Physical Security In The Federal Reserve System

PHYSICAL SECURITY IN THE FEDERAL RESERVE SYSTEM

Introduction

Harris suggests that physical security is on most occasions an afterthought (97- 98), and often

overlooked because most entities concentrate on counter measures that are technological in

nature. Many organizations lose information through hacking by malware into their systems, and

then the same information is used against an organization.

Because of this scenario, proper implementation of physical security should be enacted so that

would be attackers do not gain physical access to facilities and take information they want.

What is physical security?

This is a statutory system that was created to have a central control over financial transactions so

as to avoid crisis in monetary systems. It is the central bank of the United States, created by the

Congress to provide safer, flexible, and a stable monetary and financial system. It was created

when President Woodrow Wilson signed the Federal Act into law in 1913.

The system has several responsibilities including stabilizing of prices through proper monetary

policies, regulation and supervision of banks and other financial institutions, addressing risk

factors in financial markets and provision of financial services and payment systems to the

government.

Physical security too deals with threats to the economy and smooth operations and stability of

enterprise. Security of organizations differ from that of the public but they are interlinked and

important to ensure that there is social order, for instance dealing with problems posed by

terrorist organizations. In interruption to business or government operations through hacking,

terrorism or sabotage can cause political instability or an effect to public confidence, where

people begin to panic or lose confidence in a system. Physical security is therefore supposed to

be proactive, and not reactive, in the sense that potential threats have to be discussed and

identified in a variety of settings. Necessary measures should then be taken to address them

before they become real problems.

Why the Federal Reserve System should be complex system for continuity of operations.

The main reason for there to be a system of physical security is to ensure that personnel,

equipment, Information Technology infrastructure, facilities and company assets are safeguarded

against foreign infiltration. There must be a layered approach to be able to achieve this because

an attacker will have difficulty reaching and or bypassing multiple layers to get to the source.

There are several approaches that can be used in order to achieve this;

Administration

The administration at the Federal Reserve should ensure that personal data is secured so that in

the event that an attack occurs, the effect on personal data is zero or at least minimized. Scott

posits that during the data breach at Coca-Cola for instance (December1, 2014) many people lost

data in stolen laptops with unencrypted personal data. The result was that an employee instituted

legal proceedings against coca cola for negligence.

Oriyano suggests in his works that there should be a greater concern (393-409) about physical

theft than ever before .Portable devices can easily be stolen and therefore administrative

measures should be in place to secure facilities and ensure adherence to procedures of work.

Technical approach

On the technical front, it will be useful to ensure that there is risk management supervision.

Activities of the Federal Reserve should be operated both by outside systems and a central point

of contact which should be knowledgeable, about the institutions management structure, and

overall operations. The technical aspect will ensure proper surveillance, supervisory activities

and monitoring together with enforcement issues where necessary.

! Ensure appropriate follow-up and tracking of supervisory concerns, corrective actions, or other

matters which come to light through ongoing communications or surveillance.

Framework for Risk-Focused Supervision of Large Complex Institutions August 8, 1997

The FBO supervision program identifies several products to be shared with other U.S. 9

supervisory authorities: a review

of the home country financial system, a review of significant home country accounting practices,

a strength of support assessment of the FBO, a summary of condition of U.S. operations, and

comprehensive and individual examination plans.

Refer to SR letter 95-22 (SUP. IB).

! Participate in the examination process, as needed, to ensure consistency with the institution’s

supervisory plan and effective allocation of resources, including coordination of on-site efforts

with specialty examination areas and other supervisors, as appropriate, and to facilitate requests

for information from the institution, wherever possible.

Sharing of Information

To further promote seamless, risk-focused supervision, information related to a specific

institution should be provided, as appropriate, to other interested supervisors. Information to be

shared should include the products that are described in this handbook.9 Sharing of these

products with the institution, however, should be carefully evaluated on a case-by-case basis.

The institutional overview, risk assessment, and supervisory plan may not be appropriate for

release if they contain a hypothesis about the risk profile of the institution rather than

assessments verified through the examination process. On the other hand, it may be appropriate

to share the examination program with the institution in the interest of better coordinating

examination activities.

Physical control

2. Planning For a Physical Security Program

Adequate controls are not present to control the physical environment without a plan in place.

The company must create a team that is responsible for designing a physical security

The Importance of Physical Security 5

David Hutter, [email protected] program when planning for security. The physical

security team should continually improve the program using the defense in depth method.

Defense in depth is a concept used to secure assets and protect life through multiple layers of

security. If an attacker compromises one layer, he will still have to penetrate the additional layers

to obtain an asset. To give an example of this concept, let us say that you have a computer that an

attacker wants to access. The computer in located inside a locked room within a building. The

building has an access control system in place, and there is a fence with a guard outside. If the

adversary only needed to climb the fence to get to the data, only one level of security is in place

to stop an intruder. If we added security guards, access control systems, locked doors, this would

make the task more difficult for the person trying to acquire a resource.

In addition, logging into the computers and servers should require a smart card or token in

addition to a pin or password in order to access proprietary data. These security measures

working together provides multiple levels of security. To ensure that the security controls are

working effectively, metrics should be used.

The team needs to identify key performance indicators (KPIs) to enhance the security program

(Santander Peláez, 2010) KPIs should be monitored by period, quarter, current year, and over

years (Wailgum, 2005). Metrics depend on the industry and organization. KPIs vary between

corporations because of requirements and focus the organization has

Organizations need to use a “performance-based approach” (Harris, 2013) when measuring the

physical security program. These metrics gauge how well the program is operating towards

achieving the organization’s objectives. Data can be used to make informed decisions to lower

risk in the most cost-effective method. Without these metrics, the security program will not be

able to effectively manage security controls.

The following are key performance indicators to measure the effectiveness of the security

2. What are some other possible scenarios that could completely shut down the Federal

Reserve’s headquarters building located in Washington, DC?

3. How could the Federal Reserve System prepare itself for such a huge disaster as a massive

truck bombing? Should it act proactively to mitigate the hazard even though it has never

happened or there may be no intelligence indicating it might happen in the near future?

4. What would a good plan of operation be if the Federal Reserve System headquarters was

completely put out of commission? Where could all of the employees be relocated? What

location could act as a temporary headquarters while the main building was repaired or replaced?

Should parking accommodations already be planned for such a contingency? Should

transportation be provided? Might there be a problem of overcrowding at the new location if it is

much smaller than the existing headquarters? Could the employees simply be shifted to other

Federal Reserve Bank locations?

5. Should the computer data stored at the Federal Reserve System headquarters be constantly

backed up at an offsite location and how often should this information be backed up? Could this

slow down business operations if all data had to be saved in multiple locations all the time? Why

would it be important to have multiple safeguards and redundancies in regards to important

computer data?

Reference

Harris, S. (2013). Access Control. In CISSP Exam Guide (6th ed., pp. 97, 98, 157- 277). USA

McGraw-Hill;

Harris, S. (2013). Information Security Governance and Risk Management, In CISSP Exam

Guide (6th ed., pp. 21-141). USA McGraw-Hill

Oriyano, S. (2014). Physical Security. In Cehv8: Certified Ethical Hacker Version 8 Study

Guide (pp. 393-409). Indianapolis, IN USA: Wiley

Scott, M. (2014, December 1).Coca-Cola Data Breach highlights importance of Laptop Security.

Retrieved March14, 2017, From Http://Www.Acfe.Com/Fraudexaminer.Aspx?Id=4294986501

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