Application Security Guide For CISOs

Bold textThe aim of this project is to help Chief Information Security Officers (CISO) in establishing an application security program that addresses the different security goals of the organization such as meeting compliance requirements and reduce application security risks. Particular emphasis is given to analysis of the impact of security incidents due to attacks of web applications as a justification for investing in application security to mitigate the risks of these attacks. Quantitive risk analysis is also considered as a criteria for monetizing the cost to the organization of insecure web applications as well as criteria for prioritizing where to spend in application security measures and activities. This will allow the CISO to mitigate the application vulnerabilities that represent the higher risk to the organization from business impact perspective. The planning of application security activities takes into consideration the CISO role in the organization as well as the maturity of the organization security practices. This will allow the CISO to budget and plan for the roll out of application security activities activities such as threat modeling, secure code analysis and security testing. An "helicopter view" to OWASP resources such as technical guides, security training and tools is provided as instrumental for guiding CISOs to implement an application security program that is both cost and risk effective. Since the overall objectives for the application security program are reducing security risks for the organization yet meeting regulatory compliance requirements, some examples of metrics for measuring progress toward the realization of these objectives is also provided. In summary, this guide is being developed and structured along the following objectives: This guide is articulated in four parts:
 * 1) Provide CISOs with useful business cases for application security by rationalizing why and where to invest
 * 2) Address CISOs role and responsibility of budgeting, planning and managing the risks due to insecure web applications
 * 3) Describe to CISOs how OWASP application security resources (projects, guides, tools) can help achieve the organization application security goals
 * 4) Guide CISOs in establishing an application security metrics to measure progress in the targeted activities and toward achievement of the main goals such as risk mitigation, compliance, operational efficiency and cost reduction
 * Part I provide business cases &amp; risk-cost criteria for application security spending;
 * Part II provide examples of application security issues that can be prioritized and targeted for risk mitigation;
 * Part III provide guidance on which application security processes and activities can be targeted for spending. A reference to OWASP projects will be also provided as resources that can be leveraged;
 * Part IV provide examples of metrics and measurements for managing risks and compliance

This project is being developed by the OWASP Global Industry Committee in parallel with the CISO Survey project. The objective is to run these projects in synch and use the results of the CISO survey to tailor the guide to the specific CISOs needs by highlighting which OWASP projects/resources address these needs. The draft of the current guide is included herein:

= Part I: Business Case &amp; Risk-Cost Criteria for Application Security Spending =

Introduction
In the digital era, global organizations serve an increasing number of customers through online web and mobile software applications. Several of these web applications provide highly trusted services to customers, in the case of financial services for example, these include feature-risk services to open bank accounts, pay bills, apply for loans, book resources and services, transfer funds, trade stocks, view account information, download statements etc. This online experience is convenient for individuals: it allows them to perform the same financial transactions as being at the branch/office/outlet, but with the added convenience of conducting these transactions remotely from their home computer or mobile phone. At the same time, this convenience for customers comes at a price to the organizations involved in developing and maintaining them. Online banking and commerce sites for example have become the target of an increased number of cyber attacks and incidents. Several of these incidents resulted in a denial of online access, breaches of customers data and online fraud. In the case of data breach incidents, often these attacks involve the exploitation of vulnerabilities in the applications such as cross site scripting and SQL injection. The target of these attacks are the data assets that the site stores as well as the business transactions provided by the applications that processes these data. In the case of online banking applications, the data targeted by hacking and malware include personal data of customers, bank account data, credit and debit card data, online credentials such as passwords and PINs and last but not least, alteration of data in on-line financial transactions such as transfers of money to commit fraud. Verizon’s 2011 data breach investigations report (Ref [1]) identifies hacking and malware as the most prominent types of attack, yielding stolen passwords and credentials, and thus posing a major threat to any organization that trades online.

To cope with this increase of incidents targeting web applications such as denial of services and data breaches often caused by hacking and malware, Chief Information Security Officers (CISOs) have been called by senior executives in their organizations to roll out application security measures to avoid, mitigate and reduce these risks to the organization. The increasing threat to web applications such as online banking applications has called for increased investment in application security. In the last decade, investments in application security have been a growing proportion of overall information security and information technology budgets, the 2009 OWASP Security Spending Benchmarks Project Report (Ref[26]) for example states "Despite the economic downturn, over a quarter of respondents expected web application security spending to increase in 2009 and 36% expected to remain flat". Nevertheless, making the business case for increasing the budget for application security today still represents a challenge, especially when competing with the same budget allocated for application development of new features, support of new devices such as mobile phones and investments to retain and attract new customers as well as expand the service uptake or profitability. Ultimately, in today’s recession type of economic climate and in a scenario of slow growth in business investments including the company’s built-in software (Ref [2]), it is increasingly important for CISOs to articulate the "business case" for investment in application security. Since it also appears to be a disconnect between organization's perceived threats (application security threats are greatest) yet spending on network and infrastructure security is still much higher (Ref[27]) we would like to shed some light on the business impact of data breaches due to application vulnerability exploits and how much these might costs to organizations.

Typically, additional budget allocation for application security includes the development of changes in the application to fix the causes of the incident (e.g fixing vulnerabilities) as well as roll out of additional security measures such as preventive and detective controls for mitigating risks of hacking and malware and limiting the likelihood and impact of future data breach incidents. CISOs can build a business case for additional budget for application security today for different reasons; some directly tailored to the specific company risk culture or appetite for risk; others tailored to application security needs identified in application security surveys such as OWASP Application Security Survey. Specifically, (TBC based by the OWASP CISO survey) the most business cases for budget increases in application security spending today need to satisfy, at minimum, the following requirements:


 * 1) Mitigation of the cyber threats targeting web sites with attacks such as denial of service and data breaches
 * 2) Meeting of industry specific compliance requirements for web applications (e.g. FFIEC, PCI-DSS)

Nevertheless, assuming the business case is made for points 1 and 2 above, CISOs today still have the difficult task to justify “how much” money should the company spend for application security and “where” to spend it. Regarding the how much, it boils down to how much is needed to mitigate the risks or to reduce the residual risk to an acceptable value for the business. Both for real risks (e.g. incidents) and for compliance risks (e.g. unlawful non-compliance), the question for CISOs is also what is the most efficient way to spend the application security budget today and which application security process, activity tools yields “more bang for the money”. Regarding the "where" it comes down to balance correctly different application security and risk domains - to name the most important ones: governance, risk management, identity management and access control, network security and infrastructure, detection and incident management and last but not least the security of applications and software development projects. Since as a discipline application security encompasses all these domains, it is important to consider all of them and look at the application security investment from different perspectives.

