Segregation of Duties Explained: The Cornerstone of Enterprise Access Governance

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08 Apr, 2024

The ever-evolving cybersecurity threats like insider risks and compliance regulations in today’s digital landscape are pushing companies across industries to rethink their access management and compliance approach. As per estimate, insider threats cost companies an average of 16.2 million USD annually. Malicious insiders with escalated privileges to your sensitive business systems and processes can lead to data breaches, financial fraud, and compliance penalties.   

Take the example of a senior accountant who holds permissions for both adding and approving vendor invoices in your accounting systems. Such individuals with excessive control over your high-risk business processes or systems heighten the possibilities of financial fraud and unchecked errors. This is why you must implement strict internal controls like Segregation of Duties (SoD). A modern, unified IAM solution like AccessFlow can help prevent data theft, insider threats, and compliance violations by implementing automated and centralized SoD controls in your organization. But before we dig deeper into AccessFlow and its powerful SoD capabilities, let’s first understand:   

What is Segregation of Duties and why it’s important? 

Segregation of Duties (SoD), also known as Separation of Duties, is a fundamental concept in enterprise access management and identity governance that prevent security issues like insider threats and data theft with clear bifurcation of job roles and responsibilities. Being the cornerstone of internal enterprise access controls, it promotes the idea of revoking unilateral control from high-risk business processes or assets by appointing two or more individuals to execute or oversee them, reducing the likelihood of erroneous and fraudulent activities.   

To minimize risks, the SoD framework suggests that sensitive business transactions must be executed through four critical functions – authorization, custodian, record keeping, and reconciliation. Ideally, no single individual or group must hold excessive permissions across their areas to build a robust system of checks and balances where each role keeps a check on others, elevating security.  

Now that we obtain a deeper understanding of SoD, let’s look at why it’s a crucial internal control for organizations:   

  • Optimizes risk management: By distributing high-risk or sensitive business tasks among two or more individuals, SoD reduces the risk of security errors or intentional wrongdoing. For instance, SoD refrains enterprise user accounts from holding unnecessary or excessive permissions, minimizing the likelihood of unauthorized access, data theft, and other security issues.  
  • Prevents human errors: By involving multiple individuals to perform high-risk tasks, SoD greatly reduces the possibility of human errors. For example, with the implementation of SoD, the responsibilities of an application developer and tester can be clearly differentiated to minimize the risk of coding errors. This approach ensures tasks are completed with high accuracy and prevents conflict of interest scenarios with a clear separation of roles.  
  • Improves regulatory compliance: Implementing strict internal controls like SoD is mandatory across various industries to avoid legal and financial penalties. For instance, showcasing SoD as a critical internal control for financial reporting is mandatory for USA-based public-listed companies to avoid compliance issues. Implementing SoD in financial systems also helps them ensure transactions are properly authorized, documented, and reported to prevent fraud or errors.   
  • Eliminates fraudulent activities: By introducing a system of checks and balances through the involvement of two or more persons in critical processes, such as access management and financial transactions, SoD reduces the risk of fraudulent activities in your organization. By separating duties, such as access provisioning and certification, SoD reduces the chance that fraudulent activities will go undetected.   
  • Promotes accountability and transparency: With SoD in action, organizations can define and assign specific job roles and responsibilities to individuals, promoting a culture of transparency and accountability. A robust SoD framework with a properly outlined role structure also encourages individuals to keep a sharp oversight over critical business functions or operations.

Understanding the key SoD concepts  

  • SoD conflicts or breaches arise when an individual holds conflicting role permissions to execute a series of tasks in a critical business process that could potentially lead to fraud or errors. For instance, a senior accountant holding permission to both approve third-party vendor checks and record them in the accounting system denotes a SoD conflict and could lead to fraudulent activities.  
  • SoD exceptions are situations where, due to specific circumstances like limited staffing, an organization allows roles to overlap that are otherwise prohibited. For instance, in a small business, one employee might have to handle both billing and receiving payments, even though these tasks are typically separated to prevent fraud. This exception scenario is monitored closely to mitigate risks.

How to implement SoD controls in your organization? 

  1. Determine the critical business processes or transactions 

Before implementing SoD controls, it is critical to identify and document the sensitive processes and the associated risk levels in your organization. Payroll processing is a typical example of high-risk transactions and hence requires SoD enforcement. An employee creating paychecks in your finance department shouldn’t be able to approve them himself to avoid financial fraud. Further, IT systems or apps holding sensitive business data should also be put under SoD. 

  1. Creative a SoD matrix 

Once you determine the high-risk processes, it is advisable to create a SoD matrix to identify and assign individuals or groups for handling different parts of sensitive business operations. Below is a typical example of a SoD matrix designed to clearly distinguish the roles or responsibilities of different individuals in the HR department to prevent conflict or errors:   

User Group 

Hire employee 

Manage benefits program 

Manage appraisals  

Group 1 

Yes 

 

 

Group 2 

 

Yes 

 

Group 3 

 

 

Yes 

 An accurate SoD matrix also enables you to identify potential role conflicts and resolve them to prevent access-related issues.  

  1. Organize employee training programs 

After distinguishing user roles and responsibilities, it is critical to educate your workforce about SoD and how it strengthens your enterprise security. This will minimize accidental human errors that lead to SoD conflicts or breaches. This will help them identify and report scenarios involving potential fraud, data theft, or information misuse.  

  1. Implement automated SoD controls 

Manually creating and implementing SoD policies involves significant time and effort along with a high risk of human errors. Hence, it is better to automate the creation and implementation of SoD policies to minimize risks. Modern IAM tools provide powerful SoD capabilities to help you create, modify, and implement SoD policies with a few easy clicks. These tools also provide capabilities like role-based access, advanced analytics, and dormant account management to further strengthen your internal security controls. 

  1. Conduct timely audits and reviews 

Define a robust schedule to audit and review the effectiveness of your implemented SoD policies to prevent security and compliance challenges. Conducting such reviews also help ensures that implemented SoD controls are not impeding your overall business efficiency. Automated IAM tools can assist you in quickly scanning and fixing potential breaches across your IT infrastructure to maintain the effectiveness of SoD controls. 

Elevate your enterprise security with AccessFlow’s SoD capability  

In a nutshell, segregation of duties controls prevents business risks, such as financial frauds, compliance penalties, and data breaches, by preventing a single individual from taking control over sensitive business tasks. Modern IAM solutions like AccessFlow can help you tackle the complexities associated with creating, managing, and implementing SoD controls. As a converged IAM solution built natively on ServiceNow, AccessFlow provides a smarter, automated, and efficient approach to SoD implementation. From SoD policy creation and enforcement to breach identification and exception requests, AccessFlow provides a one-stop solution to elevate your internal security controls and risk management strategy.  

To know more about AccessFlow and how it elevates overall enterprise security, compliance, and efficiency, reach out to us at information@alcortech.com.

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