Exhibit B - NIST Guide for Applying the Risk Management Framework to Federal Information Systems.pdf

I N F O R M A T I O N S E C U R I T Y

Computer Security Division Information Technology Laboratory National Institute of Standards and Technology Gaithersburg, MD 20899-8930

February 2010

U.S. Department of Commerce Gary Locke, Secretary

Patrick D. Gallagher, Director

Guide for Applying the Risk Management Framework to Federal Information Systems A Security Life Cycle Approach

JOINT TASK FORCE

TRANSFORMATION INITIATIVE

NIST Special Publication 800-37 Revision 1

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

PAGE ii

Reports on Computer Systems Technology

The Information Technology Laboratory (ITL) at the National Institute of Standards and Technology (NIST) promotes the U.S. economy and public welfare by providing technical leadership for the nation’s measurement and standards infrastructure. ITL develops tests, test methods, reference data, proof of concept implementations, and technical analyses to advance the development and productive use of information technology. ITL’s responsibilities include the development of management, administrative, technical, and physical standards and guidelines for the cost-effective security and privacy of other than national security-related information in federal information systems. The Special Publication 800-series reports on ITL’s research, guidelines, and outreach efforts in information system security, and its collaborative activities with industry, government, and academic organizations.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

PAGE iii

Authority

This publication has been developed by NIST to further its statutory responsibilities under the Federal Information Security Management Act (FISMA), Public Law (P.L.) 107-347. NIST is responsible for developing information security standards and guidelines, including minimum requirements for federal information systems, but such standards and guidelines shall not apply to national security systems without the express approval of appropriate federal officials exercising policy authority over such systems. This guideline is consistent with the requirements of the Office of Management and Budget (OMB) Circular A-130, Section 8b(3), Securing Agency Information Systems, as analyzed in Circular A-130, Appendix IV: Analysis of Key Sections.

Supplemental information is provided in Circular A-130, Appendix III.

Nothing in this publication should be taken to contradict the standards and guidelines made mandatory and binding on federal agencies by the Secretary of Commerce under statutory authority. Nor should these guidelines be interpreted as altering or superseding the existing authorities of the Secretary of Commerce, Director of the OMB, or any other federal official.

This publication may be used by nongovernmental organizations on a voluntary basis and is not subject to copyright in the United States. Attribution would, however, be appreciated by NIST.

NIST Special Publication 800-37, Revision 1, 93 pages

(February 2010)

Attn: Computer Security Division, Information Technology Laboratory

100 Bureau Drive (Mail Stop 8930) Gaithersburg, MD 20899-8930 Electronic mail: sec-cert@nist.gov

Certain commercial entities, equipment, or materials may be identified in this document in order to describe an experimental procedure or concept adequately. Such identification is not intended to imply recommendation or endorsement by NIST, nor is it intended to imply that the entities, materials, or equipment are necessarily the best available for the purpose.

There may be references in this publication to other publications currently under development by NIST in accordance with its assigned statutory responsibilities. The information in this publication, including concepts and methodologies, may be used by federal agencies even before the completion of such companion publications. Thus, until each publication is completed, current requirements, guidelines, and procedures, where they exist, remain operative. For planning and transition purposes, federal agencies may wish to closely follow the development of these new publications by NIST.

Organizations are encouraged to review all draft publications during public comment periods and provide feedback to NIST. All NIST publications, other than the ones noted above, are available at http://csrc.nist.gov/publications.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

PAGE iv

Compliance with NIST Standards and Guidelines

In accordance with the provisions of FISMA,1 the Secretary of Commerce shall, on the basis of standards and guidelines developed by NIST, prescribe standards and guidelines pertaining to federal information systems. The Secretary shall make standards compulsory and binding to the extent determined necessary by the Secretary to improve the efficiency of operation or security of federal information systems. Standards prescribed shall include information security standards that provide minimum information security requirements and are otherwise necessary to improve the security of federal information and information systems.

• Federal Information Processing Standards (FIPS) are approved by the Secretary of Commerce and issued by NIST in accordance with FISMA. FIPS are compulsory and binding for federal agencies.2 FISMA requires that federal agencies comply with these standards, and therefore, agencies may not waive their use.

• Special Publications (SPs) are developed and issued by NIST as recommendations and guidance documents. For other than national security programs and systems, federal agencies must follow those NIST Special Publications mandated in a Federal Information Processing Standard. FIPS 200 mandates the use of Special Publication 800-53, as amended. In addition, OMB policies (including OMB Reporting Instructions for FISMA and Agency Privacy Management) state that for other than national security programs and systems, federal agencies must follow certain specific NIST Special Publications.3

• Other security-related publications, including interagency reports (NISTIRs) and ITL Bulletins, provide technical and other information about NIST's activities. These publications are mandatory only when specified by OMB.