Legal and Compliance Criteria For Application Security Budget Allocation
One of the main factors for funding an application security program is the need of the organization to comply with information security requirements mandated by the different technology security standards and regulatory bodies. Depending on the industry sector and the geographical location in which the organization operates, there will be several different types of information security standards and regulations that the organization need to comply with.

Web applications that carry out payment transactions such as merchant type of web applications that handle credit cardholder data are subjected to compliance with the Payment Card Industry Data Security Standard PCI-DSS (Ref [4]). The requirements for the protection of cardholder data when is stored by the application includes (requirement # 3.4) rendering or encrypting the primary account number and masking (requirement #3.2) when it is displayed. The requirement for card authentication data such as PIN, CVC2/CVV2/CIDs is not to store these data at all even in encrypted form after a payment has been authorized. Credit cardholder data also need to be protected with encryption when is transmitted over open networks (requirement #4). These requirements for protection of cardholder personal account numbers and cardholder authentication data motivates the CISO to document internal security requirements to comply with these provisions and to adopt application security measures and assessment to verify that these requirements are met by the web applications that are in scope. Besides protection of cardholder data, PCI-DSS has provisions for the development and maintenance of secure systems and applications (requirement # 6), for testing security systems and processes (requirement # 11) and for the testing of web applications for common vulnerabilities (requirement #11.3.2) such as those defined in the OWASP Top Ten (Ref [5]). The need of compliance with the PCI-DSS requirements can be a reason to justify an additional investment in technology and services for security testing: examples include source code security reviews with SAST (Static Analysis Security Testing) assessment/tools and application security reviews with DAST (Dynamic Analysis Security Testing) assessments.

Another term similar to PII, "personal information" is defined in a section of the California data breach notification law, SB1386:[10] (e) For purposes of this section, "personal information" means an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or California Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account. (f) For purposes of this section, "personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records.

In the case of the U.S. banking sector, web applications that handle sensitive customer information and allow to process financial transactions such as to transfer money between different bank accounts (e.g. wires) are subjected to comply with strong authentication such as multi factor authentication (MFA) requirements in compliance with Federal Financial Institutions Examination Council (FFIEC) guidelines for online authentication (Ref [3]). From application security perspective this means that FFIEC requirements for authentication of online banking sites can justify budgeting for application security measures to secure design, implement and testing the provision of MFA controls in the web application.

Web applications that store and process data that is considered personal data are required to protect it when such data is stored or processed in compliance with different privacy laws and regulations. For countries that are part of the European Union (EU), personal data is defined in EU directive 95/46/EC, for the purposes of the directive:[9] Article 2a: "personal data' shall mean any information relating to an identified or identifiable natural person ('data subject'); an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity;"

For most of the US States, protection of personal identifiable information (PII) is driven by data breach notification laws such as SB1386 where PII is more narrowly defined than in EU directive as as the individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted: (1) Social security number. (2) Driver's license number or State Identification Card number. (3) Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account. (f) For purposes of these laws, "personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records.

Web applications that process and store data that is considered personal private data by EU privacy laws or PII by US States data breach notification laws, need to implement security controls such as authentication, authorization, encryption, logging and auditing to protect the confidentiality, availability and integrity of this data. This information security requirement directly translates in application security requirements for building web applications that satisfy that requirement when storing and processing data that is either considered confidential or confidential PII. A request for budgeting an application security program for complying with these requirements is justifiable to the business in light of potential regulatory fines and legal costs that the organization might incur in case it is found unlawful and non compliant with local privacy and data breach notification laws.

Risk Mitigation Criteria For Application Security Budget Allocation
From the perspective of the “how much needs to be spent in application security”, the executive management that will approve the budget need to know how much, of the overall security budget should be spent to reduce the likelihood of a similar security breach will not re-occur. For example, assume an online banking site has been breached and sensitive customer data have been compromised, the question is how much need to spent and which security measures should be targeted for spending. To answer these questions, a risk based approach should be used and some application specific security investment risk based criteria need to be adopted, some of these criteria are documented in this guide for CISO reference. These criteria can help CISOs to determine security costs in terms of either potential or occurred monetary losses due to accidents and attacks, and compare this with the cost of the investment in the security of applications. Nevertheless, any risk criteria can only be useful if based upon objective and not subjective considerations, such as using quantitative risk evaluations of the costs that the organization incurred because of security breaches exploiting web application vulnerabilities.

Another important factor to consider by CISOs is exploit the momentum being this either a negative or positive event. An increase in application security spending can be triggered by a negative event such a security incident (use survey again to confirm), since this shifts senior management's perception of risk. In this case the money is probably already being spent to remediate the incident and implement additional countermeasures. The main question then is what investment in application security will reduce the likelihood and impact of another similar incident happening in the future. One possible approach is to focus on web applications that might become a target for future attacks. A positive event might consist on a required technology upgrade of a web application such to introduce new functionality or migrate to a newer platform. This might also represent an opportunity to upgrade security technology and implement stronger security measures as well. Unfortunately, when a CISO need to decide where and how much money to spend in application security, the approach often followed is to use common sense. Often next year budget is based upon extrapolation of current year expenses and financing of new programs. These are all good criteria, a bad criteria is budgeting based upon the perception of risk among industry peers instead of an objective assessment of risks. The intent of this guide is to provide some objective assessment of risks and to approach application security investments from risk analysis and risk management perspective.

