in-to-out security

["Joe George" <j.george () conservation org>]

Dear all,
 
I hope you're all doing well.  A colleague of mine does technical
support for some charities on the side.  One of his clients is a person
who is the CTO of a 400+ person, non-profit organization.  This CTO
asked my colleague what was the best way to (a particular application or
training method) to get his 400+ staff in-line and keep them from doing
inappropriate things on the network such as downloading rogue
applications, and inadvertently installing apps which can attack the
network and other networks.  He's looking for an in-to-out solution.
This CTO feels he and his team would be able to secure the network from
intrusion from outside rogue users by implementing necessary firewall,
IDS, etc.  I suggested to my colleague that this gentleman can not
adequately secure external/internal intrusion and attacks without
implementing an acceptable use or some kind of written policy with the
assistance of his HR department.  I informed him that end-users should
have the right to know that their activity is being monitored by the IT
staff (which is what I presumed he meant by an application/training
method to keep his staff in-line).  This CTO fellow, feels that any kind
of policy is not a viable option.  I told my colleague a written policy
will protect the organization and the employees and allow the security
team to build and design a security countermeasures, not to mention get
the best use of expensive security appliances.  Besides rogue
applications, I mentioned that other issues such as disgruntled
employees, corporate espionage, maintaining data and company integrity
are just a few reasons to start off with written policy.  My colleague
mentioned that his CTO client is not uninformed, but rather too scared
to bring up a very controversial solution as written policy to his
superiors and the end-users. My questions to you are these:
 
1.      Was I right to suggest this rather than help my colleague look
for an app/training solution?
2.      How would you convince an obviously passive CTO to do the right
thing?
3.      If such an application/training exists, can you suggest
something? 
4.      Is it legal to implement user-monitoring without informing the
staff?  This is where I think policy 
 
Thanks in advance.
 
Take it easy,
 
Joe 

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