• Compliance schedules for NIST security standards and guidelines are established by OMB in policies, directives, or memoranda (e.g., annual FISMA Reporting Guidance).

1 The E-Government Act (P.L. 107-347) recognizes the importance of information security to the economic and national security interests of the United States. Title III of the E-Government Act, entitled the Federal Information Security Management Act (FISMA), emphasizes the need for organizations to develop, document, and implement an organization-wide program to provide security for the information systems that support its operations and assets.

2 The term agency is used in this publication in lieu of the more general term organization only in those circumstances where its usage is directly related to other source documents such as federal legislation or policy.

3 While federal agencies are required to follow certain specific NIST Special Publications in accordance with OMB policy, there is flexibility in how agencies apply the guidance. Federal agencies apply the security concepts and principles articulated in the NIST Special Publications in accordance with and in the context of the agency’s missions, business functions, and environment of operation. Consequently, the application of NIST guidance by federal agencies can result in different security solutions that are equally acceptable, compliant with the guidance, and meet the OMB definition of adequate security for federal information systems. Given the high priority of information sharing and transparency within the federal government, agencies also consider reciprocity in developing their information security solutions. When assessing federal agency compliance with NIST Special Publications, Inspectors General, evaluators, auditors, and assessors consider the intent of the security concepts and principles articulated within the specific guidance document and how the agency applied the guidance in the context of its mission/business responsibilities, operational environment, and unique organizational conditions.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

PAGE v

Acknowledgements

This publication was developed by the Joint Task Force Transformation Initiative Interagency Working Group with representatives from the Civil, Defense, and Intelligence Communities in an ongoing effort to produce a unified information security framework for the federal government.

The Project Leader, Ron Ross, from the National Institute of Standards and Technology, wishes to acknowledge and thank the senior leadership team from the U.S. Departments of Commerce and Defense, the Office of the Director of National Intelligence, the Committee on National Security Systems, and the members of the interagency working group whose dedicated efforts contributed significantly to the publication. The senior leadership team, working group members, and their organizational affiliations include:

U.S. Department of Defense Office of the Director of National Intelligence Cheryl J. Roby Honorable Priscilla Guthrie Acting Assistant Secretary of Defense for Networks Intelligence Community and Information Integration/ Chief Information Officer DoD Chief Information Officer

Gus Guissanie Sherrill Nicely Acting Deputy Assistant Secretary of Defense Deputy Intelligence Community for Cyber, Identity, and Information Assurance Chief Information Officer

Dominic Cussatt Mark J. Morrison Senior Policy Advisor Deputy Associate Director of National

Intelligence for IC Information Assurance

Roger Caslow Lead, C&A Transformation

National Institute of Standards and Technology Committee on National Security Systems Cita M. Furlani Cheryl J. Roby Director, Information Technology Laboratory Acting Chair, Committee on National Security

Systems

William C. Barker Eustace D. King Chief, Computer Security Division CNSS Subcommittee Co-Chair (DoD)

Ron Ross William Hunteman FISMA Implementation Project Leader CNSS Subcommittee Co-Chair (DoE)

Joint Task Force Transformation Initiative Interagency Working Group

Ron Ross Gary Stoneburner Dominic Cussatt Kelley Dempsey NIST, JTF Leader Johns Hopkins APL Department of Defense NIST

Marianne Swanson Jennifer Fabius Greene Dorian Pappas Arnold Johnson NIST MITRE Corporation National Security Agency NIST

Stuart Katzke Peter Williams Peter Gouldmann Christian Enloe Booz Allen Hamilton Booz Allen Hamilton Department of State NIST

In addition to the above acknowledgments, a special note of thanks goes to Peggy Himes and Elizabeth Lennon for their superb technical editing and administrative support. The authors also wish to recognize Beckie Bolton, Marshall Abrams, John Gilligan, Richard Graubart, Esten Porter, Karen Quigg, George Rogers, John Streufert, and Glenda Turner for their exceptional contributions in helping to improve the content of the publication. And finally, the authors gratefully acknowledge and appreciate the significant contributions from individuals and organizations in the public and private sectors, nationally and internationally, whose thoughtful and constructive comments improved the overall quality and usefulness of this publication.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