Application Security Budget Quantification
Risk quantification can be used as criteria for quantify how much money should be spent to mitigate the risk posed by insecure web applications. From risk analysis perspective, if a web application has been already attacked and sensitive data already being lost or compromised, it might already be brought to the attention of the business and in scope for identification, remediation and testing of the vulnerabilities that might had been the cause of the exploit/security incident. The next step, might be the design and implementation of risk prevention and detection security controls for similar web applications and software that might be at risk of similar attacks and incidents in the future. The main question for the CISO is which application security measures and activities should be targeted for spending to mitigate the risks of breaches of sensitive data due to malware and hacking attacks to web applications and software that is developed and managed by the organization.

In Part II of this guide, we address how to target spending to mitigate the risk posed by specific attacks and vulnerability exploits. This helps in prioritizing risk mitigation by likelihood and business impact. From the perspective of risk management, application security spending matching all of the costs of the impact of a possible data breach is not justifiable. The main question for the CISOs, is how much should be spent to mitigate the risk of data breach incidents, if not 100%, it is the 50%, 25% or 10% of all possible monetary losses? Also does the total loss estimate includes non-monetary losses such as reputation loss ? In addition, if allocating a budget of 25% of the estimated potential losses due to data breaches is justifiable, how much of this 25% should be allocated in upgrading security in web applications that have a similar risk profile of the application being breached. Besides investing in security controls, how much should also be invested in improving secure software development/engineering processes, security training and improvements in application security testing ? Part II and III of the guide will specifically address these questions and provide the rationale of which security controls and security activities to target for spending.

For guiding the CISOs in making decisions on "how much money the organization need to budget for application security" we will focus on risk mitigation criteria rather then other factors such as as percentage of the overall Information Technology (IT) budget and year over year budget allocation for applications security as fraction of overall information security budget that include compliance and operational-governance costs. A risk based application security budgeting criteria documented in this guide consist on the following:
 * 1) Estimate of the impact of the costs incurred in the event of an security incident
 * 2) Quantitative risk calculation of the annual cost for losses due to a security incident
 * 3) Optimization of the security costs in relation to cost of incidents and cost of security measures
 * 4) The return of security investment

We shall explain in the following sections of this guide each of these criteria and how can be used for quantifying how much money to spend in application security measures

Impact Of Security Incidents
There are two important factors to determine the risk of a security incident: these are the negative impact caused by the security incident and the likelihood (probability) of the incident. To obtain an estimate of the impact of the costs incurred in the event of a security incident, the key factor is the ability to ascertain the costs incurred due to the security incident. Examples of negative impacts to an organization because of a security incident might include:


 * 1) reputation loss such as, in the case of publicly traded company, a drop in stock price as consequence of announced security breach (Ref[20]);
 * 2) loss of revenue such as in the case of denial of service to a site that sells services or goods to customers (Ref[21]);
 * 3) loss of data that is considered an asset for the company such as customer confidential data (Ref[22]), Personal Identifiable Information (PII) (Ref[23]), authentication data (Ref[24]) and trading secrets/intellectual property data (Ref[25])

In the case of a security incident that caused a loss of sensitive customer data such as personal identifiable information, debit and credit card data, the costs incurred by the organization that suffered the loss include several operational costs also referred as failure costs. In the case of a financial services company, these are the costs for changing account numbers, remission costs for issuance of new credit and debit cards, liability costs because of fraud committed by the fraudster using the stolen data such as for illicit payment transactions and withdrawal of money from ATMs. Often times, the determination of such “failure” costs is not directly quantifiable by an organization, such as when this monetary loss is not directly caused by a security incident, hence ought to be estimated as a possible impact. In this case, CISOs can use statistical data to determine the possible liability costs to the company in case of data loss incident. By using reported statistical data from data loss incidents, it is possible to estimate the costs incurred by companies to repair the damage caused by security incident that resulted in losses of customer sensitive data or identity loss.

Appendix I-A contains a detailed discussion on the value of data and the impact of a security incident. The value of data will be different for each organization, but values in the range of $500 to $2,000 per record seem to be common.

Data value: $500 to $2,000 per record

We will use this range for the remaining discussion, but each CISO needs to come up with some valuation of their own that can then be used to calculate the impact of a data loss.

One of the challenges of the calculation of the burden to the company because of a potential data loss is to get an accurate estimate of the amount of the loss x victim and of the probability or likelihood of such loss occurring.

Statistical data about reported data loss incidents to breach notification letters sent to various jurisdictions in the United States collected by the Open Security Foundation's (OSF) DataLossDB (Ref [9]) show that the percentage of 2010 data loss incidents breaching a web interface is 9% and the percentage that reported as being an hack is 12%, fraud 10% and virus 2%. The highest reported incident by breach type is stolen laptop with 13%

The data from OSF DataLossDB related to web as type of breach differ from the statistics of the Verizon’s 2011 data breach investigations report (Ref[1]) where hacking (e.g. brute force, credential guessing) and malware (e.g. backdoors, keyloggers/form grabbers, spyware) represent the majority of threats for security breaches (50% and 49% respectively) and attacks against web applications represent 22% of all attack vectors and 38% as percent of records being breached.

These differences might be explained by the fact that the Verizon study is based upon a subset of data from the U.S Secret Service and does not includes for example cases related to theft and fraud that are instead counted on the overall OSF DataLoss DB statistical data. Furthermore, according to the Verizon report;" the scope of the survey was narrowed to only those involving confirmed organizational data breaches". In the case of OSF, survey data include data breaches covered by U.S State data breach notification law such as when resulting in disclosure of customer's Personal Identifiable Information (PII) and reported by organizations with notification letters sent to various jurisdictions in the United States.

