Aug 7, 2020

Rapid7: NICER - diagnosing the internet’s security flaws

rapid7
NICER
Internet security
William Girling
3 min
Digital security
Released at the end of July 2020, Rapid7’s NICER report is one of the most ambitious pieces of internet security-related research ever conducted...

Released at the end of July 2020, Rapid7’s NICER report is one of the most ambitious pieces of internet security-related research ever conducted.

Focusing on three core topics - National, Industry and Cloud Exposure - the report has been intended by Rapid7 as a conversation starter on the current state of internet security. 

In a world which is currently in the grip of a significant digital transformation, in no small part accelerated by the COVID-19 pandemic which has forced companies all around the world to consider operational alternatives, the question of security could not be more relevant.

The ‘myth of the silver city’

First and foremost, the NICER report aims to dispel the false notion that internet security is ideal in its current state. Although most people’s daily interactions with the internet give no hint of the fragility underneath, Rapid7 is keen to quantify and demonstrate the reasons why this is not the case.

Everybody can afford to be more vigilant and proactive in bolstering their cyber defences, the report posits. After all, technology might have advanced exponentially in the last 50 years, yet the threats presented by phishing scams and exploiting legacy software on the edge remain.

NICER includes lists of countries and industries rated by their exposure to risk so that interested parties can compare their ‘risk neighbourhood’ with others and measure relative progress.

Perhaps most disconcertingly, the most at risk industries are revealed to include financial services, retail and pharma (i.e. vital services), with many FTSE 100, Fortune 500 and Nikkei Index entities suffering disproportionately. 

This highlights Rapid7’s argument that a constant re-evaluation and reassessment of legacy systems is necessary; particularly amongst older, established or ‘traditional’ companies, outdated infrastructures that seem to operate well could be the Achilles heel which leads to great financial loss or security breaches in the future.

Starting a conversation on security

Far from being a final, declaratory statement, Rapid7 has intended NICER to be the opening remarks to a much broader conversation on the subject.

Commonly used security protocols such as Telnet and SMB are analysed at great length and a balanced summary of each system’s strengths, weaknesses and applicable use cases is presented.

The ultimate conclusion is an ambiguous one: “Things aren't great, but not disastrously bad and relatively small changes in how we design, develop and deploy services will still have a great impact on the stability, safety and security of the internet as a whole.”

Rapid7 hopes that its work, the result of four years’ research, will generate heated debate within the tech industry on how best to address the fundamental issues around internet security. 

Whether the answer lies in developing new protocols, re-evaluating how programmers are trained or something yet unthought of, the company hopes that the report will spur a serious discussion on what we desire the future of the internet to be.

Download the full NICER report here

Stay tuned for our feature article on NICER with Rapid7’s Director of Research Tod Beardsley - scheduled to appear in the October edition of FinTech Magazine.

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Jul 18, 2021

Reimagining operational risk management for business value

BroadwayTechnology
riskmanagement
Finance
AI
Tom Ballard, Program Manager, ...
6 min
Tom Ballard sets out a thorough new vision for operation risk management in finance, using advanced AI and analytics technology to drive business value

The events of 2020 and 2021 have fundamentally changed how we do business, upending every industry, including investment banking. Once bustling trading floors went silent as the switch to work from home led traders to disperse locations – and gave rise to new operational risk challenges. 

Today’s dynamic regulatory landscape coupled with ongoing technological innovations have made legacy approaches to operational risk management ill-suited to tackle current challenges and complexity. And while many financial institutions have turned to digital automation and transformation projects to adapt traditional ‘revenue generating’ functions to meet their challenges and help drive growth, they must now do the same with their Operational Risk Management (ORM) functions - or risk being left out in the cold. 

The Basel Committee defines operational risk as the “risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.” Unfortunately, many financial institutions still view ORM as a regulatory and compliance necessity rather than a business function that delivers real value. That means executives and risk management departments must now change their risk approach to ensure they are dynamic and flexible, can guide their organizations through complex situations, and can readily meet the evolving expectations of regulators and their clients. 

Operational Risk Management is still a young field compared to other risk sectors in the financial markets, but it has always been viewed under a broad umbrella that encompasses risks and uncertainties difficult to quantify and manage in traditional manners. ORM has also been the convergence point where corporate governance issues overlap with revenue-generating business activities, causing potential confusion between departments. 