PAGE vi

DEVELOPING COMMON INFORMATION SECURITY FOUNDATIONS

COLLABORATION AMONG PUBLIC AND PRIVATE SECTOR ENTITIES

In developing standards and guidelines required by FISMA, NIST consults with other federal agencies and offices as well as the private sector to improve information security, avoid unnecessary and costly duplication of effort, and ensure that NIST publications are complementary with the standards and guidelines employed for the protection of national security systems. In addition to its comprehensive public review and vetting process, NIST is collaborating with the Office of the Director of National Intelligence (ODNI), the Department of Defense (DOD), and the Committee on National Security Systems (CNSS) to establish a common foundation for information security across the federal government. A common foundation for information security will provide the Intelligence, Defense, and Civil sectors of the federal government and their contractors, more uniform and consistent ways to manage the risk to organizational operations and assets, individuals, other organizations, and the Nation that results from the operation and use of information systems. A common foundation for information security will also provide a strong basis for reciprocal acceptance of security authorization decisions and facilitate information sharing. NIST is also working with public and private sector entities to establish specific mappings and relationships between the security standards and guidelines developed by NIST and the International Organization for Standardization and International Electrotechnical Commission (ISO/IEC) 27001, Information Security Management System (ISMS).

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

PAGE vii

Table of Contents

CHAPTER ONE INTRODUCTION

1.1 BACKGROUND

1.2 PURPOSE AND APPLICABILITY

1.3 TARGET AUDIENCE

1.4 ORGANIZATION OF THIS SPECIAL PUBLICATION

CHAPTER TWO THE FUNDAMENTALS

2.1 INTEGRATED ORGANIZATION-WIDE RISK MANAGEMENT

2.2 SYSTEM DEVELOPMENT LIFE CYCLE

2.3 INFORMATION SYSTEM BOUNDARIES

2.4 SECURITY CONTROL ALLOCATION

CHAPTER THREE THE PROCESS

3.1 RMF STEP 1 – CATEGORIZE INFORMATION SYSTEM

3.2 RMF STEP 2 – SELECT SECURITY CONTROLS

3.3 RMF STEP 3 – IMPLEMENT SECURITY CONTROLS

3.4 RMF STEP 4 – ASSESS SECURITY CONTROLS

3.5 RMF STEP 5 – AUTHORIZE INFORMATION SYSTEM

3.6 RMF STEP 6 – MONITOR SECURITY CONTROLS

APPENDIX A REFERENCES ............................................................................................ A-1 APPENDIX B GLOSSARY ................................................................................................ B-1 APPENDIX C ACRONYMS ............................................................................................... C-1 APPENDIX D ROLES AND RESPONSIBILITIES .................................................................... D-1 APPENDIX E SUMMARY OF RMF TASKS ........................................................................... E-1 APPENDIX F SECURITY AUTHORIZATION ......................................................................... F-1 APPENDIX G CONTINUOUS MONITORING ......................................................................... G-1 APPENDIX H OPERATIONAL SCENARIOS .......................................................................... H-1 APPENDIX I SECURITY CONTROLS IN EXTERNAL ENVIRONMENTS ....................................... I-1

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

PAGE viii

Prologue

“…Through the process of risk management, leaders must consider risk to U.S. interests from adversaries using cyberspace to their advantage and from our own efforts to employ the global nature of cyberspace to achieve objectives in military, intelligence, and business operations… “

“…For operational plans development, the combination of threats, vulnerabilities, and impacts must be evaluated in order to identify important trends and decide where effort should be applied to eliminate or reduce threat capabilities; eliminate or reduce vulnerabilities; and assess, coordinate, and deconflict all cyberspace operations…”

“…Leaders at all levels are accountable for ensuring readiness and security to the same degree as in any other domain…"

-- THE NATIONAL STRATEGY FOR CYBERSPACE OPERATIONS

OFFICE OF THE CHAIRMAN, JOINT CHIEFS OF STAFF, U.S. DEPARTMENT OF DEFENSE

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 1 PAGE 1

CHAPTER ONE

INTRODUCTION

THE NEED FOR INFORMATION SECURITY AND MANAGING RISK

rganizations4 depend on information technology and the information systems5 that are developed from that technology to successfully carry out their missions and business functions. Information systems can include as constituent components, a range of diverse computing platforms from high-end supercomputers to personal digital assistants and cellular telephones. Information systems can also include very specialized systems and devices (e.g., telecommunications systems, industrial/process control systems, testing and calibration devices, weapons systems, command and control systems, and environmental control systems). Federal information and information systems6 are subject to serious threats that can have adverse impacts on organizational operations (including mission, functions, image, and reputation), organizational assets, individuals, other organizations, and the Nation7 by compromising the confidentiality, integrity, or availability of information being processed, stored, or transmitted by those systems.