Annualized Loss Of Security Incidents
In the cases when the impact of an occurred data breach due to a security incident is not being recorded and notified to the public in compliance with the data breach notification laws enforced by different countries and jurisdictions, it is necessary to estimate it based upon risk estimate calculations. Besides the calculation of liability costs based upon the value of data (refer to Appendix I-A: Value of Data), quantitative risk analysis can be used to estimate the spending for application security measures on the yearly basis such as by calculating the impact of a security incident on an annual basis. Quantitative risks can be calculated by the assessment of the Single Loss Expectancy (SLE) or probability of a loss as a result of a security incident and the Annual Rate of Occurrence (ARO) or the annual frequency of the security incident. By using quantitative risk analysis and using publicly available reports of data breaches, CISOs can estimate the amount that a given organization managing a web application would loose and therefore should spend on application security measures to mitigate the risk of a data loss due to the exploitation of an application vulnerability. The accuracy of this risk estimate depends on how reliable and pertinent the data breach incident is to application security. It is therefore important to choose the data carefully as this is being reported as being caused by an exploit of application vulnerabilities such as SQL injection (refer to Sony and TJX Max data breaches as good examples)

The SLE can be calculated with the following formula:

SLE = AV x EF

Where, AV is the Asset Value (AV) and EF is the Exposure Factor (EF). The EF represents the percentage of the asset loss because of the realization of a threat or an incident. In the case of the 2003 US Federal Trade Commission (FTC) incident data this represents the amount of the population that suffered identity fraud and is 4.6%

Assuming the AV of 1 million accounts of $ 655,000,000 ( $655 per account based upon 2003 FTC data) and exposure factor of 4.6% (Ref [7]) the estimated SLE of the data breach incident is $ 30,130,000. Assuming a frequency of 1 attack every 5 years such as in the case of TJX Inc data breach incident (discovered in mid-December 2006 and due to SQL injection exploits) the ARO is 20% hence the estimated annual loss or Annual Loss Expectancy (ALE) can be calculated using the formula:

ALE = ARO x SLO

The calculated Annual Loss Expectancy (ALE) for data loss incident is therefore $ 6,026,000/year over 10 years.

Spend Optimization
Now the question is if, using quantitative risk analysis leads to an estimate to the optimal investment for application security measures. The honest answer is, not necessarily. The correct answer is to use cost vs. benefit analysis to determine the optimal value. By comparing the costs of security incidents against the cost of security measures it is possible to determine when this maximizes the benefit, that is, the overall security of the application. In case of software security costs for example, the cost due to software security failures including security incidents decrease as the company spends more money in security measures as shown in (FIG 1). The optimal investment in the security measures is the one that maximizes the security of the application and minimizes both the cost of security measures and of the cost incurred because of security incidents. According to an analytical study of costs vs. benefits of security (Ref [15]) the optimal investment is when the cost of security measures is approximately 37% of the estimated losses. For our example, assuming the total estimated losses of $ 6,026,000/year due to data loss incidents, the optimal expense for security measures, using this empirical value from the study, is $ 2,229,620/year.

''Figure 1: Cost of Investment in software security measures against failure costs due to incidents that exploit software vulnerabilities. At the point (A) to the costs due to software security failures exceed of several order of magnitude the expenditure in countermeasures and the assurance on the security of the software is very low, on the contrary in (B) the costs of security measures outweigh the costs due to the software failures, the software can be considered very secure but too much money is spent for software security assurance. In point (C) the cost of losses is nearly two times larger costs of security measures while in point (D) the costs due to incidents is equal to the cost of the security measures. The optimal value for spending of security measures is the one that minimizes both the cost of incidents and security measures and maximizes the benefit or the security of the software.''

Return on Security Investment
Finally, it is important to determine the most efficient way to spend the application security budget from a perspective of this being an investment. If the CISO considers application security spending as an investment rather than an expense, for example, the budget can be justifiable as additional savings the company gets because of the investment in security. The factor to calculate the savings in terms of investment in security is the Return on Security Investment (ROSI). The ROSI can also help to determine if the investment in countermeasures to thwart hacking and malware attacks is justifiable: if the ROSI is not positive, the investment is not justifiable while if it is null, it does not yield any savings or investment returns.

There are several empirical formulas to calculate ROSI; one is to factor of the savings for the data losses avoided over the total cost of the countermeasures. Assuming the Total Cost of Ownership (TCO) (Ref [16]) for the cost of countermeasure is $ 2,229,620 (previously calculated as optimal value of expense in countermeasures x year) that include development costs and acquisition of the new technologies, processes, tools as well as operating and maintenance costs it is possible to calculate the savings. ROSI can be calculated using the following empirical formula (Ref [17]):

ROSI= [(ALE x % of effective risk mitigation) - cost of countermeasures]/cost of countermeasures

With this ROSI formula, assuming that the ALE is $ 6,026,000 and that the effectiveness of the mitigation is 75% (assume for example, in the case of a SQL injection, risk mitigation as defense in depth such as different layer of mitigation that include use of prepared statements/stored procedures in source code as well as filtering of malicious characters at the web server and application server), the cost of countermeasure is $ 2,229,620, the ROSI to the company is 102% per year. Since there is return of investment, the spending in countermeasures is worth it and will make the company save money. The best use of ROSI (Ref[17]) is to compare alternative investments in security countermeasures such as to decide whether to invest in the development of a new countermeasure or extending the capabilities of an existing one.

As a comparative measurement for example, ROSI can be used by CISOs to determine which software security is more efficient or yields the organization the higher savings and returns on the investment. According to research of Soo Hoo (IBM) (Ref [18]) on ROSI of the various activities of software security in software development cycle, the maximum return of investment (21%) or a savings of $ 210,000 on an investment of a $ 1 Million Secure Software Development Lifecycle (S-SDLC) program for example is obtained when the investment is in activities that aim to identify and remedy security defects during the design phase such as threat modeling. The return of investment is 15% when the defects are identified and remedied during implementation (code) such as with source code analysis and of only 12% when these are identified and remedied during the testing-validation phase such as with ethical hacking/pen tests. The best investment in application security is therefore in activities that aim to identify defects as early as during the design phase of the SDLC, in essence, the more CISOs think about investing in software security engineering programs especially threat modeling/architectural risk analysis, the more they'll save on the costs of implementing and fixing security issues later in the SDLC such as during the validation phase or when the application is already in production in response to security incidents.

