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Segregation of Duties – Don’t let the Payee Write off that Check

Segregation of Duties

In an organization, there are multiple roles and departments for a reason. Every task and functionality is meant to be taken care of by certain people and only by them. And an extension of distributing tasks is to have several people handle the execution of crucial responsibilities. For example, to approve a vendor for your business, a vendor management team might shortlist and select the third parties, and only the finance personnel can authorize the payment for the same.

This ensures two things, firstly, the approving party checks the authenticity and correctness of the payment, and secondly, it significantly reduces the probabilities of fraud and embezzlement within the company.

Checks and balances is a well-known term in financial and government level to segregate this process. In accounting, this ensures multiple pairs of eyes for a transaction. On a government level, it ensures the sharing of power by separating it. This ensures many branches are given different powers so that another branch’s power does not cause any disruption.

The key point here is separation or segregation of powers or responsibilities to ensure no single person/ body of authority has too much authority to carry out tasks without being checked. In organizations today, this critical task is called the segregation of duties. Let’s understand its business impact, importance, and ways to implement it in this read.

What is the segregation of duties?

Segregation of duties is ensuring internal controls are present to distribute duties of a task across several authorities to avoid any security flaw due to human error or intentional fraudulent activities.

Popularly used for financial transactions, like requesting payment to authorize the check, this term can be applied over a wide variety of business incidents.

Business organizations are increasingly vast today with complex IT infrastructure, multiple roles, changing the digital landscape from just on-premise devices to policies like BYOD, and increasing culture of remote work. The wide array of resources that organizations need today to enable digital transformation, or even maintain cybersecurity contributes to the intertwining of people and processes.

With a disparate set of identities accessing applications across on-prem, cloud, hybrid, or even multi-cloud environments, it is increasingly difficult to keep track of all the responsibilities in your corporate ecosystem. With thousands of employees, it is an IT nightmare to know who has access to what, who approved the access, and the legitimacy of the access. The trail of accesses is crucial in organizations, but how well-kept are these trails?

The hay-wire accesses can easily lead to a bad internal actor to indulge in fraud.
Consider the following situations:

Someone requests access to a certain application. What if he/she could approve the access to it themselves? There would be no one to monitor if the user is entitled to it.

Someone who deposits cash in a bank. What happens if the same person is responsible for the reconciliation of the bank statements? The employee could easily get away with embezzlement.

Someone who implements the changes to your firewall. What happens if the same person decides the changes without anyone else’s prior approval? Considering how your firewall secures you from external access, at least, this could open your network to a world of threats.

According to a CNN article, an SoD violation costed a power and robotics firm ABB $73 million! The breach was a result of a lack of segregation in their treasury unit.

The incident was just one example of the many SoD violations due to a lack of internal controls in place to avoid it. To know how to combat it, let’s understand how do these violations happen.

What leads to Segregation of Duties violation?

  1. The hybrid environment in your business might be aiding your digital transformation, but it brings its set of complications. Your company might use several applications daily. Some still on-prem and some cloud. The problem with this hybrid environment, unless managed wisely, is the scattered accesses. It is critical to know exactly who holds what access, but with multiple solutions, there is no centralized place to monitor these accesses. Certain applications like SAP have their Governance, Risk, and Compliance solutions. Yet there is still room for a lot of cross-application SoD violation, lack of visibility across applications, and the increased probability for human error with the increasing applications in diverse environments.
  2. Lack of unified view due to multiple dashboards is a follow up effect of the hybrid environment. Your many applications with their dashboards cannot single out access violations. These dashboards will have the details of users, roles, groups, and so on. But how much can you cross-reference and ensure these accesses do not lead to SoD violations?
  3. Lack of defined roles and entitlements. The lifecycle of employees in your organization keeps changing. Roles are added, changed, and removed. Such a constant change requires constant monitoring, and updating, manual entries simply cannot handle such tasks. They lead to outdated roles and inaccurate entitlements. Entitlements are the accesses that a role is must obtain owing to the nature of the employee’s role. When such processes are carried out inaccurately, they lead to residual accesses from previous roles, additional accesses as a part of the new role, which might not be required. Such accesses might lead to toxic combinations that can facilitate an SoD violation.
  4. Shadow IT and rubber stamp accesses. Given how fast-paced businesses have to be today, every other access request is on high priority. When such tasks are undertaken out of pressure rather than logic, then sometimes accesses are provided without a thorough look at entitlements or current accesses. If a vendor order must be made as an urgent requirement, the one placing a request and approving can become the same, causing SoD violation. Another scenario is of mission-critical accesses. If roles are not defined correctly, then some users get provisioned with additional accesses as a way to neutralize a possible disruption. You might provide these accesses to solve a current scenario, but in the long run, you are enabling SoD violation.
  5. Poorly defined policies and processes. In organizations, usually, when security solutions are implanted, they automate a bunch of disparate processes. This leads to a lot of plaster work for these processes to function well, eventually requiring manual intervention. The policies are not well defined, and due to this lack of definitions