Threats to information and information systems include environmental disruptions, human or machine errors, and purposeful attacks. Cyber attacks on information systems today are often aggressive, disciplined, well-organized, well-funded, and in a growing number of documented cases, very sophisticated. Successful attacks on public and private sector information systems can result in serious or grave damage to the national and economic security interests of the United States. Given the significant and growing danger of these threats, it is imperative that leaders at all levels of an organization understand their responsibilities for achieving adequate information security and for managing information system-related security risks.8

1.1 BACKGROUND

NIST in partnership with the Department of Defense (DoD), the Office of the Director of National Intelligence (ODNI), and the Committee on National Security Systems (CNSS), has developed a common information security framework for the federal government and its contractors. The intent of this common framework is to improve information security, strengthen risk management processes, and encourage reciprocity among federal agencies. This publication, developed by the Joint Task Force Transformation Initiative Working Group, transforms the traditional Certification and Accreditation (C&A) process into the six-step Risk Management Framework (RMF). The revised process emphasizes: (i) building information security capabilities into federal information systems through the application of state-of-the-practice management, operational, and technical security controls; (ii) maintaining awareness of the

4 The term organization is used in this publication to describe an entity of any size, complexity, or positioning within an organizational structure (e.g., a federal agency or, as appropriate, any of its operational elements).

5 An information system is a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information.

6 A federal information system is an information system used or operated by an executive agency, by a contractor of an executive agency, or by another organization on behalf of an executive agency.

7 Adverse impacts to the Nation include, for example, compromises to information systems that support critical infrastructure applications or are paramount to government continuity of operations as defined by the Department of Homeland Security.

8 Risk is a measure of the extent to which an entity is threatened by a potential circumstance or event, and a function of:

(i) the adverse impacts that would arise if the circumstance or event occurs; and (ii) the likelihood of occurrence.

O

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 1 PAGE 2

security state of information systems on an ongoing basis though enhanced monitoring processes;

and (iii) providing essential information to senior leaders to facilitate decisions regarding the acceptance of risk to organizational operations and assets, individuals, other organizations, and the Nation arising from the operation and use of information systems.

The RMF has the following characteristics:

• Promotes the concept of near real-time risk management and ongoing information system authorization through the implementation of robust continuous monitoring processes;

• Encourages the use of automation to provide senior leaders the necessary information to make cost-effective, risk-based decisions with regard to the organizational information systems supporting their core missions and business functions;

• Integrates information security into the enterprise architecture and system development life cycle;

• Provides emphasis on the selection, implementation, assessment, and monitoring of security controls, and the authorization of information systems;

• Links risk management processes at the information system level to risk management processes at the organization level through a risk executive (function); and

• Establishes responsibility and accountability for security controls deployed within organizational information systems and inherited by those systems (i.e., common controls).

The risk management process described in this publication changes the traditional focus of C&A as a static, procedural activity to a more dynamic approach that provides the capability to more effectively manage information system-related security risks in highly diverse environments of complex and sophisticated cyber threats, ever-increasing system vulnerabilities, and rapidly changing missions.

1.2 PURPOSE AND APPLICABILITY

The purpose of this publication is to provide guidelines for applying the Risk Management Framework to federal information systems to include conducting the activities of security categorization,9 security control selection and implementation, security control assessment, information system authorization,10 and security control monitoring. The guidelines have been developed:

• To ensure that managing information system-related security risks is consistent with the organization’s mission/business objectives and overall risk strategy established by the senior leadership through the risk executive (function);

• To ensure that information security requirements, including necessary security controls, are integrated into the organization’s enterprise architecture and system development life cycle processes;

9 FIPS 199 provides security categorization guidance for nonnational security systems. CNSS Instruction 1253 provides similar guidance for national security systems.

10 Security authorization is the official management decision given by a senior organizational official to authorize operation of an information system and to explicitly accept the risk to organizational operations and assets, individuals, other organizations, and the Nation based on the implementation of an agreed-upon set of security controls.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 1 PAGE 3

• To support consistent, well-informed, and ongoing security authorization decisions (through continuous monitoring), transparency of security and risk management-related information, and reciprocity;11 and

• To achieve more secure information and information systems within the federal government through the implementation of appropriate risk mitigation strategies.