Conclusion
Finally, it is important to notice that the criteria dealt with herein are based upon empirical formulas and are as good as the data used. The more accurate is the data the more accurate are the risk and cost estimates. Nevertheless, when these risk-cost criteria are used consistently and based upon quantitative risk decisions and objective security cost considerations, can be used by information risk management decision makers such as CISOs to decide if the investment in application security is financially justifiable from risk and business impact perspective. Since investment in security has to be justified in business terms, these risk-cost criteria can be used for business cases as well as to decide how much to spend and where to spend in application security measures.

= Part II: Selection of Application Security Issues to Target Spending =

Once a web application has been targeted by an attack and the organization has suffered a data breach incident as result of that attack, it is important to understand the root causes (e.g. vulnerabilities, control gaps) of the incident and to invest in security measures that will prevent such incident to occur again. In this section of the guide, we address how to target spending to mitigate the risk posed by specific attacks and vulnerability exploits that caused data breach incidents. As best practice, we are not advocating to fix only vulnerabilities that might have the highest probability and impact but to factor threats and attacks in selecting which applications and application security issues to target for spending. Risk prioritization is critical for vulnerability management today, for example high risk vulnerabilities are prioritized for remediation over low risk ones. Another factor to consider is to whether such vulnerabilities are used in attacks against applications with similar risk profile, applications owned by the organization or applications that suffered a data breach security incident.

In part I of this guide we provide business cases that CISO can use to request budget for application security. Application security budget typically need to cover several information security and risk governance needs. Besides the usual need to spend for compliance with information security standards, policies and regulations, CISO might advocate additional budget to address mitigation of increased risks of data breach incidents. One critical factor is to quantify the impact of the data breach incident that already occurred. This implies that the CISOs are authorized to access data in relation to data breach incident such as incident reports filed by the Security Incident Response Teams (SIRT), data from legal in relation to law suits and regulatory fines and fraud data that includes amount of money losses incurred because of online fraud. All this type of information is essential to determine the overall impact. In absence of this data, the best the CISO can do is to use data breach incident data from public sources and data breach incident reports. In part I of this guide, we provided some examples of how this data can be used to estimate impact. We documented what are the critical factors to estimate impacts of data breaches: these as the value of the data assets (e.g. Customer confidential and personal identifiable information, credit cards and bank account data) and the liability for the organization in case these asset are lost. Once the potential business impact of a data breach is estimated, the next step is to determine how much should be spend to mitigate the risk. At high level, this is a risk strategy decision that depend by the organization risk culture and the organization priorities for mitigating risks. Depending on the type of the organization, the number one priority can be "to not to be caught in unlawful non-compliance" such as in case of suffering a data breach and additionally failing to comply with compliance with PCI-DSS standards. This can be the case of small company that provides online payment processing services and who could loose business from credit card issuers and additional fines, law suits and audit and legal costs. For an organization such as an engineering or research organization whose patents and trading secrets are a critical assets, the protection from internal threats of commercial or country sponsored spying might represent number one priority. In general, it is important to address to application security as a business enabler for protecting digital assets whose value is represented in terms of costs of security measures vs. benefits in protecting the digital assets. In part I of the guide we present one criteria that can be used is the one that optimize spending by maximize risk mitigation value while minimize the security costs. Another criteria, is to consider security not as a tax but as an investment, this criteria is the Return of Investment in Security (ROSI). The ROSI can be used for making both tactical and strategic risk mitigation decisions. Tactically, ROSI can be used to decide which security measures should be targeted for spending by considering the cost vs the effective of the measure in mitigating the impact of the data loss. Strategically, ROSI can be used to decide which application security activities to invest in the SDLC such as the ones that will bring money savings in the long term.

In part II, we would like to address a more tactical approach that helps CISOs to decide where to spend the budget in application security by addressIng first the immediate needs such fixing security issues that were exploited in a data breach security incident and vulnerabilities that have been exploited in publicly reported incidents affecting similar organizations and web applications. To estimate the probability that an attack will cause a data loss, we would need to identify sources of attacks that correlate data from different type of publicly disclosed incidents (e.g. data loss, denial of service, defacement etc) with sources of monitored attacks seeking to exploit specific web application vulnerabilities. To estimate the probability of a specific web application vulnerability exploit, we can refer to data reports from the Web Hacking Incident Database (WHID) (Ref [10]). The WHID is a Web Application Security Consortium (WASC) project to provide statistical analysis information of web application security incidents collected from public sources. in 2010 WHID categorized 222 incidents and observed that 33% of the incidents aimed to take down web sites (e.g. with Denial of Service), 15% aimed to deface web sites and 13% to steal information. Among the overall type of attacks the ones that sought to exploit application vulnerabilities such as SQL injection were 21%.

By using 2010 WHID data of reported incident and analysis, the overall probability of an attack aimed to steal information by exploiting of a SQL injection vulnerability is therefore 13 % x 21 % = 2.7%. Since SQL injection was also reported to be used for defacement, this ought to be considered as rough estimate.

In another survey of malicious web attack traffic observed over a period of six months, December 2010 through May 2011 from the security company Imperva (Ref [11]), SQL injection was identified in 23% of the attacks as third most prevalent after cross site scripting, the second most prevalent in 36% of the attacks and directory traversal as the most prevalent in 37% of all the attacks.

By comparing WHID and Imperva web attack surveys, an order of magnitude of 21-23% for attacks exploiting SQL injection vulnerability seems an acceptable rough estimate.

