What are Internal Control Weaknesses?

Written by
Published 05/09/2019

A control weakness is a failure in the implementation or effectiveness of internal controls. Malicious actors can leverage internal control weakness to circumvent even the most robust security measures. The wide range of internal controls, countless new technologies, and the rate at which malware evolves necessitate monitoring of data security controls. Regularly monitoring allows organizations to test the effectiveness of their internal controls and expose weaknesses in their implementation—before bad actors can exploit them.

What are data security controls?

Data security controls keep sensitive information safe and act as a countermeasure against unauthorized access. They enable risk management programs by counteracting, detecting, minimizing, or avoiding security risks to computer systems, data, software, and networks.

They include technical controls as well as operational, administrative, and architectural controls. These controls can be preventative, detective, corrective, or compensatory.

Effective internal controls protect your organization by providing reliable financial reporting, as required by various regulations and industry standards governing investment, capital, and credit risks. For example, section 404 of the Sarbanes-Oxley Act of 2002 (SOX) requires annual proof that companies accurately report financial statements and that their procedures ensure effective fraud prevention, as well as demonstration that they have addressed any uncertainty, such as stocks.

What are technical control weaknesses?

Technical security controls focus on hardware and software. Weaknesses in technical controls stem from changes in technology and maintenance or configuration failures.  In 2014, the “heartbleed” vulnerability exploited a technical control weakness in SSL to expose data, resulting in a rush of emergency patching.

What are operational control weaknesses?

Operational security (OPSEC) focuses on monitoring operations and enforcing a risk management program. Operational control weaknesses stem from the human factor. When those conducting operations fail to follow established standards and policies, operational controls are weakened.  

Incident response is a time-sensitive operational control. It is most effective with rapid intervention. As the interval between the incident and intervention increases, the effectiveness of incident response is exponentially reduced.

What are administrative control weaknesses?

Administrative security controls are also referred to as procedural controls. Failure in daily operations to adhere consistently to established standards or regulations results in administrative control weaknesses. For example, a regularly-scheduled backup routine is an important procedural control related to disaster recovery. Failing to test the integrity and viability of backups exposes the organization to the risk of media degradation, which can have a negative impact on recovery ability or create material weakness following catastrophic events or human error.

What are architectural control weaknesses?

Security architecture focuses on creating a unified design that documents and addresses the risks across an organization’s integrated information technology environment.  A weakness in either design or documentation damages the foundation of an organization’s security structure. Unexpected hardware replacement is at high risk for architectural control weakness, due to circumvention of the normal change management process. The urgent nature of these replacements creates the potential for configuration irregularities, missed patches, or other implementation oversights.

How does risk management support internal controls?

The core values of governance, risk, and compliance (GRC) focus on defining risks so that your organization can comply with standards or regulations, while continuously monitoring to ensure the processes work. Effective corporate risk management involves creating a structure to support the procedures that protect resources and assets.

Risk management is not a set-and-forget process. Established controls must evolve as the threat landscape evolves. Malicious actors modify their tactics regularly.  Maintaining peak effectiveness requires periodic risk reassessment throughout the information system’s life cycle.

Why Organizations Need to Continuously Monitor Their Controls

Continuous monitoring incorporates machine learning tools to provide real-time insights into new vulnerabilities and threats facing your information systems. Although malicious actors regularly modify malware and ransomware to avoid detection, continuous monitoring enables management to respond to threats.

Effective monitoring of internal controls requires integrating internal audit and ongoing activities to ensure that the organization embedded safeguards within normal operations. This harmonizing of detective and preventive measures helps internal analysts review effectiveness. With that information, the audit committee can regularly update the Board of Directors with reports and reviews, to ensure that current information both aligns with and informs strategic decisions.

How Automation Eases the Burden of Continuous Monitoring

As organizations grow, they increase the number of internal controls they need to monitor. Technology use increases the overlap between different types of controls.  For example, operational risk now becomes an IT risk. Before computers, an employee accessing hard copies of sensitive information was simply an operational risk because that meant the business did not follow employee internal control procedures. Cloud migration now makes unauthorized access an IT risk as well as an operational risk.

Information systems continue to scale, mirroring businesses’ expanding footprints. Organizations that attempt to rely on manual monitoring face the daunting and expensive task of hiring and training staff. With a shortage of experienced professionals in the field, this constant increase is both cost-prohibitive and reactionary. The result of manual monitoring is an organization with an out-of-date security program that falls behind and eventually becomes a victim of an attack.  Continuous monitoring systems that utilize machine learning and automation allow organizations to keep pace with the integration of new technologies, increased number of internal controls, and the ever-evolving threat landscape.

How ZenGRC Enables Corporate Data Security Control Monitoring

ZenGRC allows you to prioritize tasks so that everyone knows what to do and when to do it. Teams can more rapidly review the “to do” lists and “completed tasks” lists, understanding at a glance current task status.

With our workflow tagging, you can assign tasks to the individuals in your organization responsible for the activities involved in risk assessment, risk analysis, and risk mitigation.

Finally, with our audit trail capabilities, you can document remediation activities to prove that you maintained data confidentiality, integrity, and availability as required by law.

For more information about how ZenGRC can streamline your GRC process, contact us for a demo today.