This publication satisfies the requirements of the Federal Information Security Management Act (FISMA) and meets or exceeds the information security requirements established for executive agencies12 by the Office of Management and Budget (OMB) in Circular A-130, Appendix III, Security of Federal Automated Information Resources. The guidelines in this publication are applicable to all federal information systems other than those systems designated as national security systems as defined in 44 U.S.C., Section 3542. The guidelines have been broadly developed from a technical perspective to complement similar guidelines for national security systems and may be used for such systems with the approval of appropriate federal officials exercising policy authority over such systems. State, local, and tribal governments, as well as private sector organizations are encouraged to consider using these guidelines, as appropriate.13

1.3 TARGET AUDIENCE

This publication serves individuals associated with the design, development, implementation, operation, maintenance, and disposition of federal information systems including:

• Individuals with mission/business ownership responsibilities or fiduciary responsibilities (e.g., heads of federal agencies, chief executive officers, chief financial officers);

• Individuals with information system development and integration responsibilities (e.g., program managers, information technology product developers, information system developers, information systems integrators, enterprise architects, information security architects);

• Individuals with information system and/or security management/oversight responsibilities (e.g., senior leaders, risk executives, authorizing officials, chief information officers, senior information security officers14);

11 Reciprocity is the mutual agreement among participating organizations to accept each other’s security assessments in order to reuse information system resources and/or to accept each other’s assessed security posture in order to share information. Reciprocity is best achieved by promoting the concept of transparency (i.e., making sufficient evidence regarding the security state of an information system available, so that an authorizing official from another organization can use that evidence to make credible, risk-based decisions regarding the operation and use of that system or the information it processes, stores, or transmits).

12 An executive agency is: (i) an executive department specified in 5 U.S.C., Section 101; (ii) a military department specified in 5 U.S.C., Section 102; (iii) an independent establishment as defined in 5 U.S.C., Section 104(1); and (iv) a wholly owned government corporation fully subject to the provisions of 31 U.S.C., Chapter 91. In this publication, the term executive agency is synonymous with the term federal agency.

13 In accordance with the provisions of FISMA and OMB policy, whenever the interconnection of federal information systems to information systems operated by state/local/tribal governments, contractors, or grantees involves the processing, storage, or transmission of federal information, the information security standards and guidelines described in this publication apply. Specific information security requirements and the terms and conditions of the system interconnections, are expressed in the Memorandums of Understanding and Interconnection Security Agreements established by participating organizations.

14 At the agency level, this position is known as the Senior Agency Information Security Officer. Organizations also refer to this position as the Chief Information Security Officer.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 1 PAGE 4

• Individuals with information system and security control assessment and monitoring responsibilities (e.g., system evaluators, assessors/assessment teams, independent verification and validation assessors, auditors, or information system owners); and

• Individuals with information security implementation and operational responsibilities (e.g., information system owners, common control providers, information owners/stewards, mission/business owners, information security architects, information system security engineers/officers).

1.4 ORGANIZATION OF THIS SPECIAL PUBLICATION

The remainder of this special publication is organized as follows:

• Chapter Two describes the fundamental concepts associated with managing information system-related security risks including: (i) an organization-wide view of risk management and the application of the Risk Management Framework; (ii) the integration of information security requirements into the system development life cycle; (iii) the establishment of information system boundaries; and (iv) the allocation of security controls to organizational information systems as system-specific, hybrid, or common controls.

• Chapter Three describes the tasks required to apply the Risk Management Framework to information systems including: (i) the categorization of information and information systems;

(ii) the selection of security controls; (iii) the implementation of security controls; (iv) the assessment of security control effectiveness; (v) the authorization of the information system;

and (vi) the ongoing monitoring of security controls and the security state of the information system.

• Supporting appendices provide additional information regarding the application of the Risk Management Framework to information systems including: (i) references; (ii) glossary; (iii) acronyms; (iv) roles and responsibilities; (v) summary of Risk Management Framework tasks; (vi) security authorization of information systems; (vii) monitoring the security state of information systems; (viii) operational scenarios; and (ix) security controls in external environments.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 2 PAGE 5

CHAPTER TWO

THE FUNDAMENTALS

MANAGING INFORMATION SYSTEM-RELATED SECURITY RISKS

his chapter describes the basic concepts associated with managing information system-related security risks. These concepts include: (i) incorporating risk management principles and best practices into organization-wide strategic planning considerations, core missions and business processes, and supporting organizational information systems; (ii) integrating information security requirements into system development life cycle processes; (iii) establishing practical and meaningful boundaries for organizational information systems; and (iv) allocating security controls to organizational information systems as system-specific, hybrid, or common controls.

