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Case Study in IT Security Management - Part 2: Risk Analysis
Published: November 28, 2011
Updated: November 29, 2011
Pace Heating and Air Conditioning has grown from a company made up of the owner and four employees to a privately held corporation comprising about 50 employees. This hub provides a demonstration of due diligence on the company’s behalf to assess the risks faced by the organization. Comprising this assessment are the following elements:
- Asset Valuation
- Assessment Method and Justification
- Risk Assessment Findings
The first step of a risk analysis is to identify the organization’s assets and place a value on those assets. The assets of Pugh Heating fall under three categories, which are: 1) Intellectual Property, 2) Accounts Receivable, and 3) Physical Assets. The identification and valuation of those assets follows.
The major portion of the intellectual property assets of Pace Heating and Air Conditioning consist of various trade secrets in the company’s possession resulting from an association with Carrier “the world leader in air conditioning, heating, and refrigeration systems”. Pace Heating is one of the leading Carrier dealers and exclusively offers Carrier products for new installations.
The direct value of the intellectual property to the organization would be difficult to ascertain. However, failure to safeguard this information could result in the loss of a major portion, if not all, of the company’s revenue. The remainder of intellectual property consists of customer lists and business contacts. Loss of this information would seriously hinder the company’s ability to conduct business.
With annual sales over five million dollars, the Accounts Receivable (AR) value to Pace Heating should hover between $1,000,000 and $2,000,000 at any given time. More than 75% of the company’s business results from cash sales. Residential repair and service makes up the bulk of the company’s operations and these services are normally handled on a cash basis. New construction, both business and residential, account for about a quarter of the organization’s revenue and the terms of the resulting transactions vary.
The AR package resides on the main file server incorporated in the Shaffer system along with the dispatching and cost estimating modules.
The physical assets maintained by Pace Heating comprise the component inventories sold to generate revenue, the facility where the company is located, the fleet of trucks used on jobs, and the office equipment and supplies necessary to support the organization’s operations. A listing of the physical assets op Pace Heating comprises the following:
- A fleet of 30 vehicles valued around $29,000 each (Chevrolet, 2009)
- A $70,000 plasma cutting machine
- One Compaq file server running Windows Server 2000 valued around $5,000
- 10 Dell workstations running Windows XP valued around $1,500 each
- Shafer’s HVAC CRM package valued around $15,000
- Zenith InfoTech BDR1100 valued at $9,000, which includes online backup
- Office and warehouse facility valued around $1,500,000
- Equipment and spare parts inventory valued around $500,000
- Assorted furniture and office supplies with an approximate value of $50,000
Assessment Method and Justification
Many of the figures derived for the asset valuations were recalled from the author's prior knowledge of the organization and other figures were retrieved from public records. Therefore, a purely quantitative analysis of the risks faced by Pace Heating is not practical.
Purely quantitative risk analysis is not possible because the method attempts to quantify qualitative items, and there are always uncertainties in quantitative values. How do you know how often a vulnerability will be exploited? How do you know the exact monetary impact that would arise? (Harris, 2008, p. 93).
For the purpose of this analysis, mixing quantitative and qualitative methods was used to relate close monetary figures to the possible losses that the organization would incur in the event of a threat manifesting. At the same time, qualitative methods were used to assess the possibility of occurrences.
Risk Assessment Findings
Some safeguards have already been enacted at Pace Heating to minimize the losses from a catastrophe. For instance, the truck fleet is not parked at the warehouse facility when not in use. Trucks maintain individual inventory levels to handle the most common jobs and the technicians who drive the trucks park the trucks at their homes. This effort would minimize the losses to the fleet if the facility were destroyed and also protects a certain amount of inventory. However, some form of service level agreement should be formed with Carrier, Pace’s major supplier of equipment and parts, to specify an acceptable amount of time to restock in the event of a disaster.
The AR data resides on the same file server as the dispatching software and the only access controls to the data reside in the Shafer CRM package. The accountant accesses the data from a notebook that permits the accountant to work from home. There exists the possibility of the accountant’s notebook becoming infected with a virus or Trojan and compromising or loosing the AR data. Such a loss could cost the company somewhere in the neighborhood of $2,000,000.
Intellectual property and trade secrets reside in the minds of the corporate officers and technicians. As such, a trust element is involved to maintain the confidentiality of such information. Non-disclosure agreements should be signed by all employees and officers of the organization in practicing due-care best practices to protect the organization from litigation.
Access control mechanisms are missing from the workstations in the corporate office and employees are somewhat free to access whatever data they wish. Internet access is provided to all employees and no content filtering or intrusion detection is in place. Physical controls do not protect the file server; which resides in a copy room accessible to all employees.
This lack of physical and access controls exposes the organization to threats from within the organization. These threats could manifest in a compromise of the organization’s information assets. Pace Heating has a non-existent turnover rate so the likelihood of a disgruntled employee causing harm is remote but still present.