process to identify the most important information, what many refer to as the crown jewels of data. It is that data that must be protected at all costs, and it is up to internal audit to provide assurance to stakeholders that the processes in place to protect it are effective and efficient.

Organizations should begin by segmenting their data into three piles based on its value to the organization:

• Don’t care — This is information that would have no appreciable impact on the organization or its clients if it is accessed by hackers, e.g. information readily accessible on the organization’s website.
• Reputational risk — This is information that could lead to negative publicity or embarrassment to the organization if it fell into the wrong hands, but it would not kill the company, e.g. employee disciplinary reports.
• Real harm — This is information that could create major problems for a company or its clients if it is hacked, e.g. financial data, PCI, strategic business plans.

Information in that final crown jewels pile must be separated from the first two piles, isolated and protected. This allows for resources to be concentrated where they are most useful rather than generically spread across the environment. Once protected, it is up to internal audit to do what it does best — test for effectiveness and efficiency of controls and protocols, and provide management and the board with assurance about those protections.

Daimon Geopfert, national leader for security and privacy consulting at McGladrey, has been a strong advocate of encouraging internal audit to step up on cybersecurity matters. A popular speaker, including at a number of IIA conferences, Geopfert offers straightforward insights that help put the cybersecurity issues squarely in the internal audit camp.

According to Geopfert:

• Internal audit can and should conduct data mapping and classification exercises to test protections. It is important to “follow the lifecycle” of the data — that is, know where it comes from, where it resides, who uses it and how, and how long it is kept in the system.
• Such exercises will likely turn up instances where protected data is exported from its protected environment for local use, significantly raising the vulnerability to being successfully hacked.
• Through such exercises, internal audit can drive the discussion on what data is most vulnerable and appropriate controls throughout its lifecycle no matter where it travels.
• Internal auditors must learn to ask the right questions regarding data protection, focusing on what actually is happening in field, not just what is written in various policy statements.
• Internal audit must be prepared to sacrifice some sacred cows (business practices), especially regarding behaviors that may make operations easier but increase vulnerability and, therefore, the likelihood of data breaches.
• Internal audit must set expectations with stakeholders on data protection. High-level commitments to protecting certain data will make it easier to curtail risky behavior that simply makes work more convenient.

The other bit of good news from Geopfert is a figure rarely seen in media coverage of cybersecurity issues. Basic data protections through sound practices and policies will likely discourage 60 percent to 70 percent of hackers, many of whom are not overly skilled, significantly reducing cybersecurity risks. These practices, e.g. limiting access to sensitive information, appropriate patching and monitoring, encryption on mobile devices and media, third-party-vendor security reviews, etc., already should be on internal audit’s radar.

I’d like to hear your thoughts about what role internal audit should play in cybersecurity.