2.1 INTEGRATED ORGANIZATION-WIDE RISK MANAGEMENT

Managing information system-related security risks is a complex, multifaceted undertaking that requires the involvement of the entire organization—from senior leaders providing the strategic vision and top-level goals and objectives for the organization, to mid-level leaders planning and managing projects, to individuals on the front lines developing, implementing, and operating the systems supporting the organization’s core missions and business processes. Risk management can be viewed as a holistic activity that is fully integrated into every aspect of the organization.

Figure 2-1 illustrates a three-tiered approach to risk management that addresses risk-related concerns at: (i) the organization level; (ii) the mission and business process level; and (iii) the information system level.15

FIGURE 2-1: TIERED RISK MANAGEMENT APPROACH

15 NIST Special Publication 800-39, Integrated Enterprise-Wide Risk Management: Organization, Mission, and Information System View (projected for publication in 2010), will provide guidance on the holistic approach to risk management.

T

TIER 1

ORGANIZATION

(Governance)

TIER 2

MISSION / BUSINESS PROCESS

(Information and Information Flows)

TIER 3

INFORMATION SYSTEM

(Environment of Operation)

- Multitier Organization-Wide Risk Management

- Implemented by the Risk Executive (Function)

- Tightly coupled to Enterprise Architecture and Information Security Architecture

- System Development Life Cycle Focus

- Disciplined and Structured Process

- Flexible and Agile Implementation

TACTICAL RISK

STRATEGIC RISK

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 2 PAGE 6

Tier 1 addresses risk from an organizational perspective with the development of a comprehensive governance structure and organization-wide risk management strategy that includes: (i) the techniques and methodologies the organization plans to employ to assess information system-related security risks and other types of risk of concern to the organization;16 (ii) the methods and procedures the organization plans to use to evaluate the significance of the risks identified during the risk assessment; (iii) the types and extent of risk mitigation measures the organization plans to employ to address identified risks; (iv) the level of risk the organization plans to accept (i.e., risk tolerance); (v) how the organization plans to monitor risk on an ongoing basis given the inevitable changes to organizational information systems and their environments of operation;

and (vi) the degree and type of oversight the organization plans to use to ensure that the risk management strategy is being effectively carried out. As part of the overall governance structure established by the organization, the risk management strategy is propagated to organizational officials and contractors with programmatic, planning, developmental, acquisition, operational, and oversight responsibilities, including for example: (i) authorizing officials; (ii) chief information officers; (iii) senior information security officers; (iv) enterprise/information security architects; (v) information system owners/program managers; (vi) information owners/stewards;

(vii) information system security officers; (viii) information system security engineers; (ix) information system developers and integrators; (x) system administrators; (xi) contracting officers; and (xii) users.

Tier 2 addresses risk from a mission and business process perspective and is guided by the risk decisions at Tier 1. Tier 2 activities are closely associated with enterprise architecture17 and include: (i) defining the core missions and business processes for the organization (including any derivative or related missions and business processes carried out by subordinate organizations);

(ii) prioritizing missions and business processes with respect to the goals and objectives of the organization; (iii) defining the types of information that the organization needs to successfully execute the stated missions and business processes and the information flows both internal and external to the organization; (iv) developing an organization-wide information protection strategy and incorporating high-level information security requirements18 into the core missions and business processes; and (v) specifying the degree of autonomy for subordinate organizations (i.e., organizations within the parent organization) that the parent organization permits for assessing, evaluating, mitigating, accepting, and monitoring risk.

Because subordinate organizations responsible for carrying out derivative or related missions and business processes may have already invested in their own methods of assessing, evaluating, mitigating, accepting and monitoring risk, parent organizations may allow a greater degree of autonomy within parts of the organization or across the entire organization in order to minimize costs. When a diversity of risk assessment methods is allowed, organizations may choose to employ when feasible, some means of translation and/or synthesis of the risk-related information to ensure that the output of the different risk assessment activities can be correlated in a meaningful manner.

16 Types of risk include, for example: (i) program/acquisition risk (cost, schedule, performance); (ii) compliance and regulatory risk; (iii) financial risk; (iv) legal risk; (v) operational (mission/business) risk; (vi) political risk; (vii) project risk; (viii) reputational risk; (ix) safety risk; (x) strategic planning risk; and (xi) supply chain risk.

17 Federal Enterprise Architecture Reference Models and Segment and Solution Architectures are defined in the OMB Federal Enterprise Architecture (FEA) Program, FEA Consolidated Reference Model Document, Version 2.3, October 2003 and OMB Federal Segment Architecture Methodology (FSAM), January 2009, respectively.