By assuming the the cost of data loss of security incident for a financial organization of $355/record (Ponemon Institute 2010 data), and that the probability that such incident exploits a SQL injection vulnerability is 2.7% (WHID 2010 data), the 2010 liability for a company's web site such as online banking for a data loss of 1 million records is thus $ 9,585,000. With this figures a 2010 budget of $9 Million spent by a financial organization for application security measures specifically focused to prevent risks of data losses due to SQL injection attacks would have been justifiable.

Assuming that I will spend as much in security measures, this is the maximum amount estimated for expenses in security measures to thwart SQL injection attacks that includes acquisition of technology for secure software development, documentation, standards, processes, tools as well costs for the recruitment of qualified personnel and secure coding training especially for web developers. Normally this dollar figure ought to be considered a maximum value since assumes for example a total loss of the customer data.

It is important to notice that injection vulnerabilities are considered by OWASP (Ref [5]) (2010 A1-Injection) the most critical web application security risks for opportunistic vulnerability exploits. OWASP rates the risk of data injection, including SQL injection vulnerability, as severe since "can result in data loss or corruption, lack of accountability, or denial of access and sometimes lead to complete host takeover". The business impact that we calculated as liability for a medium size financial services company (1 million registered online banking users) assumes that the value of the data assets can be stolen by a threat agent to cause tangible harm to the company.

Historically, SQL injection attacks have been of high impact and in the United States, have been associated with the largest data breach incidents ever committed and prosecuted. In the August 2009 U.S. indictment case (Ref[12]) against Albert Gonzalez (also indicted in May 2009 in Massachusetts for the TJX Inc breach) and other two Russian hackers, SQL injection attacks were used to break into 7-Eleven network in August 2007 resulting in the theft of credit card data. Allegedly, the same kind of attack was also used to infiltrate Hannaford Brothers in November 2007 which resulted in 4.2 million debit and credit card numbers being stolen and to steal 130 million credit card numbers from Heartland Payment Systems on December 2007. In 2010, Albert Gonzalez was found guilty and sentenced to serve 20 years in federal prison while Heartland paid about $ 140 million in fines and settlements because of the security breach.

= Part III: Selection of Where to Target Spending =

''This part will help CISOs determine where it is most cost effective to target the issues identified in Part 2. For example how to divide budgets across software security activities such as secure code training, secure code reviews, secure verification/test and issue and risk management". The results of the CISO survey will be used to determine where money is spent and in which activities to determine if application security money is spent effectively (e.g. focus on security build in activities vs security bolt-on security activities). The results of the CISO survey will also be used to identify if standard application security controls are used to highlight which OWASP objects are most useful (e.g. SAMM, ESAPI, CLASP, Security Development, Coding and Testing Guides) "''

Targeting CISO Roles & Responsibilities
The adoption of application and software security processes within any given organization varies greatly depending on the type of the organization’s industry, the size and the different roles that CISO play in the organization. The source of application security budget also varies depending on the size and the type of the organization. For CISOs of large organizations, typically the budget for application security is part of the overall budget allocated by information security and operational risk departments. For these CISOs, one the main reasons for the adoption of new application security activities, guides and tools such as the ones that OWASP provides, is first and for the most to satisfy compliance and to reduce risks to the organization’s assets such as web applications and software. Compliance varies greatly depending on the type of industry and clients served by the organization. For example, organizations that produces software that implements cryptography for use by governments such as the department and agencies of the United States Federal government need to comply with Federal Information Processing Standards (FIPS) 140. Organizations that produce software and applications that handle cardholder data such credit and debit card data for payments need to comply with is the Payment Card Industry Data Security Standard (PCI DSS).

CISOs of small organizations typically have responsibility on both security and information technology functions that might also include the compliance of applications and software with technology security standards such as FIPS 140 and PCI-DSS. Compliance with security technology standards represent an opportunity for promoting secure development and testing within the organization such as by using OWASP security testing guides for achieving security certifications for applications and software products. Compliance with PCI-DSS requirements for example might already require the organization to test web applications for a minimum set of common vulnerabilities such as the OWASP Top 10. The budget allocated by the IT department for achieve certifications with technology security standards such as FIPS-140 and PCI-DSS can also be used for promoting secure coding guides such as the OWASP secure coding guide and invest on static code analysis tools. For example, in the case of compliance with PCI-DSS, CISOs might opt for static code analysis to satisfy the requirement 6.6 of PCI-DSS. CISOs of small organizations can also use defect management metrics to make the business case in which phases of the SDLC to invest in security and improve both software quality as well as security. For example, since most of the quality and security bugs are due coding errors, it is important for CISOs to emphasize to the IT department the need of secure coding processes, standards and training for developers since focusing on these software security activities also leads to cost savings for the organization. A study from NIST about the cost of fixing security issues for example has shown that the cost of fixing a coding issue in production is six times more expensive than fixing it during coding. To achieve these money saving and efficiency goals, CISOs can work together with the engineering department managers to promote application and secure software initiatives.

For CISOs of large organizations, whose focus is information security and risk management, one of the main requirements besides compliance is to introduce efficiencies and save the money spent for existing security processes, including, application security. Since the information security department allocates budgeting, any request for budget of application security need to be justified by improving security and by reducing risks. Security and risk reduction goals are aligned by improving security test processes with use of better tools and training for developers. For CISOs of large organizations, promoting a software security initiative is also justified by the return of investment in the overall application security program and processes, specifically as reduction in the cost of fixing vulnerabilities because of developers following secure coding standards, conducting secure code reviews and security teams conducting security testing for vulnerabilities earlier than the validation phase of the SDLC. OWASP provides secure development guides and secure coding guides as well as training modules that can be used to achieve this cost saving goals. Often CISOs need to justify the budget for application security by taking into consideration the different needs of security and business departments. For CISOs that serve in financial organizations for example, security is often a compromise with security and business goals. In this case, it is important for CISOs to be able to align application security programs with the business goals and when these goals not align, to focus on the ones that do. For example, by focusing on improving both software quality and security and by reaching a compromise in the case security impacts negatively the customer experience so different security options need to be considered. In the case the business is sponsoring a new application development project, CISOs can use this as an opportunity to promote new application security features for the application and work together with project managers by achieving compliance with security standards, improving security by design and by coding and yet achieving overall cost savings for the overall project.

