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- Published on Amazon.com
This book is unique, as far as I know, as a very timely analysis on technical issues and their impact on risk management.
Chapter 1 looks at three power laws for scaling networks - Sarnoff, Metcalfe and Reed. Valuing assets is a precursor to any risk management activity. Chapter 2 looks at the differences between traditional risk and Internet-style risks. There is an important distinction in perils and anomalies. Perils are defined as bugs and vulnerabilities. Anomalies are defined as the problems that arise once a vulnerability is exercised. There is also a section on monoculture which compares computing monoculture to bollweevils and other physical world monoculture risks.
Chapter 3 describes high level strategies like redundancy and backups for dealing with risks. These are high level not detailed operational planning, but they are useful for directors to plan what actions manage what risks. Federation is mentioned as having a positive impact on higher assurance integration between service providers and consumers. Another theme is the positive and negative aspects of decentralization, Quarterman concludes it is largely a positive development, and a decade and half into the web, that looks like a safe assumption.
For a book with Sarbanes in its title, there is not a ton of information on compliance. This is not a big a problem for me, since I, like this book, view compliance as a subset of risk management. Chapters 4-8 look at the implications of risk in various business sizes and verticals.
Chapter 6 examines some physical world controls that work fine in the real world but are insufficient in the digital world such as 4 digit PINs for ATMs. This chapter also covers various types of insurance schemes such as Cat Bonds.
Chapter 7 compares Frederick Winslow Taylor (command and control) to John Boyd (smart nodes) and concludes - Taylor Wrong. Boyd Right. Speed and autonomy are more valuable in a networked world. It is often said the important stuff is not exciting, risk management may not be a thrill a minute for everyone, but this book shows why risk management is important to businesses.
Chapter 8 contains an history of technologies, but does not address SOA, Web Services, Web 2.0 et. al in the context of the 5th Wave. Chapter 9 deals with a recurring theme on differentiating between risk inside the perimeter and outside the perimeter and the disparate strategies available. Chapter 10 describes some key differences between SOX (looking for black list items) and Basel II (culture change). Boyd's OODA loop is revisited in the context of self-healing networks. There is a section on the modern military's reliance on the web, which reminded me of a story by Thomas Barnett about how soldiers in Iraq were going into chat rooms to teach other about counterinsurgency. The officers instructed them to stop because Al Qaeda would listen in, the soldier's response:"Al Qaeda already knows this. We are the ones with the knowledge gap." Now the training manuals are being updated.
My favorite part of the book is Cliff Forts versus Coordinated Mesas which detailes the ancient Anasazis Protect-Detect-Respond strategy.
Chapter 11 discerns between first party loss and third party loss. Chapter 12 contains a set of actionable items for companies wanting to improve their risk management.
Overall, a useful window into the current risks and risk management opportunities in the early 21st century.