SEC sees cyber attacks as one of greatest risks to financial services industry

Cybersecurity CSC Blogs

The financial services industry must manage many risks today – from banks that, should they fail, could compromise the global financial system to making sure new investment vehicles such as ETFs work as promised. But according to a speech given recently by SEC Chair Mary Jo White, it’s cybersecurity that poses “one of the greatest risks facing the financial services industry.”

White explained how regulatory efforts focus on ensuring that financial organizations have policies and procedures in place to deal with cyber threats. In the asset management space, the SEC issued guidance on ways funds and advisers can stay safe. These include:

  • Conduct a periodic assessment of: (1) the nature, sensitivity and location of information that the firm collects, processes and/or stores, and the technology systems it uses; (2) internal and external cybersecurity threats to and vulnerabilities of the firm’s information and technology systems; (3) security controls and processes currently in place; (4) the impact should the information or technology systems become compromised; and (5) the effectiveness of the governance structure for the management of cybersecurity risk. An effective assessment would assist in identifying potential cybersecurity threats and vulnerabilities so as to better prioritize and mitigate risk.
  • Create a strategy that is designed to prevent, detect and respond to cybersecurity threats. Such a strategy could include: (1) controlling access to various systems and data via management of user credentials, authentication and authorization methods, firewalls and/or perimeter defenses, tiered access to sensitive information and network resources, network segregation, and system hardening; (2) data encryption; (3) protecting against the loss or exfiltration of sensitive data by restricting the use of removable storage media and deploying software that monitors technology systems for unauthorized intrusions, the loss or exfiltration of sensitive data, or other unusual events; (4) data backup and retrieval; and (5) the development of an incident response plan. Routine testing of strategies could also enhance the effectiveness of any strategy.
  • Implement the strategy through written policies and procedures and training that provide guidance to officers and employees concerning applicable threats and measures to prevent, detect and respond to such threats, and that monitor compliance with cybersecurity policies and procedures. Firms may also wish to educate investors and clients about how to reduce their exposure to cyber security threats concerning their accounts.

Financial organizations are hit 300 times more frequently than other industries, according to a report released last year by security firm Websense.

“While no one can prevent all disruptions from cybersecurity events, you should consider the full range of cybersecurity risks to your funds and consider appropriate tools and procedures to prevent breaches, detect attacks and limit harm,” White said in her speech last week.

That’s for certain. And it’s excellent advice for not only financial services but every organization.

RELATED LINKS

Phishing attacks keep financial institutions, online services on the hook

Cyber extortion and IT hijacking for ransom

Phishing attacks increasingly target enterprise financial departments

 

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