Question

Week 6 Written Assignments 1

Answer all the following questions below.  Write about budgeting and the budgeting process within an organization and the security department.

1: How are budgets created, implemented, and supervised in a security department? Why is it important to have a budget in a security department?

2: How does security work within an organization's budgeting process? Include at least two common metrics associated with security and an organization's budget.

3: Explain in detail at least two common methods for budgeting. Compare and contrast each method.

Answer 1

About Budget

A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a family, a group of people, a business, a government, a country, a multinational organization or just about anything else that makes and spends money. At companies and organizations, a budget is an internal tool used by management and is often not required for reporting by external parties.

Budgeting Process

The process begins by establishing assumptions for the upcoming budget period. These assumptions are related to projected sales trends, cost trends and the overall economic outlook of the market, industry or sector. Specific factors affecting potential expenses are addressed and monitored. The budget is published in a packet that outlines the standards and procedures used to develop it, including the assumptions about the markets, key relationships with vendors that provide discounts, and explanations of how certain calculations were made.

Security Budget

Budgeting for the security of your business is an important task. However, many commercial businesses often overlook the importance of a security budget, and the benefits that budgeting for the security of your company can bring. Having something like a security budget in place allows you to bounce back from negative outcomes such as business break-ins. Of course, most companies tend to budget for the very obvious things, but security often gets left to the wayside. Veteran business owners know the benefits that security brings to the table, and they understand how it can help your business run smoothly. As far as the success of your business goes, having a security budget can set you up for success in many different ways.

When a business is not operating at peak performance, there is always a reason why. Smart companies usually take the time to trace the cause of this lull in performance, and oftentimes they find themselves facing the undeniable fact that their business security is having a negative impact on the overall performance of their company. It is usually instances like these that spur companies on to pay close attention to the state of their commercial security. Without an effective mechanism of security in place, your business runs the risk of endangering the lives of employees and customers. In addition to this, there is also the risk of sensitive company and customer data being released to unauthorized individuals, or the risk of loss to company assets and monetary value. Investing in your business security simply allows you to run a tighter ship, which makes things easier for your company in the long run.

Essentially, having a modicum of business security in place helps keep your business protected from threats that you might not even have perceived. However, without a security budget, the idea of having great security only ever remains an idea.

Advantages of Security Budget

1. Save your Business money

2. Makes it easier to secure your assets

3. Give you room to upgrade and expand security protocols

4. Help you to plan for security emergencies

Preparation of Security Budget

While preparing security budget, you need to have a closer look on below key aspects.

1. Identify Assets and Resource and Assess Risk associated

Thoroughly evaluate the systems, data and other business assets that are both valuable and potentially at risk in the organization. Today, this makes up an ever-evolving network, and priorities will shift over time to reflect changes in the business and the threat landscape. The findings will be foundational to the security program’s goals and budget recommendations.

2. Allign the Security Budget with Business Goal

Security spend should be calculated based on the risk associated with assuring continuity with important business processes. Seeking opportunities to use security funding not just for risk mitigation, but also to boost revenue and accomplish other business wins such as enhanced productivity.

3. Hire and Train Good People

One of the best investments in a security program is an effective staff. However, in a tight market for employers seeking talent, organizations may have to look inward and invest in training employees who otherwise might not have considered a security career. By training people that are already part of the organization and recruiting them to work in security, you can offer opportunities for professional growth and build their security teams while taking advantage of the employees’ institutional knowledge.

4. Invest in Security Culture

An effective cybersecurity strategy must include a corporate culture in which every employee values security. It means getting all employees — from the security team to the executive suite — to feel invested in the company’s security and risk posture and to engage in secure behavior. Investments in security culture could include initiatives such as awareness training, a secure development life cycle program, and rewards for employees who demonstrate compliance and report incidents.

Methods of Budgeting

1. Incremental Budgeting

Incremental budgeting takes last year’s actual figures and adds or subtracts a percentage to obtain the current year’s budget. It is the most common method of budgeting because it is simple and easy to understand. Incremental budgeting is appropriate to use if the primary cost drivers do not change from year to year. However, there are some problems with using the method:

• It is likely to perpetuate inefficiencies. For example, if a manager knows that there is an opportunity to grow his budget by 10% every year, he will simply take that opportunity to attain a bigger budget, while not putting effort into seeking ways to cut costs or economize.
• It is likely to result in budgetary slack. For example, a manager might overstate the size of the budget that the team actually needs so it appears that the team is always under budget.
• It is also likely to ignore external drivers of activity and performance. For example, there is very high inflation in certain input costs. Incremental budgeting ignores any external factors and simply assumes the cost will grow by, for example, 10% this year.

2. Zero-based Budgeting

As one of the most commonly used budgeting methods, zero-based budgeting starts with the assumption that all department budgets are zero and must be rebuilt from scratch. Managers must be able to justify every single expense. No expenditures are automatically “okayed”. Zero-based budgeting is very tight, aiming to avoid any and all expenditures that are not considered absolutely essential to the company’s successful (profitable) operation. This kind of bottom-up budgeting can be a highly effective way to “shake things up”. The zero-based approach is good to use when there is an urgent need for cost containment, for example, in a situation where a company is going through a financial restructuring or a major economic or market downturn that requires it to reduce the budget dramatically.

Zero-based budgeting is best suited for addressing discretionary costs rather than essential operating costs. However, it can be an extremely time-consuming approach, so many companies only use this approach occasionally.