2018 Intelligent Reporting Summit Q&A: The Movement to Quantify IT Risk

Sovos
September 17, 2018

The information technology (IT) and risk departments in most organizations have generally had little to do with each other outside of specific tasks. However, now that some of the biggest potential risks companies face involve data security, a new effort seeks to help IT and risk experts speak a common language, coming together to quantify the risk involved in a potential data breach.

Katie Crammer is Director of Security Platform Strategy at Verizon. She will be a featured speaker at the 2018 Intelligent Reporting Summit in Denver in October, and shares her thoughts on marrying IT and risk management.

Sovos: It’s pretty clear what IT does, but what do risk experts do for a company?

Katie Crammer: Risk experts look at the financial exposure associated with all the business dealings a company undertakes, and risk management varies greatly from industry to industry. In a traditional risk office, risk experts are in charge of measuring risk and ensuring a company has appropriate coverage for any measured risk it might take. For example, mergers and acquisitions. Or real estate management, such as building facilities in flood plains. There’s also a human resources component that looks at risk of lawsuits, labor issues and other potential problems with employees.

Sovos: But despite the obvious dangers involved with data breaches, risk experts and IT professionals have not traditionally had a relationship?

Crammer: You used to have an IT security office in the basement staffed by four to six nerdy-looking dudes with four to six monitors each watching network traffic. Then, there was the risk office with financial staff in another part of the building, and the two never met.  We’ve seen that start to shift but it’s still largely true that there’s very little communication.

Sovos: Part of what you’re trying to do is get IT and risk interests in on the same page. How does that work?

Crammer: They have to have a common language to even discuss the problem. That common language is dollars. They need to answer some difficult questions: What does my risk translate to in dollar value? Do I have insurance? How much is it going to cost me if I am breached? There is a lot to consider, including: legal fees, restitution payments to victims, reputational damage, increased governmental and press scrutiny among other things.  

Sovos: And it’s your goal to enable the parties involved to quantify that somehow?

Crammer: It’s difficult to get an exact measurement of risk here and we have no way to assess all of that today. The industry is not that mature. However, after some high-profile breaches all companies are now required to report if they’ve been breached and divulge how many records they lost. Insurance company records show how much a company paid out. So we know who has been breached and roughly what it has cost them. From that, we think we can develop an increasingly accurate equation by analyzing historical data. In developing that equation, we’re championing a common measurement for risk posture and threat level.

Sovos: How can the development of an equation that can quantify data security risk benefit the departments involved?

Crammer: When they go to ask for an investment from the CFO or Board, cybersecurity people walk into it with few tools in hand to support the ask because they have no way to quantify the return on investment. We need to be able to translate their requests into a future potential cost savings if the company is breached, multiplied by a probability of that happening. If somebody could go in and say a certain amount of risk exposure requires a certain level of security investment, everybody in the organization, (particularly in the risk office and IT areas) would benefit. We can’t do that today, but we’re working on it.

Sovos: What kind of progress have you made?

Crammer: We launched the first risk model in April. We partnered with four other industry leaders. It’s not just about coming up with a model. We need input to run the model and understand the specific risk each organization has. We need to go to organizations and say here’s how you use the model on yourself.

Sovos: What kind of response have you had from companies so far?

Crammer: We’re definitely having to evangelize. Risk management for cybersecurity is the buzzword of 2018. People think the idea makes sense, but then they see what it means to execute. You have to be willing to stand your company on the scale, and not everybody is going to like what it says. We have beta customers we’ve been working with and they’ve asked lots of good, valid, and relevant questions. There’s the occasional response of “this isn’t meaningful for our business model” or “here’s why it’s not relevant to me” but it’s been a mix. CSOs either love it or they hate it.

Take Action

Katie Crammer has much more to share about data security and risk. Discover more at the 2018 Intelligent Reporting Summit. Plus, use code 2018GCS10 to receive 10% off your registration!

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Sovos

Sovos is a global leader in tax compliance and business-to-government reporting software, safeguarding businesses from the burden and risk of compliance around the world. As governments go digital, businesses face increased risk and complexity. The Sovos Intelligent Compliance Cloud combines world-class regulatory analysis with a global cloud software platform to create an adaptable, connected and global compliance solution that keeps businesses ahead of the ever-changing regulatory environment. Sovos supports 4,500 companies, including half of the Fortune 500, and integrates with a wide variety of business applications. Based in Boston, Sovos has offices throughout North America, Latin America and Europe. For more information visit and follow us on LinkedIn and Twitter.
Share This Post

Tax Information Reporting United States
2019-03-22
How to Respond to the Growing Challenges of 1099-R Reporting

The demographics don’t lie: Reporting for form 1099-R is only going to grow more difficult as baby boomers retire. The form used to report distributions from IRA, pensions, annuities and other similar retirement accounts is poised to explode in volume. As such, financial institutions (FIs) and insurance companies can’t afford to mishandle 1099-R reporting. The […]

E-Invoicing Compliance EMEA
2019-03-21
Portugal Issues New E-Invoicing Rules: A Flavour of Clearance but Not Quite There

On 15 February 2019, Portugal published Decree-Law 28/2019 regarding the processing, archiving and dematerialization of invoices and other tax related documents including: The mandatory use of certified invoicing software General requirements for paper and electronic invoices Dematerialization of tax documentation Archiving of tax documentation (including ledgers, etc) Adjacent tax rules and obligations The decree aims […]

EMEA LATAM VAT & Fiscal Reporting
2019-03-18
Are We in the Golden Age of VAT Recovery?

The value-added tax (“VAT”) was described in the EU as a “”money machine” over 20 years ago. Yet according to a 2015 study by the European Commission by the Centre for Social and Economic Research (CASE), the “VAT gap” was approximately 168 billion EUR. This represents 15 percent of the theoretical VAT that would be […]

Tax Information Reporting United States
2019-03-15
As Legal Sports Gambling Grows, So Does Growth in W-2G Reporting

With the NCAA basketball tournament approaching, the US is gearing up for its biggest gambling weeks of the year. And while most “March Madness” pools might technically be illegal, legitimate sports betting is sweeping the US following last year’s landmark Supreme Court decision allowing states to legalize sports gambling in casinos.   As legal sports […]

E-Invoicing Compliance EMEA Italy
2019-03-14
Italy E-invoicing: Esterometro Reporting Requirements for Cross-border Transactions Updated

What is Esterometro? The Italian government’s e-invoicing mandate became effective on 1 January 2019.  While cross-border invoices are exempt, all domestic B2B and B2C invoices must be cleared through the SDI platform. This means that the Italian government and tax authority now have real-time access to the data of all B2B and B2C VAT transactions […]