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Integrating Threat Modeling with Risk and Controls Processes in Regulated Industries such as Finance, Healthcare, and Critical Infrastructure



In highly regulated industries—such as finance, healthcare, and critical infrastructure—the stakes for ensuring security and compliance are incredibly high. Regulatory frameworks mandate rigorous controls and processes to mitigate risks and safeguard sensitive data. A critical aspect of these frameworks is the ability to anticipate potential threats and understand how they align with an organization’s risk and controls environment. This is where integrating threat modeling into the risk and controls process becomes essential.

Threat modeling provides a structured approach to identifying, assessing, and mitigating potential security threats, which in turn strengthens the organization’s risk posture and ensures adherence to regulatory controls.

This article explores the reasons why threat modeling should be tightly coupled with risk and controls processes in regulated industries, providing examples of established frameworks and research supporting this integration. Additionally, we explore European frameworks, which emphasize risk management and control requirements across various sectors.

Threat Modeling: A Proactive Approach to Security

Threat modeling is a process used to identify and assess potential threats to an application, system, or entire environment. By analyzing the architecture, components, and data flows of a system, organizations can anticipate possible attack vectors and the motivations of threat actors. Well-established threat modeling frameworks, such as Microsoft’s STRIDE (Spoofing, Tampering, Repudiation, Information Disclosure, Denial of Service, and Elevation of Privilege) or MITRE’s ATT&CK (Adversarial Tactics, Techniques, and Common Knowledge), provide structured methodologies for identifying and categorizing threats. These frameworks help organizations assess risks by evaluating both the likelihood and impact of each threat.

In regulated industries, where the potential damage from a breach extends beyond financial loss to include regulatory penalties and reputational harm, threat modeling is a proactive approach to safeguarding systems and data. It identifies vulnerabilities before they are exploited and provides a blueprint for mitigating risks through well-defined security controls. However, without integrating this process into the broader risk management framework, the benefits of threat modeling may be limited.


Why Threat Modeling Must Be Tied to Risk and Controls

The risk and controls process in regulated industries is designed to manage organizational risk by implementing appropriate controls to mitigate identified threats. This is where frameworks like COSO's Enterprise Risk Management (ERM) and NIST's Risk Management Framework (RMF) come into play, offering structured approaches to identifying risks and applying appropriate controls. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines risk management as identifying, assessing, and responding to risks to ensure the organization meets its objectives. Similarly, the National Institute of Standards and Technology (NIST) focuses on risk-based approaches to securing systems through its RMF and Cybersecurity Framework (CSF), emphasizing the continuous identification, assessment, and mitigation of risks.

However, traditional risk and controls frameworks often focus on compliance requirements and operational risks, without diving deeply into how specific threats evolve in the context of an organization's unique environment. This is where threat modeling fills a gap. When threat modeling is integrated into the risk management process, it helps ensure that security controls are not just reactive but are designed to preemptively address real-world threats.

Example 1: STRIDE and COSO ERM Integration

Consider integrating Microsoft’s STRIDE model with the COSO ERM framework. STRIDE is useful for identifying technical threats across an organization’s systems, from unauthorized access to denial-of-service attacks. COSO ERM, on the other hand, emphasizes understanding risks across all operational areas. By aligning the outputs of STRIDE (i.e., identified threats) with COSO’s framework for addressing risks (i.e., risk assessments and control implementation), security teams can ensure that identified threats are prioritized based on risk appetite and regulatory requirements. For example, if a financial institution identifies "Information Disclosure" as a critical threat via STRIDE, COSO’s ERM can guide how to allocate resources and establish appropriate data protection controls, such as encryption, in alignment with both operational risks and regulatory mandates.

Example 2: MITRE ATT&CK and NIST RMF Alignment

In the context of healthcare, consider aligning the MITRE ATT&CK framework with NIST’s RMF. MITRE ATT&CK is an adversarial-focused framework, mapping real-world tactics and techniques used by attackers. NIST’s RMF, meanwhile, offers a structured approach to applying security and privacy controls across federal and critical infrastructure systems. By aligning the detailed insights provided by ATT&CK with NIST’s risk-based approach, healthcare organizations can better assess where they are most vulnerable and apply appropriate controls, such as those outlined in NIST SP 800-53 family of documents.

For example, ATT&CK may reveal that adversaries are increasingly targeting healthcare data through phishing campaigns that lead to credential theft. NIST’s RMF would then guide the organization in applying specific controls (e.g., multi-factor authentication, continuous monitoring, and incident response procedures) to mitigate this risk, while ensuring that all controls are documented and auditable to meet regulatory standards such as HIPAA (Health Insurance Portability and Accountability Act).

European Frameworks for Risk and Controls

While American frameworks like COSO ERM and NIST RMF are widely recognized, European regulations and risk frameworks also play a significant role in shaping how organizations manage security and compliance. As threat modeling gains traction, integrating it with European-specific frameworks enhances both the proactive identification of risks and the alignment with regional regulatory mandates.