18 Information security requirements can be obtained from a variety of sources (e.g., legislation, policies, directives, regulations, standards, and organizational mission/business/operational requirements). Organization-level security requirements are documented in the information security program plan or equivalent document.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 2 PAGE 7

Tier 3 addresses risk from an information system perspective and is guided by the risk decisions at Tiers 1 and 2. Risk decisions at Tiers 1 and 2 impact the ultimate selection and deployment of needed safeguards and countermeasures (i.e., security controls) at the information system level.

Information security requirements are satisfied by the selection of appropriate management, operational, and technical security controls from NIST Special Publication 800-53.19 The security controls are subsequently allocated to the various components of the information system as system-specific, hybrid, or common controls in accordance with the information security architecture developed by the organization.20 Security controls are typically traceable to the security requirements established by the organization to ensure that the requirements are fully addressed during design, development, and implementation of the information system. Security controls can be provided by the organization or by an external provider. Relationships with external providers are established in a variety of ways, for example, through joint ventures, business partnerships, outsourcing arrangements (i.e., through contracts, interagency agreements, lines of business arrangements), licensing agreements, and/or supply chain arrangements.21

Risk management tasks begin early in the system development life cycle and are important in shaping the security capabilities of the information system. If these tasks are not adequately performed during the initiation, development, and acquisition phases of the system development life cycle, the tasks will, by necessity, be undertaken later in the life cycle and be more costly to implement. In either situation, all tasks are completed prior to placing the information system into operation or continuing its operation to ensure that: (i) information system-related security risks are being adequately addressed on an ongoing basis; and (ii) the authorizing official explicitly understands and accepts the risk to organizational operations and assets, individuals, other organizations, and the Nation based on the implementation of a defined set of security controls and the current security state of the information system.

The Risk Management Framework (RMF), illustrated in Figure 2-2, provides a disciplined and structured process that integrates information security and risk management activities into the system development life cycle. The RMF operates primarily at Tier 3 in the risk management hierarchy but can also have interactions at Tiers 1 and 2 (e.g., providing feedback from ongoing authorization decisions to the risk executive [function], dissemination of updated threat and risk information to authorizing officials and information system owners). The RMF steps include:

• Categorize the information system and the information processed, stored, and transmitted by that system based on an impact analysis.22

• Select an initial set of baseline security controls for the information system based on the security categorization; tailoring and supplementing the security control baseline as needed based on an organizational assessment of risk and local conditions.23

19 The RMF categorization step, including consideration of legislation, policies, directives, regulations, standards, and organizational mission/business/operational requirements, facilitates the identification of security requirements.

20 The allocation of security controls can take place at all three tiers in the risk management hierarchy. For example, security controls that are identified as common controls may be allocated at the organization, mission/business process, or information system level. See Section 2.4 for additional information on security control allocation.

21 Appendix I provides additional guidance regarding external service providers and the provision of security controls in external environments.

22 FIPS 199 provides security categorization guidance for nonnational security systems. CNSS Instruction 1253 provides similar guidance for national security systems.

23 NIST Special Publication 800-53 provides security control selection guidance for nonnational security systems.

CNSS Instruction 1253 provides similar guidance for national security systems.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 2 PAGE 8

• Implement the security controls and describe how the controls are employed within the information system and its environment of operation.

• Assess the security controls using appropriate assessment procedures to determine the extent to which the controls are implemented correctly, operating as intended, and producing the desired outcome with respect to meeting the security requirements for the system.

• Authorize information system operation based on a determination of the risk to organizational operations and assets, individuals, other organizations, and the Nation resulting from the operation of the information system and the decision that this risk is acceptable.

• Monitor the security controls in the information system on an ongoing basis including assessing control effectiveness, documenting changes to the system or its environment of operation, conducting security impact analyses of the associated changes, and reporting the security state of the system to designated organizational officials.

Chapter Three provides a detailed description of each of the specific tasks necessary to carry out the six steps in the RMF.

FIGURE 2-2: RISK MANAGEMENT FRAMEWORK

In summary, there is a significant degree of flexibility in how organizations employ the risk management processes described above. While it is convenient to portray the risk management approach in Figure 2-1 as hierarchical, the reality of project and organization dynamics can be much more complex. The organizational management style may be at one or more points on the

Starting Point

RISK

MANAGEMENT

FRAMEWORK

PROCESS

OVERVIEW

Architecture Description Architecture Reference Models

Segment and Solution Architectures Mission and Business Processes Information System Boundaries

Organizational Inputs Laws, Directives, Policy Guidance

Strategic Goals and Objectives Priorities and Resource Availability

Supply Chain Considerations

Repeat as necessary

Step 6

MONITOR

Security Controls

Step 2

SELECT

Step 3

IMPLEMENT

Step 4

ASSESS

Step 5

AUTHORIZE

Information System

Step 1

CATEGORIZE

Information System

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 2 PAGE 9

continuum from top-down command to consensus among peers. For risk management to succeed at all levels of the organization, the organization must have a consistent and effective approach to risk management that is applied to all risk management processes and procedures. Organizational officials identify the resources necessary to complete the risk management tasks described in this publication and ensure that those resources are made available to appropriate personnel.