For CISOs of both large and small organizations, application vulnerability metrics plays an important factor in making business cases for budgeting application security. Security metrics such as vulnerabilities found on the same applications over a certain period of time when application security activities have been rolled out for example, can demonstrate to senior managers and company executives that the adoption of application security processes, training and tools ultimately helps the organization to deliver web applications and software products that have a fewer number of vulnerabilities and pose less risk to the organization as well as the customers.

Choosing the right Tools from OWASP and other organizations
Depending on the overall security level and risk profile of the organization unit different tools and standards can be particularly useful for the CISO in advancing his security strategy. Note, following the risk discussions in the previous chapter, depending on the risk profile of different business units, the security strategy can actually be different based on their different individual risk scenarios and different regulatory requirements. For example a financial department may require a substantially stronger security posture, while an internal web page announcing the lunch menus of the cantine may be sufficiently protected with basic security measures (though to the authors knowledge in military settings, even the lunch menu can be considered as confidential information as further information about supply logistics etc. could be derived from that).

Based on these different risk profiles different tools and standards may be more relevant for the project and organizational unit in question.

In general tools can be classified in various categories (and so are also the OWASP projects): - Stable (a project or tool, that is mature and constantly maintained to a good quality) - Beta (relatively proven, though not to optimal quality) - Alpha (this usually reflects a good first prototype, but still a lot of functionality may be missing or not up to standard) - Inactive (former projects that have been retired or deprecated or that at some point have been abandoned).
 * Maturity

Obviously for a CISO, the most interesting projects and tools would be stable and reliable ones. He can rely on a certain proven quality, and on them being available and maintained to a certain degree in the future days to come. Beta projects can also be very valuable, as they may represent projects that have not finished their full review cycle yet but are already available for early adopters and can help to build good foundations for your security programs and tools going forward.



A second dimension would be the various: Usually OWASp projects are divided in either Tools or Documentation. And by the category of use: Protect, Detect and Life Cycle.
 * Categories

These categories can help the manager to quickly navigate the large portfolio of OWASP tools available and more easily find the right project for his current needs.

Please find a page of the various OWASP projects classified by categories here.

People, Processes and Technology
The CISO can also choose to achieve his security goals through three main ways. People, Processes and Technology. Managing the organisation it is usually important to shape all three pillars to achieve the best impact throughout your organisation. Focusing on only one or two of them can leave the organisation vulenarable.



People
Will address the training and motivation of staff, suppliers, clients and partners. If they are well educated and motivated, the chances of malicious behaviour or accidental mistakes can dramatically be reduced and many basic security threats can be avoided.

Processes
If an organization becomes more mature, the processes will be well defined and in fact channel and enable the work force to do things the "right way". Processes can ensure that the actions of the organization became reliable and repeatable. For example with well defined standard operating procedures, the incident response process will be reliable and not rely on ad hoc decisions that would before have varied with the individual decision maker. In highly mature organizations, the business and IT processes will be constantly evaluated and improved. If a failure happens, improved processes can allow an organization as a whole to learn from past mistakes and improve its operation to more efficient and secure ways.

Technology
In general technology can guide and support people by providing good training and knowledge, by being engaging and motivating to work with. And Technology can enable an organization to make the following the right processes easy by providing good tools, while making it hard to deviate from the right path for malicious users. For example good technology would automate access controls and authentication and make them very simple for the authorized user, while denying access or privileges to an unauthorized attacker. And last but not least a number of automated tools can in the background help and support the people and organization in their work to defend against risks more effectively and more efficiently.

Many of the security standards and tools (in OWASP and other bodies) can also be seen as focusing on parts of this framework. For example, staff training will enable the people to build their security understanding and do the right thing, while the various SDLC models can help an organization establish the right level of processes for its development and incident response mechanisms.

Benchmarking & Maturity
One fo the very first steps for a CISO is to understand his current situation by reviewing the current security maturity of his organization or the individual department and benchmark it against peers or his target security posture.



There are several maturity models published, with variations in focus and depth of detail. Usually they share a number of good practices and for a CISO it may be advisable to review whether his organisation is elsewhere already using one of the maturity models and possibly align with this for an easier initial benchmark of his organisation. In the medium term the decision for which maturity model to use, would be driven be question of: what level of detail is required, are we required by a regulatory body to use and report based on a specific type of maturity model, can our model be easily integrated with the organsiation's culture and common reporting information, ...

In the end, the author believes that most maturity models can equally fulfill your basic needs and that it will be up to the tactical judgment of the CISO to decide which model to use.

The openSAMM maturity model has in the past been developed by OWASP and is a very mature ("stable") project, that offers a fairly lightweight way in analyzing your current security maturity and benchmarking your organization against your peers and your targets. See also: Software Assurance Maturity Models (SAMM), OWASP, http://www.opensamm.org/

Other maturity models can be taken from BSIMM, CMM (Common Maturity Model), the ISO-2700x series

Ref [?] S-SDLC processes: MS-SDL, OWASP-CLASP, Cigital-TP

Ref [?] ESAPI

Ref[?] OWASP-CLASP

Ref[?] OWASP- Development Guide

Ref[?] OWASP- Coding Guide

Ref[?] OWASP- Testing Guide

Ref [?] Security and the Software Development Lifecycle: Secure at the Source, Aberdeen Group, 2011 http://www.aberdeen.com/Aberdeen-Library/6983/RA-software-development-lifecycle.aspx

Ref [?] State of Application Security - Immature Practices Fuel Inefficiencies, But Positive ROI Is Attainable, Forrester Consulting, 2011 http://www.microsoft.com/downloads/en/details.aspx?FamilyID=813810f9-2a8e-4cbf-bd8f-1b0aca7af61d&amp;displaylang=en

= Part IV: Metrics For Managing Risks &amp; Application Security Spending =

''This part will help CISOs to measure and manage application security costs using cost and risk metrics. The focus will be on metrics used by CISO to report appsec to management (from CISO Survey), this metrics might include for example the percentage of application portfolio regularly assessed in appsec verification program, the percentage of internal apps vs. external apps covered, the risk of these apps and the type of security assessments performed and when in the SDLC are performed' '

About OWASP
Short piece about OWASP and including links to Projects, ASVS, SAMM, Commercial Code of Conduct, Citations, ???

