Why Facebook outsources some of its risk management

by Michael Arbow, MBA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com

 

The major downside risk for any software/web based company is a “bug” that can disable their software or possibly expose their clients/users private information to the public.  To reduce this downside risk some firms and perhaps most recently Facebook, have established a program that provides incentive money to third parties or “bug bounty hunters”.  As the Chief Security Officer Joe Sullivan states:

 

"We hire the best and brightest (at Facebook), and have implemented numerous protocols. We realize, though, that there are many talented and well-intentioned security experts around the world who don't work for Facebook."

 

In other words, Facebook has a talented team but realize they do not a monopoly on that talent and that outsiders sometimes see things or have ideas that the company employees do not.  Being buried in the weeds with the day-to-day and living the company culture can sometimes reduce your visibility.  Is your company like Facebook and retains or incents outsiders (consultants?) to define risks your employees may overlook?  And if your company has not sought third party guidance what procedures does your organization have in place to continually discover the un-discovered?

 

For more on Facebook’s use of third party risk hunters follow the link to the CNN Money story:   http://tinyurl.com/3d3twx3

If Rodney Dangerfield was a Risk Manager today, he is now finally getting respect

by Michael Arbow, MBA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com

 

Before: 

“The risk chief used to be like the human resources leader. You had to have one, but generally speaking, the risk guy was never going to be CEO of the company,” Tom Flannery, managing director for the Pittsburgh office of executive search company Boyden said.

 

After: 

“The value of the job has gone up because people have seen how badly things can go if you aren’t paying attention,” said Kevin Blakely, chief risk officer at Huntington Bancshares Inc. 

 

A few months ago I wrote a blog entitled “Was Rodney Dangerfield once a Risk Management Consultant?” in response to some research I did surrounding the US government’s job title classification list which in its over 250,000 words excludes the work risk.  Well perhaps that will change now that some risk managers on Wall Street are pulling in 7 figure incomes and at least one topping out at $10,000,000.  To me this is a sign that risk management and managers is coming of age, pity it took the financial collapse of the Western economies through the Great Recession to make it so.

 

So has your firm brought on a risk manager or risk consultant yet?  It is only a matter of time,… for as I like to say, “The train has left the station”. 

 

For more on this subject, click on this link to Bloomberg: http://tinyurl.com/6b7uxcf 

To see my original blog of April 3, 2011 click on the link: http://tinyurl.com/626aqvo