When Leadership Says “Keep Us Safe”: Finding Cyber Risk Tolerance in the 10-K

 One of the most common questions cybersecurity professionals ask executive leadership is:

“What is the organization’s risk tolerance when it comes to cyber risk?”

And one of the most common answers they get back is:

“Keep us safe.”

“Don’t let a breach happen.”

While well-intended, these answers don’t actually define risk tolerance. No organization can be perfectly safe, and “no breaches ever” isn’t a strategy—it’s a hope. When leadership can’t (or won’t) clearly articulate cyber risk tolerance, you need to look elsewhere for clues.

One of the most useful—and often overlooked—places to find them is the company’s 10-K report.

Why Risk Tolerance Matters

Risk tolerance drives real decisions:

• How much downtime is acceptable?
• How much data exposure is tolerable?
• How much money should be spent on security controls?
• Which risks are accepted versus mitigated?

Without understanding leadership’s tolerance, security teams either over-invest (creating friction and wasted spend) or under-protect (creating unacceptable exposure).

The 10-K: Executive Risk Thinking, in Writing

A public company’s 10-K is an annual filing that details financial performance, business operations, and—most importantly for security leaders—risk factors. These disclosures are reviewed by legal teams and executive leadership, which means they reflect what leadership is willing to formally acknowledge as material risk.

When you read the 10-K, focus on:

• Risk Factors section
• Management’s Discussion and Analysis (MD&A)
• Any section referencing cybersecurity, data breaches, operational disruption, or regulatory exposure

Pay attention to:

• How strongly cyber risk is worded
• Whether breaches or data loss are explicitly mentioned

Asset Management - Physical Devices - What do you have? Do you know?

Asset management and inventorying your physical systems, we all know we should do it, and I am sure most try.  I am not going to talk about the should have, would have or could have. Instead, I am going to focus on the risks associated with the NIST CSF control ID-AM.1.  

The control simply states, “Physical devices and systems within the organization are inventoried.”  At the simplest level, this control is saying that the organization inventories all physical systems that are apart of the information system. In my opinion, the control is foundational because how can you secure something if you don't know it exists.  If you are not inventorying your systems, how do you know if they have adequate controls to protect the data and network.   If you had a breach of data, would you know what type of data was involved, or would you even know if you had a breach?  To further extend this, how can you perform a risk assessment on the system to understand and relay any risks to the overall information system?  

If this control is not in place and at a minimum level repeatable, your organization is higher risk.  You have to know what you have to be able to protect it.

The associated risks of the NIST CSF

In this series, I am hopefully going to explain the risks associated with the NIST CSF and associated controls.  I will primarily focus on NIST controls.  I intend to review each NIST CSF control individually and help understand the risks associated with not satisfying that control.  This series should help you know which controls are essential for your business when developing your profile.  The information can be further extended to developing scorecards and metrics for your information security program. 

Vulnerability Management… It’s easy - Planning

I am sure you have had either consultants, vendors, or heard at a conference that vulnerability management is foundational security control.  While I agree that it is an essential control, I also understand that it is challenging to implement.  Vulnerability management is not just to pick a tool, scan, and fix issues.  Many components make it a complicated journey.  This series will attempt to help break it down and give you ideas on how this complex service and be delivered effectively. 

 

Planning

 

Objective

When you start, I recommend creating a targeted objective and set of measures against your objective.  Ensure that you keep in mind your organization’s culture, politics, and risk appetite as you are developing your objective.  I have seen some target just “critical” systems for regulatory compliance, whereas others have targeted their entire enterprise.  No matter your scope, keep in mind your team’s current resource load, as standing up a vulnerability management program is resource-intensive at first.  In the example of scoping your vulnerability management program to the entire enterprise, break it down into smaller actionable pieces.  Smaller actionable pieces will allow you to show continual progress as you build your complete vulnerability management program.  To give you some ideas, limit scopes to a zone, subnet, or system.  Don’t try to tackle everything at once.  That often leads to frustration and failure.

 

For instance, talk to your business customers and understand what they perceive as their most critical systems.  Understand from their point of view what needs to be protected, this will help you later when you are seeking their approval, or buy in. 

 

Socializing

I have seen lots of projects fail because of lack of buy in.  For most a vulnerability management program is telling system owners how ugly their system is and that it may cost more money to fix it, or make it prettier.  To help make your program a success you should get as much executive buy in as possible.  To do this, you need to get them to understand how this program will help.  Cost avoidance is typically a difficult sell, and stating that it is mandatory for regulatory compliance is about the same.  Instead help them understand that this program will help lead to a more secure product/service.  This increased posture can be used as a competitive advantage.

Now that your executive team is starting to support you make sure you understand from their point of view what is the most critical systems that need to be protected.  Build the critical systems into your plan and agree to a scope and timing.  Just don’t forget to keep them updated as to progress and any potential roadblocks as you progress. 

 

Documenting

Formally documenting your project plan is a great way to hold yourself accountable and be able to show progress.  The documented project plan can be provided to executive management to provide updates as to the progress of the project, or show roadblocks and issues in which you need their support. 

 

Next up… reviewing and selecting tools