One chestnut from my history in lottery game development:
While our security staff was incredibly tight and did a generally good job, oftentimes levels of paranoia were off the charts.
Once they went around hot gluing shut all of the “unnecessary” USB ports in our PCs under the premise of mitigating data theft via thumb drive, while ignoring that we were all Internet-connected and VPNs are a thing, also that every machine had a RW optical drive.
Banned open source software because of security concerns. For password management they require LastPass or that we write them down in a book that we keep on ourselves at all times. Worth noting that this policy change was a few months ago. After the giant breach.
And for extra absurdity: MFA via SMS only.
I wish I was making this up.