In hiring its first CISO to prevent another massive data breach, Target made a mistake in not having the top security officer report directly to the chief executive, experts say.
Target has hired Brad Maiorino, who was chief information security and information technology risk officer at manufacturers General Motors. In his previous position, Maiorino overhauled the global information security organisation at GM.
Target's latest executive hire comes six months after reporting a massive breach in which 40 million credit card numbers and 70 million customer addresses, phone numbers and other personal data were stolen from the retailer's computers.
Experts commended Target on Friday for hiring a CISO, but questioned its decision to have the executive report to Chief Information Officer Bob DeRodes, hired in April, and not directly to interim CEO and President John Mulligan. They worried that security might not get a high enough priority, if the CISO is not equal to the CIO.
"There is always a trade-off when it comes to implementing security, but as we have come to learn, security should no longer play second fiddle to other considerations," Al Pascual, analyst at Javelin Strategy & Research, said. "The CIO and CISO are really complimentary roles, and to be truly effective they need to act as partners within an organisation."
The CISO's job is to establish a company's overall approach to security and to take full responsibility for the successes and failures of policies and procedures. The chief security exec is also responsible for making sure the company's board and CEO are aware of any technical problems.
To be effective, the executive should be able to present arguments for large IT security expenditures directly to the CEO and the chief financial officer, who can weigh the request against the money the CIO wants to spend on IT operations.
The balance between IT operations and security could get tilted toward the former, if the CIO has the final say.
"CIOs have to deliver on projects and keep things operating and quite often security controls and measures slow things down," Richard Stiennon, chief research analyst for IT-Harvest, said. "So they launch things in an insecure mode and of course, after that it's too late."
If the CISO reported directly to the CEO or to the board's Audit Committee, which is the operating panel overseeing financial reporting, then they could overrule the CIO, if they decided he was not doing what was needed to secure computer systems as best as possible, Stiennon said.
The fallout from Target's data breach is expected to be huge. The company has spent $61 million responding to the break in as of February 1, but analysts estimate total costs could run into the billions, given that more than 90 lawsuits are pending.
Because Target is aware of the potential cost of a major breach, Jacob Olcott, principal consultant on cybersecurity at Good Harbor Security Risk Management, was surprised that Maiorino did not have a higher place in the executive suite.
Nevertheless, having the CIO above the CISO could work.
"It is reasonable for organisations that have security- and risk-conscious CIOs to have the CISOs report through them," Olcott said.
However, that structure will fail, if the CISO is "buried in the organization," Olcott said.
"If senior executives do not have visibility into the company's security posture, then that's a bad thing," he said.
Ultimately senior execs, including the CEO, CFO and general counsel, depend on the CISO in deciding the level of risk the company will accept in setting security spending.