How can you implement the Segregation of Duties?

Segregation of Duties is undoubtedly crucial for organizational security and compliance. It ensures that neither human error nor fraud leads to financial repercussions in your organization.

You can ensure SoD in your organization by streamlining accesses and using security solutions that can handle SoD. With multiple identities, roles, applications, and access requests, what better than an identity and access management solution itself to manage it all.

1. Define policies and processes clearly. This is the stepping stone to obtain SoD. Implementation of effective identity management solutions includes a focus on defining these policies for the smooth functioning of identity lifecycles. Furthermore, setting clear access policies across a large number of applications enables the practice of the right people having the right access—facilitating the Segregation of Duties.

2. Streamlined view of access, allows you to know at all times the overview of the accesses within your organization. Businesses today have the problem of managing accesses across hybrid environments, it is essential to monitor the application access from a commonplace. Multiple dashboards are counterproductive. Dashboards provide you with data such as below:

  • Gives you data of who has access to what application
  • You get to know if there any unwanted access permissions
  • You get the data of orphan accounts, which can be taken over by someone created SoD conflicts.

The use of a unified dashboard ensures that if and when there is an SoD violation, they can be recognized quickly remediated as the data that you need is right in front of you.

3. Access certification for timely review of accesses. Access certification campaigns give you the information about the access provisioned to every user. With this data, you can remove accesses, which might cause a conflict of interest. You can know for sure that there is no prolonged access that is going unnoticed.

4. Workflows for access requests, which provide a clear structure for approvals. Every access in an organization must be provided only after approval. Thus, it is critical to define these approvals. Identity management solutions which enable you to create multi-level approval workflows, easily, will allow you to maintain SoD without hassle.

5. Role based access provisioning. Every role in an organization must be clearly defined. Further, these roles must be entitled to certain applications. Assigning these entitlements provide clear guidance to approve accesses. The most convenient way to carry it out is to automate these processes. So whenever there is a new hire, the applications that he/she is entitled to be automatically provisioned without having to request it. The automation of accesses reduces room for human error drastically. Also, when an additional request is made, it can be provisioned by a simple glance at the entitlements.

6. IT and HR collaboration is a must. This ensures that roles are defined appropriately from the start to avoid any disparities along their lifecycle. These roles must be defined with the approval of managers and information about the new employees’ role.

Read our blog, HR collaboration with IT security: It takes two to tango, to understand this better.

7. Identity Management with risk engines. With the evolving cybercrime, there is no room for manual errors. Along with automating access approvals, intelligent solutions must be incorporated. An effective, well-rounded risk engine, will continuously monitor all the accesses in your organization, and assign scores to every access. Such that whenever access gets a high-risk score due to various parameters, manual intervention or step-up authentication can decide whether to allow or deny access.

To understand risk engines better, you can read our blog: Here’s why you need a risk engine.

8. Specific SoD features in your identity management solutions. Ilantus identity management solution has specific SoD features that can ensure you are always violation free. Firstly, an SoD rule is created, and an SoD owner is assigned to it. Next, the SoD evaluation is done. After these actions, based on the evaluation results, necessary actions can be taken.

Segregation of Duties is necessary to remain compliant, secure, and ensure your employee accesses are not prone to conflicts. Implementing a stringent Segregation of Duties plan is imperative. Acquire an identity management solution today and ensure SoD at all times.

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