Appendix I-A: Value of Data &amp; Cost of an Incident
The discussion of various information sources, which gives a single illustrative value for the main text

Value of Information
The selection of security measures must consider the value of asset being protected. Like personal data, all types of data can have value determined from a number of different perspectives. While it may be most common the look at the value of data by its value as an asset to the organization or the cost of an incident, these are neither always the most appropriate nor greatest valuations to consider. For example, a report looking at the value of personal data (personally identifiable information) suggests four perspectives from which personal information draws its privacy value (Ref 19). These are:


 * its value as an asset used within the organization’s operations;
 * its value to the individual to whom it relates;
 * its value to other parties who might want to use the information, whether for legitimate or improper purposes;
 * its societal value as interpreted by regulators and other groups.

The value to the subject of the data, to other parties or to society may be more appropriate for some organizations than others. The report (ref 19) also examines the wider consequences of not protecting (personal) data and the benefits of protection. It describes how incidents involving personal data that lead to financial fraud can have much larger impacts on individuals, but that financial effects are not the only impact. The report provides methods of calculation, and provides examples where the value of an individual's personal data record could be in the £500-£1,100 (approximately $800-$1,800) in 2008.

Data Breaches and Monetary Losses
Regarding the monetary loss per victim, exact figures vary depending on the factors that are considered to calculate them depending by the type of industry and the type of attack causing the data loss incident. According to a July 2010 study conducted by Ponemon Institute (Ref[13]) on 45 organizations of different industry sectors about the costs of cyber attacks, the costs of web-based attacks is 17% of the annualized cyber attack costs. This cost varies accross different industry sectors with the higher costs for defense, energy and financial services ($16.31 million, $15.63 million and $12.37 million respectively) than organization in retails, services and education.

Also according to the 2011 Ponemon Institute annual survey of data loss costs for U.S. companies (Ref[14]), the average cost per compromised record in 2010 was $214 up 5% from 2009. According to this survey, the communication sector bear the highest cost of $380 per customer record with financial services the second highest cost of $353 followed by healthcare with $345, media, at $131, education at $112 and the public sector at $81.

The security company Symantec, which sponsored the report, developed with Ponemon Institute a data breach risk calculator that can be used to calculate the likelihood of data breach in the next 12 months, as well as to calculate the the average cost per breach and average cost per lost record.

The Ponemon institute direct costs estimates, are also used for estimating the direct cost of data breach incidents collected by OSF DataLossDB (Ref[9]). 2009 direct cost figures of $60.00/record are multiplied by the number of records reported by each incident to obtain the monetary loss estimate. It is assumed that direct costs are suffered by the breached organizations while this is not always true such as in the case of credit card number breaches where the direct costs can often be suffered by banks and card issuers. Futhermore, estimate costs does not include indirect costs (e.g. time, effort and other organizational resources spent) as well as opportunity costs (e.g. the cost resulting from lost business opportunities because of reputational damage).

According to (Ref [8]) another possible ways to make a risk management decision on whether to mitigate a potential loss is to determine if the company will be legally liable for that data loss. By using the definition of legal liability from a U.S. liability case law, given as Probability (P) of the loss, (L) the amount of the Loss, then there is liability whenever the cost of adequate precautions or the Burden (B) to the company is:

B &lt; P x L

By applying this formula to 2003 data from the the Federal Trade Commission (FTC) for example (Ref [7]), the probability of the loss is 4.6% as the amount of the population that suffered identity fraud while the amount of the loss x victim can be calculated by factoring how much money was spent to recover from the loss considering the time spent was 300 million hours at the hourly wages of $ 5.25/hr plus out of pocket expenses of $ 5 billion:

L = [Time Spent x Recover From Loss x Hourly Wage + Out Of Pocket Expenses]/Number of Victims

With this formula for calculating the amount of loss due to an identity fraud incident, based upon 2003 FTC data, the loss per customer/victim is approximately $ 655 dollars and the burden imposed to the company is $ 30.11 per customer/victim per incident.

The risk management decision is then to decide to whether it is possible to protect a customer for $ 30.11 per customer per annum. If it is, according to (Ref [8]) then liability is found and there is liability risk for the company. This calculation can be useful to determine the potential liability risk in case of data loss incidents, for example by applying the FTC figures to the TJX Inc. incident of 2007 where it was initially announced the exposure of confidential information of 45,700,000 customers, the exposure to the incident for the victims involved could be calculated as:

Cost exposure to the incident = Number of victims exposed by the incident x loss per victim

With this formula using TJX Inc data or number of victims affected and by applying the loss per victim using FTC data, the cost of the incident that represents the loss potential is $ 30 Billion. By factoring this with the probability of the incident occurring, then it is possible to determine how much money should be spend in security measures. In the case of TJX Inc incident for example, assuming a 1 in 1000 chance of occurrence a $ 30 Million security program for TJX Inc would have been justifiable.

Summary
We can see that there are different ways to determine the value of information and the that some of these are purely based on the costs relating to data breaches. But overall, the references suggest that typically individual's data can be valued in the range $500 to $2,000 per record.

Appendix I-B: Calculation Sheets
Some grids for CISOs to enter their own numbers and calculations

Appendix I-C: Online Calculator
Eoin's online calculator URL and instructions