Resource allocation includes both funding to carry out the risk management tasks and assigning qualified personnel needed to accomplish the tasks.24

2.2 SYSTEM DEVELOPMENT LIFE CYCLE

All federal information systems, including operational systems, systems under development, and systems undergoing modification or upgrade, are in some phase of a system development life cycle.25 Requirements definition is a critical part of any system development process and begins very early in the life cycle, typically in the initiation phase.26 Security requirements are a subset of the overall functional and nonfunctional (e.g., quality, assurance) requirements levied on an information system and are incorporated into the system development life cycle simultaneously with the functional and nonfunctional requirements. Without the early integration of security requirements, significant expense may be incurred by the organization later in the life cycle to address security considerations that could have been included in the initial design. When security requirements are considered as an integral subset of other information system requirements, the resulting system has fewer weaknesses and deficiencies, and therefore, fewer vulnerabilities that can be exploited in the future.

Early integration of information security requirements into the system development life cycle is the most cost-effective and efficient method for an organization to ensure that its protection strategy is implemented. It also ensures that information security processes are not isolated from the other routine management processes employed by the organization to develop, implement, operate, and maintain information systems supporting ongoing missions and business functions.

In addition to incorporating information security requirements into the system development life cycle, security requirements are also integrated into the program, planning, and budgeting activities within the organization to ensure that resources are available when needed and program/project milestones are completed. The enterprise architecture provides a central record of this integration within an organization.

Ensuring that information security requirements are integrated into the organization’s system development life cycle processes regardless of the type of life cycle processes employed, helps facilitate development and implementation of more resilient information systems to reduce risk to organizational operations and assets, individuals, other organizations, and the Nation. This can be accomplished using the well-established concept of integrated project teams.27 A responsible organizational official (e.g., agency head, mission or business owner, integrated project team leader, program manager, information system owner, authorizing official) ensures that security professionals are an integral part of any information system development activities from the

24 Resource requirements include funding for training organizational personnel to ensure that they can effectively carry out their assigned responsibilities.

25 There are typically five phases in a generic system development life cycle including: (i) initiation; (ii) development/ acquisition; (iii) implementation; (iv) operation/maintenance; and (v) disposal.

26 Organizations may employ a variety of system development life cycle processes including, for example, waterfall, spiral, or agile development.

27 Integrated project teams are multidisciplinary entities consisting of a number of individuals with a range of skills and roles to help facilitate the development of information systems that meet the requirements of the organization.

Special Publication 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

CHAPTER 2 PAGE 10

initial definition of information security requirements at Tier 1 and Tier 2 to the selection of security controls at Tier 3. Such consideration is used to foster close cooperation among personnel responsible for the design, development, implementation, operation, maintenance, and disposition of information systems and the information security professionals advising the senior leadership on appropriate security controls needed to adequately mitigate risk and protect critical missions and business functions.

Finally, organizations maximize the use of security-relevant information (e.g., assessment results, information system documentation, and other artifacts) generated during the system development life cycle to satisfy requirements for similar information needed for information security-related purposes. Similar security-relevant information concerning common controls, including security controls provided by external providers, is factored into the organization’s risk management process. The judicious reuse of security-relevant information by organizations is an effective method to help eliminate duplication of effort, reduce documentation, promote reciprocity, and avoid unnecessary costs that may result when security activities are conducted independently of system development life cycle processes. In addition, reuse promotes greater consistency of information used in the design, development, implementation, operation, maintenance, and disposition of an information system including security-related considerations.

2.3 INFORMATION SYSTEM BOUNDARIES

One of the most challenging problems for information system owners, authorizing officials, chief information officers, senior information security officers, and information security architects is identifying appropriate boundaries for organizational information systems.28 Well-defined boundaries establish the scope of protection for organizational information systems (i.e., what the organization agrees to protect under its direct management control or within the scope of its responsibilities) and include the people, processes, and information technologies that are part of the systems supporting the organization’s missions and business processes.