Evan Schuman's StorefrontBacktalk

A 403 Labs QSA, PCI Columnist Walt Conway has worked in payments and technology for more than 30 years, 10 of them with Visa.

How do you use your PCI risk assessment? Requirement 12.1 tells you to have “an annual process that identifies threats, and vulnerabilities, and results in a formal risk assessment.” The questions for retailers and their CIOs are: “What do you do with that risk assessment once you are done? Do you use it to question your current practices and reduce your PCI scope?”

Speaking for myself, I hate to do a bunch of work and get nothing for it. That’s too much like paying for dinner and then not sticking around to finish dessert. Often, merchants prepare a thoughtful risk assessment and then file it away (a.k.a., “shelfware”) until their QSA returns the next year, at which time it gets dusted off, reviewed and, hopefully, updated. If that describes your situation, you could be missing a golden opportunity to reduce your PCI scope, lower your risk and cut your cost of PCI compliance. Now doesn’t that sound like a dessert worth sticking around for?

Requirement 12 contains one of the hidden gems of PCI. For those not intimately familiar with PCI, Requirement 12 addresses information security policies. In particular, 12.1 tells you to look at your threats and vulnerabilities (resulting in no small part from all that cardholder data you are keeping) and then to produce a formal risk assessment.

Other than a brief entry in a glossary, the PCI Council doesn’t offer very much in the way of guidelines for level of effort or what an “annual process” or a “risk assessment” should look like. You may think of it as a cost-benefit analysis or an ROI evaluation, but the idea is to put a dollar value on the assets you are protecting. That means you need to quantify those risks.

Most merchants and processors use industry data to put a dollar value on some of the risks, particularly data breaches. One widely cited measure says the average total cost to a merchant of dealing with a data breach is about $6.6 million. Looked at another way, an accepted industry standard is that a data breach will cost a merchant about $200 per record compromised.

Using this metric, a compromise of only 10,000 PANs would cost you about $2 million. If you are a large merchant or a processor with, say, a few million card numbers stored, your financial exposure rapidly escalates into the financial stratosphere. This cost is in addition to brand damage when you find yourself in the headlines for the wrong reason.

Here is a radical idea: Once you recover from the shock of looking at these numbers, you might want to ask some direct questions about your PCI scope and why you are paying to store and protect all that cardholder data. Smart merchants and their CIOs focus on minimizing their PCI scope, to both reduce risk and lower their cost of compliance. Maybe Requirement 12.1 is one more wake-up call telling you to take a look, at least once a year, at your risks and ask if you should be doing some things differently.