Investment banks have too often placed undue emphasis on creating governance frameworks designed to ensure they meet Basel Committee on Banking Supervision (BCBS) standards instead of recognizing that a sophisticated ORM function can bring quantifiable value. Their desire to merely meet BCBS standards and avoid historic risks has in effect led to an outdated, analogue approach in an increasingly digital world. Savvy investment banks have grasped the value potential of ORM and begun to drive a shift in awareness about the importance of a comprehensive risk identification, measurement, and mitigation program. 

Embracing a data-driven approach

Market players now recognize that adopting a digital strategy will allow them to deploy diverse and agile risk management mechanisms. It will also empower them to develop a strong and dynamic understanding of risks while adding real value to the business. This value goes beyond meeting regulatory and compliance mandates introduced as part of the Standardized Measurement Approach developed under Basel 3. A robust approach to risk allows the ORM functions to provide actionable intelligence to support business decision-making and assume a more commercial role that supports the various business units’ day-to-day activities. And that requires an intelligent, data-driven approach with a mandate to match, one that is championed at all levels of the organization.

This type of aggressive approach and embrace of digital transformation can also strengthen how ORM functions handle ambiguous and/or improbable events, especially as traditional methods of risk analysis prove unable to manage the ever-increasing volume of data. In 2010, the total amount of data created, captured, copied and consumed equaled about two zettabytes, compared to 2018 when volumes reached about 33 zettabytes. This 26% compounded annual growth rate means that if the rate of growth steadily continues by 2024, we can expect 149 zettabytes of data created per annum. 

Available data levels will make it difficult for analogue ORM functions to successfully meet the executive expectations, however organizations that adopt a data-driven approach will find increased data volumes provide them the insights to gain a competitive advantage and ability to proactively manage their risk. 

Leveraging AI and advanced analytics for high impact

Cognitive computing technologies like artificial intelligence (AI), data mining and natural language processing (NLP) can supplement a data-driven approach and help financial institutions confidently automate decisions, optimize processes and provide a deeper insight into available data. These cognitive computing technologies can help reduce or eliminate time-intensive and repetitive tasks, often related to data collection, handling and analysis which are better suited to automation. That in turn can free up critical employees to deploy their experience, knowledge of policies, and powers of assessment to support ORM functions and achieve their goals and focus on high-impact, high-value deliverables. 

Cognitive computing can teach computers to recognise and identify risk, which is especially useful to handle and evaluate unstructured data – the kind of data that doesn’t fit neatly into structured rows and columns on a spreadsheet. Natural language processing (NLP) can analyze text to derive insights and sentiments from unstructured data, which a 2015 study by the International Data Group estimates accounts for 90% of all data generated daily. When combined with the estimated future data volumes, cognitive computing functionality presents an immense opportunity for ORM functions to add additional business value in ways previously impossible. A detection model built on cognitive analytics can manage risk on a near real-time basis and can also unlock organizations’ historic datasets that have been compiled for internal, regulatory, or compliance purposes. These datasets often contain free text descriptions that contain a potential wealth of untapped, institution-specific information and could provide valuable insight into historic operational risk losses, providing data to augment employee’s qualitative experiences.    

Teaching an old dog new tricks

There are certainly challenges to launching digital transformation projects, implementing new data-driven approaches, and introducing cognitive computing technologies, including employee uncertainty and ethical considerations. That means financial institutions must preemptively address and prepare for potential challenges before they adopt a technology-enabled approach to Operational Risk Management. They must also secure employee buy-in to ensure stakeholders use these new technologies to their full potential and to assuage any concerns that technology diminishes employees’ important role in the organization.  

It’s critical that investment banks now shift their Operational Risk Management functions and focus on becoming more adaptive and agile in an increasingly volatile, complex, and uncertain world. Over 66% of banking executives report that adopting new technologies like AI and NLP will be a key driver in IBs development through to 2025. Yet for many investment banks, their ORM functions do not leverage the powerful new tools available to them – including increased computing power, digitization, advanced analytics, and data visualization techniques – much less harness the power of cognitive computing technologies. Until ORM functions leverage these tools, executive leadership cannot allocate resources and solidify ORM’s role in business strategy, performance, and decision-making processes. 

Old habits die hard, but it’s time for ORM functions to keep pace with these new technologies, methodologies, and approaches to position themselves and their organizations for success in today’s ever-changing world. If they do not adapt, there is a real risk they may stifle the wider organization, impede new opportunities and inhibit paths to valuable business growth.

This article was contributed by Tom Ballard, Program Manager, Broadway Technology

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