According to Javelin’s 2018 Identity Fraud Report, identity theft reached an all-time high in 2017 with more than 16 million consumers being affected. On top of this, 24 percent of network breaches target financial institutions, according to Verizon’s 2017 Data Breach Investigations Report. This 1-2 punch combination is affecting banks of all sizes. The days of cybersecurity attacks only affecting the largest financial institutions are gone.
Criminal tactics are evolving and becoming more sophisticated. Increasingly, smartphones are targeted through spam text messages and a myriad of social media scams. These tactics could compromise the phone of a customer that may be accessing a mobile banking application or a bank employee accessing internal bank systems, such as email. The Internet of Things, or IoT, is the network of physical devices, vehicles, home appliances, and other items that can connect and exchange data. Criminals are compromising IoT to launch sophisticated cyberattacks against financial institutions and their customers.
As a bank executive or board member, there are steps you can take to fight back. It starts by recognizing your bank and your customers are targets and can become victims. As leaders, it is important to understand your responsibility to oversee the bank’s cybersecurity program and educate yourself on the current threats and trends. The following recommendations are the first steps to take as you oversee your bank’s cybersecurity program.
What the CEO should be doing
- The Financial Services Sector Coordinating Council has an Excel-based Automated Cyber Assessment Tool (ACAT) available for download at https://www.fsscc.org/. Ensure it is completed by management and updated at least annually.
- Management should develop a cybersecurity risk appetite and understand where the bank is exposed to the greatest risk.
- Oversee and monitor the bank’s cybersecurity program. Ensure a strategic and tested incident response program is in place.
- Challenge preparedness results by reviewing the ACAT and not accepting “baseline” control maturity levels as the desired control level.
- Budget appropriately for cybersecurity preparedness. Compare the funding for cybersecurity controls to physical security controls. Assuming cybersecurity threats are greater than physical security threats, then funding of cybersecurity controls should be in parity with physical security investments.
What the board should be doing
- Consult with cybersecurity professionals to provide education on an annual basis.
- Ask the CEO and senior management to present the bank’s vision, risk appetite, and overall strategic direction for the bank’s cybersecurity program.
- Review the results of ongoing monitoring of the bank’s exposure to and preparedness for cyber threats. Challenge the status quo and do not become complacent. Expect control proficiency levels to increase from baseline levels to evolving levels and higher. Criminals are not standing still and neither should you.
- Ensure proper budgeting of cybersecurity controls and review the bank’s cyber liability insurance annually.
- Ensure the bank’s systems are tested against cybersecurity threats at least annually and utilize the same techniques criminals use to break in.
What bank CEOs should know
- Where is our bank most at risk?
- Are our cybersecurity controls improving beyond baseline?
- Are we comfortable with residual risk levels?
- Are we reviewing the ACAT at least quarterly?
- Are our cybersecurity controls improving fast enough to outpace the evolving cybersecurity threats?
What the bank should be doing
- Your bank should be a member of information sharing organizations such as Financial Services - Information Sharing and Analysis Center (FS-ISAC) and share information in bank peer group meetings.
- Work with cybersecurity experts to develop regular board reporting on cybersecurity threats and risk management.
- Improve cybersecurity control proficiency beyond baseline. Remember that improvement does not have to be overly expensive.
- Maximize the use of all currently available controls.
- Do not wait on examiners or IT auditors to make you improve. It could be too late.
Many executives and boards feel unprepared to address cybersecurity threats and risks. The good news is there are many well trained and qualified cybersecurity professionals that can help you. Enact change where needed and provide ongoing oversight of the cybersecurity program at your bank. Doing so will go a long way towards ensuring your bank does not become another victim of cybersecurity attack.