Example 3: ISO 31000 and ISO/IEC 27005 for Risk Management

In Europe, ISO 31000 provides a widely adopted framework for risk management, applicable across industries and sectors. The standard emphasizes a structured approach to identifying, assessing, and treating risks, with a strong focus on governance and communication. Threat modeling can be integrated with ISO 31000 by aligning identified threats with the standard’s risk assessment processes. This ensures that risks related to cybersecurity threats are not treated in isolation but are considered alongside operational, financial, and compliance risks.

Additionally, ISO/IEC 27005 is a key standard that focuses specifically on information security risk management. When threat modeling frameworks like STRIDE or MITRE ATT&CK are tied to ISO/IEC 27005, organizations can strengthen their ability to assess security risks in a structured and repeatable manner. For example, ISO/IEC 27005’s risk assessment methods align well with the outputs of threat modeling, ensuring that identified vulnerabilities are not only addressed through security controls but are also documented and tracked in accordance with governance requirements.

Example 4: GDPR and ENISA Guidelines

The General Data Protection Regulation (GDPR) is one of the most stringent privacy regulations globally, with a particular emphasis on the protection of personal data. Under GDPR, organizations are required to implement "appropriate technical and organizational measures" to ensure the security of personal data. Threat modeling plays a crucial role here by helping organizations identify potential attack vectors that could lead to breaches of personal data. By aligning threat modeling with GDPR’s risk assessment processes, organizations can proactively mitigate risks related to data breaches and demonstrate compliance with Article 32 of the regulation, which mandates data protection by design and by default.

The European Union Agency for Cybersecurity (ENISA) also provides guidelines for managing security risks, including the ENISA Threat Landscape (ETL), which maps the evolving threat landscape in Europe. ENISA’s recommendations can be integrated with threat modeling to ensure that identified threats are evaluated against the most recent adversarial tactics and regional threats. For instance, ENISA’s focus on supply chain security can be complemented by threat modeling to assess third-party risks and ensure that supply chain partners adhere to the same security and regulatory standards.

Example 5: Basel III for Financial Risk Management

In the financial sector, Basel III is a regulatory framework developed by the Basel Committee on Banking Supervision (BCBS) to strengthen risk management in the banking industry. While primarily focused on financial risk, Basel III includes guidelines for operational risk management, which encompasses cybersecurity threats. By integrating threat modeling with Basel III’s operational risk framework, financial institutions can enhance their ability to assess and mitigate risks posed by cyber threats involved in thier finacial process (yes, process, application logic, AI/ML decisioning all benefit from threat modeling)

For example, a bank might use threat modeling to assess the risk of a data breach affecting customer accounts, and then apply the Basel III operational risk framework to quantify the financial impact of such an event. This approach ensures that cybersecurity risks are treated with the same rigor as other forms of operational risk, and that mitigation strategies are aligned with regulatory expectations.


Research Supporting Threat Modeling in Regulated Industries

Several research studies and industry reports underscore the importance of integrating threat modeling with risk and controls processes in regulated environments.

A study published by ISACA (Information Systems Audit and Control Association) highlights that threat modeling, when aligned with risk management frameworks, results in a 20% reduction in security incidents. The report also notes that threat modeling enhances visibility into high-risk areas that traditional risk assessments might overlook, particularly in industries with complex regulatory requirements.

Furthermore, a report from Gartner emphasizes that organizations in regulated industries adopting proactive threat modeling strategies are more likely to achieve compliance with frameworks such as PCI DSS (Payment Card Industry Data Security Standard) and GDPR (General Data Protection Regulation). Gartner’s findings suggest that these organizations experience fewer audit findings and incur lower compliance-related costs.


The Benefits of Integration

When threat modeling is integrated into the risk and controls process, regulated industries gain several key benefits:

  1. Enhanced Risk Prioritization: Threat modeling helps identify and prioritize risks that are most likely to impact an organization. By tying these insights into a broader risk management framework, organizations can focus on the most pressing threats and allocate resources more efficiently.

  2. Improved Compliance: By linking threat modeling outcomes with regulatory controls, organizations can better ensure that they meet industry-specific compliance requirements. This is particularly valuable when frameworks like NIST CSF, GDPR, or HIPAA require detailed documentation of security controls and risk mitigation strategies.

  3. Proactive Security Posture: Rather than reacting to incidents after they occur, integrating threat modeling into the risk process allows for the proactive identification and mitigation of threats. This reduces the likelihood of breaches and minimizes the impact of potential incidents.

  4. Clearer Communication with Stakeholders: A well-documented risk and controls process that includes threat modeling provides clearer communication to both internal and external stakeholders, such as auditors, regulators, and board members. This fosters transparency and trust while demonstrating due diligence.

Conclusion

In regulated industries, where compliance, security, and risk management are not optional, integrating threat modeling with the risk and controls process is not just advantageous but necessary. By proactively identifying and mitigating potential threats, organizations can improve their security posture, ensure regulatory compliance, and drive more effective use of resources. Frameworks such as STRIDE and MITRE ATT&CK, PASTA, and others, when aligned with risk management standards like COSO ERM, ISO 31000, and NIST RMF, offer powerful tools to manage evolving risks in an increasingly complex threat landscape. The future of secure, compliant operations in regulated sectors lies in this holistic, integrated approach to risk and threat management.

You can also view how Necessary Security builds programs to align to this concept by reviewing a slide deck we presented at ThreatModCon October 2024.

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